How much money do I need to purchase a home?
by : Mari Takeshita
It depends on the cost of the home, the type of loan you get and the amount of your down payment.
From the moment you write an offer on a house and it is accepted by the seller, you will need earnest money. This is the first check a buyer will need to write to accompany the offer to buy a home.
Then there’s the cash needed to pay for a home inspection as well as upfront fees for credit reports and an appraisal.
Next comes the down payment, which is the amount of cash required by the lending institution securing your loan. Based on your credit score, debt-to-income ratio and available cash, lenders will advise which loan products, if any, are available and whether a down payment will be necessary. A down payment is separate from earnest money, and depending on the lender, it can be money gifted from parents or other sources.
In some instances, if you qualify as a first-time home buyer, you can receive down payment assistance and closing cost monies from the county you choose to live in. IN THE DENVER METRO area, a lot of first time buyers will use CHFA, which requires you to have a minimum of a 620 Fico score and a minimum of $1000.00 Out of pocket. The balance of the down payment is thru the CHFA program.
The next consideration when buying is closing costs. These fees are not part of the financed amount of a purchase and can add 3-5 percent on top of the sale price of the home. In some instances, closing costs can be part of the home purchase negotiations.
Your Realtor can write an offer asking for the seller to pay your closing costs. You can also ask your lender about assisting in paying the closing costs they the interest rate.
While there are Veterans Affairs loans and some conventional loan products that offer “100 percent financing,” closing costs are still additional costs that can’t be completely wrapped up in the loan. (Note: Some fees, such as the VA funding fee, may be wrapped up in the loan.)
You can also discuss with your Realtor or whoever is representing them in the transaction whether to ask the sellers to cover the cost of a home warranty, HOA fees or other expenditures.