Understanding The Costs of Purchasing a Home:

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Understanding Costs When Purchasing a Home

My hope with this post is to provide a simplistic approach to the explanation of what costs go into a home purchase. 

Down Payment + Closing Costs = Your Total Costs

1. Down Payment

 The down payment is often the largest upfront cost when purchasing a home. Depending on the type of mortgage and your financial situation, this can range from as little as 3% to 20% or more of the purchase price. It’s important to understand what you can afford and to explore various loan options that may offer lower down payment requirements.

2. Closing Costs

Closing costs typically range from 2% to 5% of the loan amount and can include a variety of fees associated with finalizing your mortgage and transferring the property. Some common closing costs include:

  •  Origination Fees: Charged by the lender for processing the loan.
  • Appraisal Fees: Required to determine the market value of the property.
  • Title Insurance: Protects against potential disputes over property ownership.
  • Survey: Makes sure any structures you're buying are on your property.
  • Title Fees: Assistance with closing and recording the important documentation.

                                       Ok, there's more...

Earnest Money

Earnest money is a deposit made to demonstrate your commitment to purchasing the home.  The earnest money is held in an account until closing and is applied toward your down payment or closing costs. If the deal falls through due to contingencies outlined in the purchase agreement, you may receive this money back. However, if you back out without a valid reason, you risk losing this deposit.

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Buying a home involves several out-of-pocket costs beyond just the down payment. By understanding and planning for these expenses, including earnest money, you can set yourself up for a smoother home-buying experience. 

 If you have questions about specific costs or need assistance with the mortgage process, don’t hesitate to reach out. We’re here to help you make informed decisions on your path to homeownership!

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