Still interested in buying your dream home? In the last post, we talked about one of the first steps in home buying. Now that you are ready to buy a home let's look at the next step in this series.
Step Two: Covering Down Payment and Closing Costs.
While buying a home can be very exciting. There are more factors to keep in mind before making this big purchase...
1. Count the cost.
If this purchase has the potential to lead you into a deficit financially, you might want to reconsider the purchase until an opportune time. If it makes sense for you financially determine how much you are capable of spending on a down payment.
2. Down Payment.
Your down payment is a large amount paid once at the beginning of the purchase. Most lenders require a down payment on a mortgage loan. Down payments are usually 20% of the loan but this can be unrealistic for some buyers. FHA loans could require as little as 3% of the purchase amount. A VA loan could make a no money down deposit feasible. If you were to put at least 20% down, Private Mortgage insurance wouldn't be mandatory.
3. Closing Costs
There will be fees that you'll have to pay to get the loan. So calculating 3%-6% of the home value will be a necessity. That number could be anywhere between $6,000-$12,000 on a $200,000 home. The costs associated with closing will all depend on the type of loan that you use. Some costs pay for things lie title insurance and appraisal fees.
You're one step closer to becoming a homeowner.