What You Need To Budget For
When it comes to buying a home, it can feel a bit intimidating to know how much you need to save and where to find that information. To get you started, here are a few things experts say you should plan for along the way. Your Down Payment As you set your savings goal for your purchase, your down payment is likely already top of mind. And like many other people, you may believe you need to set aside 20% of the home’s purchase price for that down payment – but that’s not always the case. The National Association of Realtors (NAR) says: “One of the biggest misconceptions among housing consumers is what the typical down payment is and what amount is needed to enter homeownership. Having this knowledge is critical to know what to save . . .” The good news is, you may be able to put as little as 3.5% (or even 0%) down in some situations. To understand your options in today’s market, lean on a professional to go over the various loan types, down payment assistance programs, and what each one requires. An Earnest Money Deposit (EMD) While it isn’t required, an earnest money deposit is common in today’s highly competitive market. It’s money you pay as a show of good faith when you make an offer on a house. First American explains how it works: “This deposit is typically held in trust by a third party and is intended to show the seller you are serious about purchasing their home. Upon closing the money will generally be applied to your down payment or closing costs.”
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