In other words, an earnest money deposit could be the very first check you’ll write toward your purchase. The amount varies by state and situation, but realtor.com says you can typically plan for 1-2% of the home’s purchase price. Work with a real estate advisor to understand any requirements in your local area and determine if it’s something that could be an option for you. Your Closing Costs The next thing to plan for is your closing costs. The Federal Trade Commission (FTC) defines closing costs as: “The upfront fees charged in connection with a mortgage loan transaction. . . . generally including, but not limited to a loan origination fee, title examination and insurance, survey, attorney’s fee, and prepaid items, such as escrow deposits for taxes and insurance.” Basically, your closing costs cover the fees for various people and services involved in your transaction. NAR says to budget for roughly 2-5% of the home’s purchase price. Freddie Mac sums up why this matters to you and your homebuying journey like this: “If you’re in the market to buy a home, your down payment is probably top of mind.And rightly so – it’s likely the biggest cost of homebuying. However, it is not the only cost and it’s critical you understand all your expenses before diving in. The more prepared you are for your down payment, closing and other costs, the smoother your homebuying journey will be.” Bottom Line Knowing what to budget for in the homebuying process is essential. To make sure you understand these and any other expenses that may come up, let’s review your options together.
19
Made with FlippingBook. PDF to flipbook with ease