Tax Refunds and Home Down Payments…but wait, there’s more.

Hi everyone.  Hope all is well.

With last week’s warm up and tax refunds coming in, the home search has begun for many people.   In fact, I was recently a speaker at a home buyer workshop and was encouraged by both the turnout as well as the research already underway by so many of the prospective buyers.

What I also noticed, however, was the misconception by some that the down payment would be their only out of pocket cost to purchasing the home.  Without a doubt, that is part of it.  With a conventional loan, the buyer will be expected to have at least 5% down…3.5% for FHA.

In addition, there will be a lender origination fee, credit report, appraisal, title insurance and inspections just to name some.

The intent of this blog post is buyer awareness. When you sit down with your buyer’s agent, he or she will go over the estimate of the costs to purchase a home in the price range you desire.  The buyer should leave that consultation with a good idea of what all the upfront costs will be.  I like to also include which items will be out of pocket prior to your closing.  For example:  It is customary to provide earnest money that will be deposited in an escrow account upon acceptance of your offer. This money will be credited back to you at the closing, but for now, it has departed your checking account!

Remember that this is just an estimate that the buyer’s agent is initially providing. Still it is a good indicator of what funds will be needed. But what if I want the seller to pay for all or half of the closing costs you might ask?  That is certainly a consideration, but you need to know what you’re asking for.  Once you’ve found THE ONE, your agent will prepare another estimate of costs based on that specific home so that you can clearly see all costs and then know what to negotiate.

I hope this has been helpful.  Feel free to contact me with any questions and have a great day,

Terry

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