How Much Money do I need to Buy a Home?

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If you are looking to buy a home in today’s market, you need to be prepared to fork over a decent amount of money to make the move. It’s not simply saving for a down payment on a home or buying a moving truck to fully move from the old home to a new home. There are many different types of fees and costs that go into buying a home, and you will want to be well prepared, so you aren’t left broke when all is said and done. Let’s go over some costs to include into your budget before you make a move.

Down Payment

You may be thinking that this is a no-brainer cost to save up for, but a down payment alone can really add a lot to save up for when buying your own home. In today’s market, finding a home loan that removes the 10-20% down payment from the equation is indeed rare. If you intend to buy a home worth $150,000-200,000, prepare to save back at least $15,000-20,000 cash just to cover the down payment. The reason you want to prioritize paying in cash is to prevent yourself from getting into more debt along the way. Most lenders will not look kindly towards your using a credit card or some other form of debt to cover for a down payment.

Utility reimbursements

When the seller prepares to move from their current home to their new home, they still must pay utilities before they can finally move. That means any water, sewer, or garbage fees they take care of before moving will need reimbursed by you. If they heat their home with a propane tank, any unused oil will need to be reimbursed as well. Make sure you work with the seller beforehand to prepare yourself for any basic utility expenses that will need taken care of when you move into the home.

Home inspection

A critical aspect of buying a house with peace of mind is a home inspection. The last thing you want on your financial plate is a list of repairs that need done that cropped up out of nowhere due to your not getting a home inspection. Plan on home inspections costing anywhere from $200 to $500. As frustrating of an expense as that can be, it will be even more frustrating when unknown expenses appear that could have been prevented.

Related: Is a Pre-Offer Inspection a Good Idea?

Appraisal fee

One of the final steps in the home-buying process is conducting an appraisal of the home you are buying. This is typically done by the lender to ensure the home is being listed at the proper price – that way the money lent to you is money well spent. The appraisal fee can cost several hundred dollars depending upon what area you live.

These are just a small sample of fees and costs that go into buying a home. Again, do your research, seek guidance from a real estate agent, and plan to save up plenty of dollars before you find yourself ready to buy a house. This will save you years of financial heartache in the long run.

Getting back to the basics is what a lot of new buyers are doing right now. If you'd like to buy a home in Palm Desert or anywhere in our area, don't hesitate to contact us. We work with lenders in the area, inspectors and appraisers to make sure your real estate deal is done professionally and as stress-free as possible.