Buying a home is a significant milestone in life, but it often comes with a substantial financial commitment. One of the key financial aspects you'll need to consider when purchasing a home is the down payment. Additionally, you'll also need to factor in closing costs. In this guide, we'll break down what these terms mean and how much you can expect to pay as a home buyer.
Understanding Down Payments
A down payment is a lump sum of money that you pay upfront when buying a home. It's a percentage of the total purchase price, and it's a crucial component of the home-buying process. The down payment serves several purposes:
1. Demonstrating your commitment: Putting down a significant amount of money upfront shows the seller that you are a serious buyer.
2. Reducing the loan amount: A larger down payment means you'll need to borrow less money, which can lead to lower monthly mortgage payments.
3. Mortgage approval: Lenders often require a minimum down payment to qualify for a mortgage loan.
The down payment percentage typically ranges from 3% to 20% of the home's purchase price, depending on various factors, including the type of mortgage loan and your creditworthiness. Here's a breakdown of some common down payment options:
1. 3% - 5% Down Payment: Some government-backed loans, such as FHA loans and certain conventional loans, allow you to make a down payment as low as 3% to 5% of the purchase price. This is a good option for first-time homebuyers with limited savings.
2. 10% - 20% Down Payment: Many conventional loans require a down payment of at least 10%, and a 20% down payment is often considered the gold standard. A larger down payment may lead to better loan terms and lower interest rates.
3. 20% or More Down Payment: If you can afford it, putting down 20% or more has several advantages, including avoiding private mortgage insurance (PMI) and reducing your overall interest costs.
Understanding Closing Costs
Closing costs are the fees and expenses associated with finalizing a real estate transaction. These costs are paid at the closing of the sale and cover various services and administrative tasks required to complete the home purchase. Closing costs typically range from 2% to 5% of the purchase price and can include the following:
1. Loan Origination Fees: Charges from the lender for processing your mortgage application.
2. Appraisal Fees: The cost of having a professional appraiser assess the property's value.
3. Title Insurance: Protects you and the lender from any issues with the property's title.
4. Attorney Fees: If an attorney is involved in the closing process.
5. Inspection Fees: Costs associated with home inspections.
6. Property Taxes: Pro-rated property taxes for the time you'll own the home.
7. Homeowners Insurance: Prepaid premiums for homeowners' insurance.
8. Escrow Fees: Money held in escrow for property taxes and insurance.
9. Recording Fees: Costs for recording the deed and other documents.
10. Transfer Taxes: State and local taxes associated with transferring ownership.
Options that can help make it a bit less financially difficult.
In some cases, a home seller may agree to cover some or all of the buyer's closing costs. This can be a significant benefit, as it reduces the upfront cash required from the buyer. This option will need to be negotiated with the seller with any agreed upon seller assistance reference in the purchase agreement.
Gift of Equity
And there's one more option worth considering: The Gift of Equity from a family member.
A Gift of Equity is when a family member, typically a parent or grandparent, gifts you a portion of the home's value to be used as your down payment. This generous gift can help you enter the real estate market with less money upfront.
When budgeting for a home purchase, it's essential to consider both the down payment and closing costs. Your specific financial situation and the type of loan you qualify for will determine the exact amounts you need to pay. To avoid surprises, work closely with your lender and real estate agent to estimate these costs accurately.
At E Z Home Search Real Estate, we understand the importance of transparency in the home-buying process. Our team is here to guide you through every step, helping you understand your financial obligations and find the perfect home within your budget. Contact us today to start your journey towards homeownership!
Thinking of buying, but not sure where to start? Why not start by getting a copy of our Home Buyer's Guide to Real Estate? It's packed full of valuable information to help take the stress out of your big move! Plus, it's FREE with no obligation! Simply complete the form below to get instant access.
Are you on the hunt for your dream home? The process of finding the perfect property can often feel like searching for a needle in a haystack. Fortunately, with E Z Home Search Real Estate, your quest for the ideal home is about to get a whole lot easier. In this blog post, we'll introduce you to the innovative tools and features offered by E Z Home Search Real Estate, designed to simplify your home buying journey.
1. Property Search Made Effortless
E Z Home Search Real Estate understands that your time is valuable. That's why they offer an intuitive property search platform that allows you to filter and refine your search with ease. Whether you're looking for a cozy suburban bungalow or a trendy downtown loft, the user-friendly interface helps you narrow down your options quickly. Specify your criteria, such as location, price range, number of bedrooms, and more, to uncover listings that match your preferences.
2. Stay Informed with Real-Time Updates
The real estate market is dynamic, and opportunities can come and go in the blink of an eye. E Z Home Search Real Estate keeps you in the loop with real-time property updates. Once you set up your personalized search alerts, you'll receive notifications the moment new listings that meet your criteria hit the market. This gives you the edge in a competitive market, ensuring you don't miss out on your dream home.
3. Explore In-Depth Property Details
When you find a property that piques your interest, E Z Home Search Real Estate provides comprehensive information at your fingertips. Detailed property listings include high-quality images, property features, neighborhood insights, and more. You'll have all the information you need to make an informed decision without the need for endless phone calls and site visits.
4. Connect with Local Experts
Sometimes, you need a helping hand from a local expert who understands the ins and outs of your desired neighborhood. E Z Home Search Real Estate connects you with experienced real estate professionals who can provide valuable guidance throughout your home buying journey. From negotiating offers to navigating the closing process, their expertise is your secret weapon.
5. Mortgage Calculators and Financial Tools
Understanding your budget is crucial when embarking on a real estate journey. E Z Home Search Real Estate offers handy mortgage calculators and financial tools to help you estimate monthly payments, assess affordability, and plan your budget accordingly. This ensures you're financially prepared when you find your dream home.
Searching for the perfect home has never been this convenient and stress-free. E Z Home Search Real Estate is your trusted partner in finding the property that matches your vision and budget. With user-friendly search features, real-time updates, expert guidance, and financial tools, they empower you to make informed decisions every step of the way.
Say goodbye to the hassle of sifting through endless listings and hello to your dream home. Start your journey with E Z Home Search Real Estate today and unlock a world of possibilities in the real estate market. Your dream home awaits—let E Z Home Search Real Estate help you find it.
Get a scary good deal on a new house!
Have a friend or family member thinking about buying a new home? Lots of people think that now might not be a good time because it's not necessarily the "busy" real estate season. But as a buyer, that's not such a bad thing! October is a great month to be in the market to become a homeowner.
Many buyer's (and some sellers too) start there search by touring local open houses. Do you know someone that has thought about making a move? Here's two opportunities for this weekend! Consider sharing this newsletter with them. Who knows, one of these homes maybe just when they are looking for!
Swansea - Off Gardners Neck Rd
Great example of a Mid-Century Modern Contemporary Style Home!One block from the water off Gardners Neck Rd!Over 1700 s.f. on One Level3 Bedrooms, 2 Baths$379,900CLICK HERE to TOUR!
Somerset - Corner Lot on Lafayette St
Well Maintained Ranch Home Located on a Corner LotCentral AC Beautiful Hardwood Floors Partially Finished Basement3 Bedrooms, 1 Bath, Large Garage $340,000CLICK HERE to TOUR
Taunton - No Open House This Weekend But Easy to Show!
Tucked away in a very private setting, this immaculate raised ranch has allthe amenities your are looking for!3 Bedrooms, 2 Baths, Central Air, Hardwood Floors, Granite Tops$479,999CLICK HERE to TOUR
Thinking of Selling?
We analyze home values and determine market prices everyday. Many online sites off an automated valuation model, while our Realtor Valuation Model is much more detailed. CLICK HERE for DETAILS
9 Steps to Buying a New Home?
Think you are ready to buy a house? Make sure you know what the process entails! Check out our list of 9 steps you need to know to be ready!CLICK HERE to LEARN MORE
Growing up, most of us imagined living in a home that we owned. A home that we could decorate to our perfection, and a place with a big enough backyard for the kids and dogs to run free in.
For many though, it is hard to take the leap and buy a home. That is why here at E Z Home Search Real Estate we want to give you a comprehensive buying guide so that you don’t feel alone when you start the search for your perfect home.
In the last 3 parts (click here for part 1, part 2, part 3) of this guide we discussed the top reasons to buy a home, five tips that you should know before you make the purchase, and the process of picking a qualified agent. In today’s blog, we want to give you the 10 steps to buying a home so that you will feel well prepared when it comes time to purchase your dream home.
1. Get pre-qualified with a lending specialist
2. Shop for your dream home with a real estate professional
3. Choose a top 2 list-- this is a list of the top two homes that you saw during your house hunt. It is good to have two homes in mind just in case the sellers of your first pick accept someone else’s offer.
4. Place an offer on your first pick home
5. Be prepared for a counter offer
6. Sign and date the effective contract
7. Take note of the option period
8. Order inspections and negotiate repairs
9. Terminate or proceed with the contract
10. After final approval, go to closing to sign and own your new home
On top of the 10 steps listed above, you will need to consider the following costs. These are fees that you can expect to have to pay throughout the homebuyers process, so please plan accordingly.
• Earnest money – typically 1-5% of sales price - the amount of earnest money is negotiable and varies with the value of the property
• Inspection fee - $450 - $550
• Appraisal - $425-$525
• Credit report - $125
• Buffer money - $100 - $350
The thought of becoming a homeowner can be overwhelming. Our goal is to take the stress out of the unknown. We have additional FREE resources for you available in the buyer area of our website. Plus you can get a FREE copy of our insiders home buyers guide simply by visiting http://www.ezhomesearch.net/buyersecrets.
Do you have any advice from your own experience that you would like to add for future buyers? If so, comment below!
One of our home buyer clients recently stopped by our office to thank us for helping them accomplish what they thought was the impossible, becoming homeowners. They had just gotten of the wild roller coaster of the mortgage and home buying process. As we spoke smiles came across their faces as they talked about having their first cup of morning coffee in a home of their own.
They talked about decorating and painting and how much they are going to enjoy having a yard. They talked about having friends over for dinner and family over for the holidays. The more they talked, the more excited they became.
I asked them if many of their friends were also buying. They said they had talked to their friends about buying but that they weren’t. Why not? Their friends believed that home ownership was financially unobtainable right now. Many wanted to own but didn’t think they could afford the monthly mortgage payment. They decided to rent instead.
I said that with interest rates and prices where they are today, owning a home might not be any more expensive than renting one. The couple agreed but said their friends were afraid; afraid they might not qualify for a loan, afraid to handle negotiations with a seller, afraid of the home buying process itself.
People should not make decisions out of fear! I’m not saying that every young person should own a home. I am saying that anyone that is qualified and wants to buy should not be afraid of the process. I realize the process may seem daunting but realize over 14,000 homes sell every day in this country. Sit down and discuss your goals with professionals from both the real estate and mortgage industries. Get the facts. Make an informed decision. Don’t let the fear of the unknown prevent you from owning a home of your own, building equity for you and your family and living the life of your dreams.We are here to help you navigate the real estate transaction!Christopher Terry is a licensed real estate broker in Ma and RI, has completed the Accredited Buyer Representative Certification, is a graduate of the Certified Distressed Property Institute, holds the prestigious CDPE designation, is a 4-Time winner of the Master Sales Society's 5/50 Award and is the founder of EZ Home Search Real Estate Inc.
In Part 1 and Part 2 of this guide we talked about the top reasons to buy a home as well as five tips that you should know before you make the purchase. In Part 3 we will discuss the process of picking a qualified agent, and the questions that you should ask your agent before you buy.
First of all, let us inform you that not all agents are the same. All too often people pick the first agent they stumble upon only to realize too far into the process that they should have shopped around a bit first. Buying a home is one of the biggest purchase decisions you will ever make, so why not get the best of the best to help you through the process?
When you are ready to buy a home the first thing you should do is ask the people around you who they trusted to get them their dream home. Use their suggestions as a starting point in your search for the agent who will work best for you.
Once you have found an appealing agent you should consider asking them the following questions.
Can you send me some information about yourself?
Look for professionalism and consistency. What are their professional accomplishments?.
How many homes have you closed in the past year?
Look for an agent who is active in your area and at the top of their industry. Part-time agents are not able to keep up with the constantly changing demands of the market. A good rule of thumb is a minimum of 10-15 transactions.
How long have you been in business?
Look for an agent that has been in the business for a minimum of three years. The fall-out ratio for agents in the business less than 3 years is over 80%. While experience is important, accomplishments are more important. You should also consider how long they have worked in the area you want to buy a home specifically. The longer they have worked in the area, the more they know about that specific market and what is considered a “good deal” in that neighborhood.
What will you do keep me informed?
Determine how much communication you want, and then find an agent who will give you the attention and time you want and deserve.
What is the best way for me to get in touch with you?
You should know exactly how to get through to your agent or assistant.
What awards or accolades have you received in the past couple of years?
Make sure that your agent is a professional, well regarded and at the top of the industry. They will be more knowledgeable and will be able to best represent your interests based on experience and reputation.
If you follow this guideline, there is a better chance of having a great experience while purchasing your home. The process itself is stressful enough, do not let an under qualified agent add to that.
Don't miss Part 4 where we give you 10 must do steps to becoming a homeowner.
Don't want to wait for Part 4? Click Here for instant access to our Special Home Buyer Guide packed full of insider tips to help you save thousands when finding, buying and financing your next home.
Do you have any more pointers for new buyers? Leave them know by posting a comment below!
Mariah Terry is passionate writer and blogger studying Journalism at Emerson College with a minor in Marketing. See her work at mariahjterry.wix.com/reblogs.
This is Part 2 in our guide to help you through the process. Below is a list of buying tips for when you purchase that dream home of yours!
Get Pre-Qualified-- Knowing what exactly you can afford is the first step to seriously considering buying a home. Sometimes though, it is nerve-wracking and overwhelming to think about how you should go about getting pre-qualified. That’s when we come in. Here at E Z Home Search we can get you in touch with professionals who will work with you to get pre-qualified!
Always Think Resale-- The average time spent in a home is 5 to 7 years, so you should consider what future buyer might be looking for if you do ever decide to sell your home. Even though you might not mind having a backyard against a busy street, future buyers may. Studies show that homes near busy streets and railroad tracks take longer to sell, so it is something to consider when purchasing your home.
The Little Things Can Be Changed-- Location, location, location. The home is in the perfect neighborhood but all of the lighting fixtures are from the 1980’s and there is still wallpaper on the walls. Guess what, though? Wallpaper can be changed, the neighborhood can not. So pick a home with good bones in a great location and deal with the little cosmetic things later!
Don’t Wait-- Yes, buying a home is a huge decision. But, all too often we see people lose their dream home because they wanted to sleep on it and they waited too long to put an offer in. Homes sell fast. Especially the homes that are in a good location with a great price. Chances are, if it is your dream home then it’s someone else’s dream home as well. So if you find that perfect place, don’t wait and let it slip away!
Compare Sales-- To see if the home you want to buy is a steal or a rip off you can look at the recent sales of similar homes, called “comparable sales. Comparable sales are recent sales of homes that compare closely to the one you are looking to purchase, usually sold in the past few months. Specifically, you want to compare prices of homes that are similar in square footage, garage spaces, number of bedrooms and baths, lot size, etc. Of course, if you need help with this, that is what we at E Z Home Search Real Estate are for!
Don't miss Part 3 of our Home Buyers Guide where we review questions you must ask your agent before you buy!
Do you have more tips from your home buying experience? Comment below and let us know!