Saving to buy a home can be overwhelming. Here is a list of costs you will need to consider when saving:
1. Down Payments
Usually, the amount required to buy a home with a conventional loan is 5% of the purchase price. For example, a 5% down payment on a $200,000 mortgage would be $10,000.
The minimum down payment required on an FHA loan is 3.5% of the purchase price. FHA loans are insured by the Federal Housing Administration.
VA & USDA Loans
VA loans are backed by the U.S. Department of Veterans Affairs. They are available to most active-duty military personnel and veterans. USDA loans are backed by the U.S. Department of Agriculture. They are available when purchasing a property in a rural or outlying suburban area. Both VA and USDA loans don’t require a down payment.
2. Closing Costs
Closing costs are fees affiliated with your home purchase which are paid at closing. These fees usually include things like the application fee, appraisal, attorney fee, origination fee, survey fee, underwriting fee, among others. Commonly, you will pay between 2 and 5 percent of the purchase price in closing fees. The buyer can sometimes negotiate with the seller over who will pay these fees.
3. Moving Expenses
Another expense to consider when saving for a home is moving expenses. Will you take on the task of moving yourself or will you need to hire a moving company? Depending on the distance you are moving, hiring a moving company can get pricey. It is important to compare quotes from different companies and plan ahead for that expense.
4. Inspection Costs
A home inspection will point out current and potential problems in a home. This ensures buyers are aware of any issues and allows them to make an informed decision on the purchase of the home. In Texas, average home inspections cost between $200-$400.
5. Cost of Setting Up Utilities
Generally, you will need to set up water, electricity and gas before you move in. You may also need to set up cable and internet. When setting up utilities you can incur set up, new account or installation fees. These fees add up, making it something you will want to plan for ahead of time.
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