How much money saved do you need to buy a house?

Guest Post by Darby Reynaert

How much do you need to buy a house? What new homebuyers should know before they start looking for a home.

How much do you really need saved up to buy a house? This question is not easily answered as there are many intricacies in the home buying process. However, it is crucial to understand the basics of one of the largest financial purchases most couples will make in their lifetime. Partnering with a trusted realtor and lender will be key in guiding you through the process but being financially prepared will make sure you have a great leg forward.

The mortgage industry has a tremendous amount of different aspects when it comes to buying a home! A lending professional will take a look at your work history, life circumstances, and general financial standing to help determine what type of loan you qualify for and, therefore, what percentage down is required to finance the loan. The percentage required can be as low as 0-5% down. When considering not just the down payment but also all the other associated costs, the biggest issue is clarity.

Too many lenders are concerned about getting the loan that they leave certain items out of the conversation for the sake of making what they’re presenting look better. In all reality, the only thing that can change is the lender charges which is line-A of the loan estimate.

It’s important that home buyers are aware that they are going to have to pay back the seller for the taxes that were paid in advance, a difference of anywhere from $2,000 to $5,000 on average. Setting a realistic expectation is the most important thing any lender can do! Outside of the lender charges, regardless of who a home buyer goes with, all other costs will be the same; even if they decide to leave that information off the initial loan estimate, the underwriter will make the necessary and unexpected changes during the process.

Here at Power Mortgage, we have $0 lender costs and offer a price-beat guarantee to all of our clients! What that means is that you are not going to be charged an application fee, processing fee, origination fee, underwriting fee, or any doc fees.

Steps on the mortgage side for home buyers.

1. Fill out the application
2. Get the necessary documents to verify the information
3. Run everything through underwriting
4. Issue out the pre-approval letter
5. Start shopping for a home

Once you start shopping for a home, a decision will need to be made on getting a home inspection. Although it is not required to get a private home inspection, it is recommended that buyers hire an inspector to ensure the home they are purchasing doesn’t have any hidden issues that would be a deal-breaker.

A buyer can expect to pay on average from $300-$650 for a comprehensive report of their home. Common deal breakers that an inspector can help identify are foundation issues, plumbing issues, and large ticket items that are nearing the end of their life such as roofs and furnaces. The range in costs comes from what inspection company is used and what level of inspecting they are performing whether that is the basics or adding on additional items such as radon testing, lead based paint testing, sewer line inspection, etc.

How much will it cost to close out the transaction? Some additional fees to expect on closing day are your title fees and all the prepaids such as taxes and insurance. On average you can expect closing costs to range from 3%-6% of the purchase price of your new home. 

About the Author

Darby Reynaert is the realtor at Darby Dream House, an eXp Realty Company comprised of real estate and mortgage experts based in Troy, Michigan. Learn more about Darby Dream House at darbydreamhouse.com.