top of page

Blog

Key Items to Save for When Buying a Home

grace264



Planning the budget for purchasing a home might seem complicated, but it’s not as difficult as it appears. By being aware of the various costs you’ll encounter during the buying process and preparing ahead, you can more effectively manage the entire process.


Let’s look at a few important factors to consider as you prepare for your home purchase:


1. Down Payment 

   Saving for the down payment is a crucial task. So, how much do you actually need? Many people assume they need to pay 20% of the purchase price, but that’s not always the case. Depending on the loan type and lender requirements, the required down payment could be as low as 3.5%, or even 0%. There are multiple loan options available, so if you haven’t saved up a large sum, don’t worry. 

   It’s important to consult with a trusted lender to understand the different loan types, down payment requirements, and any available down payment assistance programs. Gathering information ahead of time will make the process much easier. Working with an expert to find the best option for your situation is essential.


2. Closing Costs 

   Don’t forget to include closing costs in your budget. These are fees paid to various parties involved in the transaction. Closing costs typically range from 2% to 5% of the loan amount and must be paid on the day of closing. These costs include appraisal fees, title insurance, and fees related to loan processing and underwriting. 

   If you have questions about closing costs, reach out to a reliable lender who can provide guidance and give you a clearer idea of how much you need to save for a smooth closing.


3. Earnest Money (EDM) 

   It’s also worth considering saving for Earnest Money (EDM) to cover any contingencies. According to Realtor.com, EDM is typically 1% to 2% of the total home price and is paid to show good faith when making an offer on a property. However, this is not an additional cost. EDM is a part of your upfront costs and shows the seller that you're serious about buying the home. 

   While EDM isn’t mandatory, and it doesn’t guarantee that your offer will be accepted, it can help strengthen your position. It’s important to understand local requirements and work with a real estate consultant to make the best decision.


The key to a successful home-buying savings strategy is knowing exactly what you need to save for. Understanding the expected costs allows you to plan ahead. I recommend consulting with a local agent and a trusted lender to gather the necessary information and confidently move forward with your purchase.



 

 

2 views0 comments

Comments


bottom of page