Understanding the Full Cost of a Home Purchase

Your home will likely be the largest purchase you ever make - and understanding the costs with buying a house will make you feel more in control. 

Below are some calculations to consider.  

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Closing Costs

Closing costs may include some or all of the following: title exam, title insurance, recording costs, appraisals, transfer tax, credit reports, tax escrow, homeowners insurance, underwriting fee, and more.  A rough estimate of your closing costs would be about 5% of the loan amount (sale price minus down payment), however it may be more.  Your lender could give a more accurate estimate based on your specific loan type.  

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Down Payment

Depending on your loan type, you will have to submit a percentage of the sale price as a down payment to the lender (not the same as an earnest money deposit).  Conventional loans usually require at least 5% down, FHA loans normally require a minimum of 3.5% down, and USDA and VA loans may require even less.  A reputable lender could help figure out for which type of loan you may qualify.

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Seller Assist

If agreed upon, the seller may be willing to take a portion of the proceeds from the sale to help pay a portion of your closing costs.  The amount of seller assist will be determined with your initial offer.  

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So how much money do you NEED to purchase a home?

The Cash to Close is the cost needed to purchase your home and is paid at the closing of a real estate transaction. Closing is the point in time when the title of the property is transferred from the seller to the buyer.  Here is a simple calculation to determine your cash to close amount: 

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Monthly Payments

If you are using a mortgage loan to pay for a property, the lender will likely include taxes, insurance, and mortgage insurance (fee required if putting down less than 20% as a down payment).  Your monthly payment would be as follows: 

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Principal and Interest

+Tax Escrow (1/12 annual taxes)

+Mortgage Insurance (if applicable)

+Home Owner's Insurance (1/12 annual quote)

= Estimated Monthly Payment