We all need our own home at some point. We have already dreamed about our home thousands of times. The only thing that stops us from buying our own homes is inflation.
Yes, we know you want to buy a home but don’t have enough money for it. Some of you must have the money but you don’t know how much money, do you need to spend on buying a house.
Don’t worry in this article you will get to know how much money do you need to buy a house or how much money you need to save for it.
Read More: Plan to save money for a house.
Cost Of Buying A House
Everyone has different preferences about their dream home. The cost of a house varies according to your preference. Depends where you want to buy a home, (location, infrastructures). The type of mortgage you want to use to buy a new home.
If you are looking to buy a $350,000. Then you might need less than $15,000 upfront. If you are purchasing $800,000 then you may need to save over $200,000 for upfront.
Read More : You must read these ways to save money when you broke.
Down Payment Required For Buy A House
Yes, how much down payment do you need to buy a home is among the most asked questions. The answer is as much as you can. To avoid paying PMI (private mortgage insurance) you must save a minimum of 20% of the total house price.
Read More: Best ways to save down payment money for house in 6 months.
You must know that any down payment that is less than 10% or 20% is way too low. There are numerous government-insured programs like FHA, VA, and USDA that will make buying a new home easy for you.
If you are choosing government-insured programs, then you need to know one thing about them. Government-insured programs will make you pay more interest and fees. Yes, you need to pay some extra dollars if you choose this method.
Mortgage Payment Required To Buy A House
The Mortgage payment is one the most recommended method by the people you will get. When you will tell them about buying a new home. Yes, it is one of the best methods to pay for your new home.
It is the best way if you don’t want to pay for a home together. For example, if you borrow $240,000 and then you finance it with a 30-year. Fixed-rate of the mortgage at 3 percent, then you have to pay $1,011 in monthly principal and interest.
You should always calculate the mortgage rate before borrowing it. If you don’t pay your mortgage payments according to the given time then you need to pay the extra fine charges.
Read More: How to save money for car down payment?
Earnest Money
The amount of earnest money you need to pay or deposit as a token of faith to the seller. Sometimes there is a fixed amount decided by the seller or you can give it according to your preference.
The minimum earnest amount you need to pay to the seller is between 10%-20% of the total cost of the new home. For example, if the total cost of your new house is $400,000 then you can pay $40,000 as earnest money.
Closing Cost
Closing cost includes the lender and the third-party fees, which can include an appraisal fee, credit report fee, origination fee, application fee, title search fee, title insurance, and underwriting fee.
You must know that closing costs vary widely from state to state, it is not similar for everyone. You need to pay 2 to 5 percent of your mortgage loan.
Prepaid Expenses
We know that prepaid expenses are the most confusing charges for home buyers. Some people think that prepaid expenses aren’t an important thing to discuss. It is necessary to pay for prepaid expenses.
Yes, you need to pay in advance for the prepaid expenses. Prepaid expenses are the future expenses that your seller will ask you to pay in advance. The prepaid charges will be included in your monthly payment and will be paid by the lender when due.
The minimum prepaid expenses amount that you need to pay is as much as 2% of the loan amount.
Utility Adjustment
Utility adjustment can include a large number of charges. The utility cost is paid by the property seller in advance. For example, if the seller has prepaid for the house utilities, such as water, sewer, or trash removal.
In simple words you can say that the utility adjustment charges are paid by the seller, you don’t need to pay for it.
Why do we need home appraisal?
Home appraisal is among the important things you need to take while buying a new house. Lenders require to have home appraisal, to ensure the purchase price does not exceed the home’s market value.
The lenders will not let you more money than a home you are buying. If the LTV (loan-to-value) ratio exceeds the maximum percentage more than your home amount, then you need to re-negotiate the purchase price.
Look For A Best Real Estate Agent
Yes, it is very important to buy a house with a top real estate agent. There are numerous benefits you will get if you buy a house with a top real estate agent.
Some common benefits you will get if you have a real estate agent with you is ethical consideration, they are pricing expertise. They will always show you the great options according to your preference or requirements.
They will help you in tackling the paperwork. There are several other benefits of having a top real estate agent by your side. Therefore don’t forget to call out the real estate agent when you decide to buy a new home for yourself.
Check Your Home Loan Eligibility
Home loan eligibility is among the important thing you need to have. Apply according to the total cost of house. You need to have positive financial records. If you apply for loan in bank to buy a new house. They will check your past credit records.
You need to maintain good credit score, financial position, age, and other financial obligations if you want loan from bank. Always choose the bank who provide low interest rate on loans.
Frequently Asked Questions (FAQ’s)
How much to put down on a house?
You should at least put 20% down on a house, it will improve your chances of getting approved and locking in a lower rate. Some lenders will approve less than 20% down, but for the safe side, you should put a minimum of 20% down on a house.
I make $25,000 a year can I buy a house?
Yes, making $25,000 in a month or year can absolutely make qualify for mortgage payment. You just need to have good credit score, a low debt-to-income ratio anda large enough down payment saved up can ensure that you can get highest mortgage achievable for your income bracket.
How much money should I save to buy a house?
Saving before buying a new house for yourself is very important. You need to save money according to your requirements like if you want a big and lavish house for yourself then you need to save more money. The money or cost of the house depends on your requirements or needs. The minimum amount you should save is $300,000-$400,000.
How much money do you need to buy a $300,000 house?
You should have the minimum down payment of $60,000 if you are looking to buy a 300k ($300,000) house for yourself. You need to pay 20% of the total cost of the house. Sometimes the seller asks for less than 20% but the average amount of down payment is 20%.
How much money do you need to buy a house first time?
There is no such exact amount you need to buy a new house because the amount varies from different-different houses. If you want a small house you will pay less amount in comparison to the big lavish house. The minimum amount you need to buy a house is $150,000.
Can I buy a house with cash?
Yes, you can buy a house with cash. You can make full payment with cash for your new house. There are numerous people out there who make the full payment with cash. It is up to you how you want to make the payment.
Conclusion
Everyone has the dream to buy their own house. We hope you got all your doubts cleared about the mortgage payment, down payment, earnest money, closing costs, prepaid expenses, and many more.
We all know that you need to save a lot of money before buying a new house for yourself. You just need to follow few steps and you will get your dream house. Always find a house with a top real estate agent because they will help you in various ways in process of buying a house.
