The Costs of Buying a Home: Explained


There are a few costs associated with buying a home. I’ll go over the full breakdown for you today.

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Buying a home comes with a lot of different costs. One of the things I get asked most often by homebuyers is to clear up confusion between things like down payments, closing costs, and earnest money.

To start, the down payment is the deposit you put down on a property. If you buy a $200,000 home, for example, and you put 10% down that would total to a deposit of $20,000. Then, the remaining $180,000 would become the total of your mortgage.

Different loan programs do have different levels of down payments associated with them. A rural development loan or a VA loan will be 0% down.

You may have a more conventional loan, though, with a minimum of 5% down. In these scenarios, the payment could be as much as 20% down.

Next we should think about closing costs. Closing costs are the general costs of buying a home. With this, there are three types of cost: the lender cost, titling costs, and governmental costs like taxes.

For example, a mortgage registration tax is $3.30 for every $1,000 of the home you buy. Other closing costs include a lender’s origination fee, appraisal, and others.

These closing costs should really be thought of as an addition to the original price, but in some circumstances you can negotiate having the seller pay them for you.

In some circumstances, you can negotiate for the seller to pay the closing costs for you.

Finally, there is the cost of earnest money. Earnest money is essentially money put down in good faith to let the seller know you are serious. 

This money actually goes toward your down payment as opposed to being an additional cost once you proceed with closing.

If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.

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