Embarking on the journey to buy a home might seem like a daunting task, especially when it comes to budgeting and saving. However, with the right guidance, it doesn't have to be intimidating. One crucial step is understanding the upfront costs involved, and this is where trusted real estate professionals can be invaluable. They can help you formulate a plan and assess your budget strategically before you even start the home-buying process.
Here are some key considerations that experts recommend:
Down Payment
The thought of saving for a down payment is likely on your mind as you plan to buy a home. Contrary to a common misconception, there's no strict rule that you must put down 20% of the purchase price. Your specific situation and home-buying goals determine the right amount. Collaborate with real estate professionals to explore various loan types and down payment assistance programs, tailoring the approach to your needs.
Closing Costs
Don't overlook budgeting for closing costs, a compilation of fees paid to various parties involved in the transaction. Closing costs typically range from 2 to 5 percent of the mortgage. Seeking guidance from a trusted lender will help you prepare for this expense and provide clarity on what to expect at the closing table.
Earnest Money Deposit (EMD)
Consider saving for an earnest money deposit (EMD) as an additional measure. This deposit, usually between 1% and 2% of the total home price, demonstrates your commitment when making an offer on a house. It serves as a credit, contributing to your upfront costs. While not mandatory, an EMD showcases your seriousness as a buyer. Work closely with a real estate advisor to determine if an EMD aligns with your needs and local requirements.
Remember, being well-informed about what to save for is crucial when buying a home. Partnering with a local real estate advisor ensures you have an expert by your side to address any questions throughout the entire buying process. With their guidance, you can make informed decisions and navigate the complexities of home purchase finances in 2024.
Source: https://www.keepingcurrentmatters.com/2023/12/28/what-you-need-to-know-about-saving-for-a-home-in-2024/