Typically there are 5 main pieces of buying a home when it comes to your up front cost:
- Your down payment: This vary depending on your eligible loan programs, but typically a minimum down payment is required of at least 3.5% of the sales price of your home.
- Closing costs: this will also vary depending on your loan program, but you can expect anywhere from approximately $3,000 to $5,000 depending on your loan amount and loan program.
- Escrow and prepaid items: Most people do not take into account this piece of the puzzle. At the time of settlement, you’ll be responsible for any taxes due on your property, any prepaid interest due, as well as setting up an escrow account for your real estate taxes and home owners insurance. Typical escrows will include 3-5 months of real estate taxes and 2-3 months of homeowners insurance.
- Homeowners insurance: your homeowners insurance is required to be paid in full prior to closing, ensuring that your home has full replacement coverage should disaster strike.
- Final adjustments: Your new home may have balances due for water, sewer, oil, gas, or propane. These can be surprise fees that many people do not anticipate, but are very common.
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