You find the perfect house, you make an offer and the buyer accepts! You both sign the contract! What next? Sometimes it feels like lots and lots of money!

If you aren’t prepared to close as fast as you do, you might find yourself in quite a predicament! This is why its best to put back at least 5% of the potential cost of your home before you start looking. Traditional downpayment vary but an FHA loan requires 3.5% down payment, and closing fees average around 2% of the purchase price—on a $200,000 home, that’s $4,000—but they can go as high as 5%.

The laundry list of costs is long. Before you even get to the closing table, you’ll pay the lender for a credit check and appraisal; you’ll also pay out of pocket for an inspection, property survey and any attorney’s fees. At the closing you may be hit with other lender fees, plus a title search and lender’s title insurance, charges to record your deed and property transfer taxes. In addition, the lender will collect roughly two months of advance payments on property taxes and insurance.

Sometimes a seller will agree to cover some or all of the closing costs—an offer that usually goes hand-in-hand with a higher purchase price. If they won’t cover all the closing cost, maybe your realtor can negotiate a split. This is common if your offer is solid.

Another option to help you with up front costs is to ask your broker about down payment assistance. Depending on the part of the country you live in and what the average income in your county is, you probably will qualify for a down payment assistance program so that the money you pay up front is just closing costs and not both a down payment and closing costs.

Most importantly, talk with your broker about what expenses you’ll face up front so you can be prepared to make the right purchasing decision.


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