Taking the Fear out of Saving for a Home
Laurie-Ann Webster October 31, 2022
Laurie-Ann Webster October 31, 2022
If you’re planning to buy a home, knowing what to budget for and how to save may sound scary at first. But it doesn’t have to be. One way to take the fear out of budgeting is understanding some of the costs you might encounter. And to do that, turn to trusted real estate professionals. They can help you plan your finances and prepare your budget.
Saving for your down payment is likely top of mind as you set out to buy a home. But do you know how much you’ll need to save? While each situation is different, there’s a common misconception that putting 20% down toward your purchase is required. An article from the Mortgage Reports explains why that’s not always the case:
The idea that you have to put 20% down on a house is a myth. . . . The right amount depends on your current savings and your home buying goals.”
Make sure you also budget for closing costs, which are a collection of fees and payments made to the various people involved in your transaction. Bankrate explains:
“Closing costs are the fees you pay when finalizing a real estate transaction, whether you’re refinancing a mortgage or buying a new home. These costs can amount to 2 to 5 percent of the mortgage so it’s important to be financially prepared for this expense.”
If you want to cover all your bases, you can also consider saving for an earnest money deposit (EMD). An EMD is money you pay as a show of good faith when you make an offer on a house. According to realtor.com, it’s usually between 1% and 2% of the total home price.
This deposit works like a credit. It’s not an added expense – it’s paying a portion of your costs upfront. You’re using some of the money you already saved for your purchase to show the seller you’re committed and serious about their house. Realtor.com describes how it works as part of your sale:
“It tells the real estate seller you’re in earnest as a buyer, . . . . Assuming that all goes well and the buyer’s good-faith offer is accepted by the seller, the earnest money funds go toward the down payment and closing costs. In effect, earnest money is just paying more of the down payment and closing costs upfront.”
Keep in mind, an EMD isn’t required, and it doesn’t guarantee your offer will be accepted. It’s important to work with a real estate advisor to understand what’s best for your situation and any specific requirements in your area. They’ll help you determine what moves you should make in the homebuying process to have the greatest success.
Budgeting for your home purchase doesn’t have to be scary. Let’s connect so you’ll have an expert on your side to answer any questions you have along the way.
Experts are optimistic about what 2024 holds for the housing market.
You haven’t missed your chance to sell at a time when sellers are receiving multiple offers.
If you want to buy a home, you may not need as much for your down payment as you think.
There aren’t that many homes available for sale right now, your home’s asking price still matters.
Whether you're on the hunt for your next home or thinking of selling, now might be the perfect time.
Achieving the dream of having a home may be more within reach than you think.
Here’s one key data point that could help you feel more confident in making your decision.
Home prices are still rising, just at a slower pace – and that’s perfectly normal for this time of year.Â
It can be helpful to know what led other people to buy their first home to make that decision.
You will find Laurie Ann energetic, integrity driven, family oriented, and professional to work with. Laurie grew up on Cape Cod in Falmouth, MA and agrees that there is no place like Cape Cod!
