Saving for a Downpayment
January 2024
Here are some key things to consider when saving for a downpayment for a home:
Down Payment: As you embark on the journey of buying a home, saving for your down payment is a crucial consideration. While it's a common belief that a 20% down payment is mandatory, Mortgage Reports dispels this myth, stating that the appropriate amount depends on your current savings and home buying goals. Collaborate with trusted real estate professionals to explore various loan types, down payment assistance programs, and their respective requirements. The more information you have in advance, the smoother the entire process will be.
Closing Costs: In addition to the down payment, it's essential to budget for closing costs, encompassing fees paid to various parties involved in the transaction. According to Bankrate, these costs can range from 2% to 5% of the mortgage. To comprehend the specific requirements at the closing table, consult with a reputable lender who can address your queries and provide clarity on the financial aspects.
Earnest Money Deposit: For a comprehensive approach, consider saving for an earnest money deposit (EMD). This deposit, typically 1% to 2% of the total home price, signifies your commitment when making an offer on a house. Realtor.com explains that the EMD functions as a credit, utilizing a portion of your upfront savings to demonstrate seriousness to the seller. While not obligatory, it contributes toward the down payment and closing costs if your offer is accepted. Work closely with a real estate advisor to determine the best course of action for your specific situation, considering local requirements and recommendations.
Be clear, be confident and don’t overthink it. The beauty of your story is that it’s going to continue to evolve and your site can evolve with it. Your goal should be to make it feel right for right now. Later will take care of itself. It always does!