The real cost of buying your first home home, first home, upfront, costs, expenses, buying, pre-approval, down payment, inspection, closing

INTRO

Let's break it down!

Once you find a home that checks all your boxes, you’ll be required to make a deposit to the seller as a show of good faith. In other words, you’ll write a check and give it to the seller as proof that you’re serious about buying their home.

EARNEST MONEY DEPOSIT

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The Real Cost of Buying your First Home

Don’t let upfront costs take you by surprise.

The upfront costs

When it comes to buying a home, some costs can sneak up on you (like that annual magazine renewal you forgot you subscribed to in 2016). So how much will you need when making that all-important purchase?

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Earnest money deposit

Once the seller accepts your offer to purchase the home, an earnest money deposit is applied toward your down payment. It’s kept in an escrow account set up by a third-party (real estate broker, attorney, title or escrow company), and can’t be withdrawn without written consent from you, as the buyer, and the seller.

Why get an inspection? Because the cost of an inspection is a fraction of what you could pay to replace flaws that might not be apparent when you’re touring the home. It’s best to identify defects before you buy the house so you can negotiate with the seller to pay for repairs or give you a credit towards repairing them yourself.

INSPECTIONS

While it’s true that the standard 20% down has its advantages – lower monthly mortgage payments, no private mortgage insurance – in today’s economy, many people just don’t have that kind of cash. You can still achieve the dream of homeownership with a much smaller down payment.

DOWN PAYMENT

Closing costs refer to all of the expenses that are due by the time you sign the final mortgage paperwork. These can include an appraisal, title services, credit report, attorney and underwriting fees.

CLOSING COSTS

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What can I expect to pay?

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Inspection

Once you sign the contract, you’ll typically have 10 days to get the property inspected. A typical inspection starts at the roof and ends at the foundation, with stops in between at every major house system. Most also include tests for radon gas and water safety.

Don’t skip inspections on new construction. Just because something’s new doesn’t mean it’s flawless.

Bonus Tip

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Down Payment

At Amerifirst, we offer several loan options that require 3-10% down, and you may even qualify for a home loan that finances 100 percent of the purchase price (yes, no down payment required). If you decide to take advantage of a low-down payment loan – and many first-time homebuyers do – you’ll need to carry mortgage insurance (MI).

How does Mortgage Insurance (MI) work?

If you decide to take advantage of a low-down payment loan – and many first-time homebuyers do – you’ll need to carry mortgage insurance (MI).

Mortgage insurance can either be included in your total monthly mortgage payment, as part of your costs at closing, or a combination of both.

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Closing Costs

Closing costs are usually between 2-5% of the purchase price. For example, closing costs on a $150,000 home could be anywhere from $3,000 to $7,500. Can I reduce my closing costs? At Amerifirst, we’ll help you look at ways to decrease your closing costs. You may be able to wrap your closing costs into the total cost of the mortgage, negotiate with the seller to pay a portion of your costs, or be eligible for a government payment assistance program that helps cover closing costs.

WHAT'S NEXT?

Let us make it easier

Buying a home can be daunting -- whether it’s your first, or fourth time. Let us help you make it easier with a complimentary pre-approval. Submit your financial documents, and we’ll tell you how much home you can afford. With pre-approval, you’ll be a more competitive buyer.

GET PRE-APPROVED

*Down payment and terms shown are for informational purposes only and are not intended as an advertisement or commitment to lend. Please contact us for an exact quote and for more information on fees and terms. Not all borrowers will qualify.

This will depend on the market. The cost could be as little as $500, or in higher-priced or competitive markets, can reach up to 10%. In most states, you can expect to pay between 1-3% of the total purchase price.

What can I expect to pay?

A good inspection, by a professional inspector to the standards set by the American Society of Home Inspectors, costs anywhere from $300- $500 and takes 2 to 3 hours, depending on the size and age of the house.

This type of insurance is backed by the federal government (which lowers the risk to your lender) so that you can qualify for a loan that you might not otherwise be able to get.

On certain loans, you can drop your MI once you have paid down your mortgage balance to 80% of the home’s original appraised value (when the balance drops to 78%, your mortgage servicer is required to eliminate MI).

Federally-backed

Flexible ways to pay

Eliminate over time

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EARNEST MONEY ESTIMATE

PRICE

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Pest inspection Make sure your inspector looks for evidence of current or past infestations -- particularly termites. The average cost of a pest inspection is $75 - $125.

Septic You’ll have to pay extra for this inspection (seller often pays), but make sure you get it. Buying a new septic system can be expensive!

Electrical You’ll sleep easier at night knowing if the property’s visible wiring and electrical panels are up to code, and that circuit breakers, outlets, light fixtures and fans are functioning properly.

Plumbing A sound plumbing system is a no-brainer. You’re learn if there are any damaged or leaking pipes, and if toilets, sinks, tubs, and showers are functioning properly.

Foundation A solid foundation will prevent your home from shifting or settling. Your inspector will look for structural damage, cracks, and separations that show foundation movement.

Roof To ensure the roof over your head is secure, the inspector will assess its structure, materials and workmanship. They will also check skylights, chimneys, vents, and gutters.

HVAC Your thermostat, furnace, air conditioner and heat pump and ducts will be checked to determine if they’re in good, functional condition.

Can I reduce my closing costs? At Amerifirst, we’ll help you look at ways to decrease your closing costs. You may be able to wrap your closing costs into the total cost of the mortgage, negotiate with the seller to pay a portion of your costs, or be eligible for a government payment assistance program that helps cover closing costs.