Home Buyer's Guide to Buying Costs

If you are thinking about buying a new home, you’re probably also thinking about how much money you will need to make that happen. How much does it really cost to buy a house?

Homebuyers need to plan for the costs of buying a new home that is separate from their monthly mortgage payment. Ideal Homes & Neighborhoods will connect you with a preferred lender to help explain all of these items so that you’re well prepared.

Costs of buying a home #1: Earnest Money

The earnest money deposit is the deposit you pay when signing your contract to take the home off the market. At Ideal Homes & Neighborhoods this is 1% of the home’s purchase price. This money is applied to your down payment at closing.

Costs of buying a home #2: Down Payment

Simply put, a down payment is the money you’ll pay at closing toward the home’s total price. You might hear people talk about a “standard” 20% down payment, but we regularly see a 3-5% down payment for first-time homebuyers. Loan types often have different required down payment percentages.

The more you’re able to put down on your home, the more you’ll save in monthly payments. Additionally, private mortgage insurance (PMI) will be applied to your monthly mortgage payment for down payments of less than 20%.

Costs of buying a home #3: Closing Costs + Prepaids

Finally, closing costs are an item that often gets overlooked when deciding to buy a new home. Closing costs and prepaids can range from around 3% to 4% of the purchase price of the home. 

However, Ideal Homes & Neighborhoods will cover up to $4,000 towards your closing costs when using a preferred lender. Additionally, Citywide Mortgage, Ideal’s preferred lender, charges fewer fees than most other mortgage companies which save you money. 

Closing costs include home appraisal fees, title fees, a mortgage origination fee, and a mortgage application fee.

Prepaids are certain expenses such as property taxes, homeowners insurance, or mortgage interest. Your mortgage lender will have you make an initial escrow deposit that they will put into an account for you. Your lender will then use the escrow account to pay any property taxes, interest, or insurance premiums when they come due.

For more information about the home-buying process, visit IdealHomes.com or call Citywide Mortgage at 405-794-4412.