If you're thinking about
buying a home and you'd like to start
saving for your home buying expenses early I'm going to give you a general rule of thumb. This
will not apply to everyone because there are
several significant factors that will come into play when purchasing a home that can change these figures.
Example: Your household's
gross monthly income is $3,000, your
credit score is 640 and you have
little to no other debt.
Let's say
your purchase price is $100,000 and you're using an
FHA 3.5% down loan with
no repair escrows (203b) (203k) and
no down payment assistance (Georgia Dream, Neighborhood Lift, NSP, etc) or other grant programs.
With $100,000 for your purchase price you'd pay $3,500 for a down payment (
NOT the same as earnest money deposit) making your loan amount $96,500 for 30 years at 4.5% interest; $1,500 a year for property taxes $500 a year for HOA fees & $1,000 a year for homeowner's insurance. Your PMI (
NOT the same as homeowner's insurance) is 1.25% giving you a monthly mortgage payment of $839.47 until your PMI drops off (in 2021) then your payment will go down to $738.95.
The first item you'll pay for is the lender's credit report about
$75 for a married couple.
The next thing you'll pay is the earnest money deposit which is typically 1% of your purchase price if it's a regular seller and $500-$2,000 if it's a foreclosure seller dependent upon the purchase price and their individual requirements. So we'll say
$1,000 for this example.
It's deducted from the closing costs at closing.
Then you have your home inspection
$350 (estimate) termite inspection
$45 (estimate if the seller doesn't provide it) appraisal
$600 (estimate)-if you'll want any other tests/inspections (lead, soil, survey, etc.) you'll have to add those on too.
The house checked out wonderfully and about
1-2 months later you're ready to close, your total closing costs including the lender's fees, hoa fees, property taxes, title insurance, recording fees, $3,500 down payment, title check & closing attorney fees came to a total of
$6,000 (
6% of your purchase price) from that we'll subtract the -$1,000 earnest money deposit that you've already paid & 2% that the seller is paying towards your closing costs -$2,000=
$3,000 that you'd need to bring on closing day.
We don't want you to go broke at closing so the lender may require you to have 3-6 months of your mortgage payment in an account(s) (reserves) on the day of closing, so for this example we'll say 3 months of mortgage payments=$2,518.41
Your total savings to purchase this $100,000 home should be about
$7,588.41 which is a little on the high side but
it will keep you from being surprised and caught off guard, the sample is a different amount but you should get the general idea.
Let's say you
need to work on raising your credit score (click here for help with that) and want to move in the next 6 months, so if you have no money already saved up you would need to save
$1,264.74 monthly for the next 6 months. If your move is in a year you need to save $632.37 monthly.
If you like to be prepared in advance and want to pre-plan your move or you're a big spender and need a little prodding to save for your
home purchase, call me and I'll remind you every payday how much you need to put in your savings account before you go shopping!
Priscilla Hammond
Licensed Real Estate Agent
1st Choice Premier Realty Group "If we're not your 1st choice, we should be!"
Maximum One Realty Greater Atlanta
Independent Credit Consultant
FES
404.503.6562
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