If you're thinking about buying a home, figuring out your budget and savings plan might seem overwhelming, but it doesn't have to be. One helpful way to reduce the stress is by making sure you're familiar with the upfront costs you might face. It's always a good idea to rely on dependable real estate experts for guidance. They can assist you in creating a solid plan and analyzing your budget and approach before you dive into the home-buying process.

There are a couple of things that experts suggest you should consider.

1. Down Payment

If you're considering buying a home, you're probably wondering how much you need to save for the down payment. Well, here's the thing: many people think you have to put down 20% of the purchase price, but that's not always true. An article from the Mortgage Reports explains why.

““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.””

— Mortgage Reports

When it comes to exploring your options for buying a home, it's important to team up with reliable real estate experts who can walk you through the different types of loans, available down payment assistance programs, and the specific requirements for each. The more information you have upfront, the smoother the whole process will be.

2. Closing Costs

Don't forget to factor in closing costs when you're planning your budget. These are the fees and payments that go to different people involved in your real estate deal.

““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.””

— Bankrate

Hey there! If you want to know what you'll need for the closing, your best bet is to team up with a reliable lender. They'll be able to give you all the info and answers you're looking for.

3. Earnest Money Deposit

To make sure you're fully prepared, you might want to think about setting aside some cash for an earnest money deposit (EMD). This is a sum of money you put down to demonstrate your sincerity when you submit an offer on a home. Typically, it amounts to about 1% to 2% of the overall price of the house, as stated by Realtor.com.

Hey there! putting some of your money down upfront to show the seller you're really dedicated to buying their house. This demonstrates your commitment and seriousness about the purchase. Realtor.com has a great breakdown of how this deposit plays a role in your home 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.””

— Realtor.com

Just a heads up - you don't necessarily need to provide an Earnest Money Deposit (EMD), and even if you do, it doesn't automatically mean your offer will get accepted. It's super crucial to team up with a real estate advisor who can guide you on what's ideal for your circumstances and any special rules in your area. They'll steer you in the right direction, so you can make well-informed choices as you navigate the home buying journey.

Bottom Line

When you're looking to buy a home, it's super important to know what you should be budgeting for. Let's chat so you can have a real estate expert by your side to help you out with any questions you might have during the process.