Following up from our last blog about getting pre-approved, you will want to start getting yourself mentally prepared for the budgeting items that come along with your home purchase … Let’s review those now!
1. The first time that money is going to come out of your account towards your new home will be your Escrow Deposit.
This is a portion of your overall down payment that gets paid at the time of signing the contract that will be held until closing day. These funds, often called, “skin in the game” is a sort of deposit on the house. Generally, you will put about 1-3% of the purchase price down as escrow. For example, if you are buying a $250,000 house, you can put down $2,500 in escrow. This is not extra money or fees. If your total down payment is going to be $10,000 on a house, and you have already put $2,500 down in escrow, you will simply bring the remaining $7,500 to closing. (Next blog, we will go over escrow in more detail).
2. The second time that money is going to come out of your account will be to pay for the Home Inspection.
The Home Inspection is a day that we will uncover everything that could potentially be considered a defect in the house. We will meet the home inspector at the property, and they will assess every inch of the house. Roof, foundation, windows/doors, electrical, plumbing, exterior, interior, and more. They will generate a full report with pictures and descriptions which we will use to negotiate repairs (more on this in a later blog as well).
3. The final payment you will make will be the Down Payment and Closing Costs when you go to settlement and take possession. In a later blog, we will go over these two payments in detail because it is the largest payment and often times the most confusing!
Upfront Costs
- Down payment
- Closing costs
- Reserves
Ongoing Costs
- Mortgage payments
- Property taxes
- HOA fees
- Homeowners and mortgage insurance
- Home maintenance, repairs and utilities
Get started today with The Essential Guide to Creating a Homebuying Budget
Be on the lookout for your next informative guide: What is Escrow?