So, you want to buy a home? Below is an outline of the money needed from a buyer to proceed in the home buying process on a pre-existing home. If purchasing a new construction home, the option fee goes away and the earnest money amount can be lower.
#1 - Down Payment - depends on the loan type, can be anything from $0 (VA loan, USDA, Down Payment Assistance) to 3.5% (FHA) to 3-5% (Conventional)
#2 - Earnest Money - typically 1% of the sales price, this goes towards the down payment (this is good faith money to show that you are serious about purchasing the home)
#3 - Option Fee - $70- 100 due when the offer is agreed to, this gives you 7- 10 days to have a home inspection and negotiate repairs, if you change your mind for ANY reason during the 10 days, you can get your earnest money back, but if you proceed the option fee goes towards the purchase of the home
#4 - Home Inspection - approx. $400 to determine if there are any major repairs needed that the buyer wants the seller to address, this is an out of pocket expense
Lastly, you may have to pay for the property appraisal required by your lender approx. $400-$450 out of pocket and get reimbursed at closing.
So, even when utilizing zero down payment loans, the buyer still has to have some money available for the home buying process.
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"âWhen Michael Brown called about our house, weâd already made a list of agents to interview but decided to add him as well - but for the next day. After the first day of interviews, we had a couple of agents in mind and hadnât interviewed Mike yet. Since we had added him last, it would only be fair to hear what he could offer. Weâre glad we did. Of all the agents we interviewed, we felt he understood us and our home. Michael made the process a good experience for us.â "