Setting back enough money is a crucial part of buying a new home. Below is a summation of the costs associated with closing a deal.
Earnest Money Deposit
Earnest money deposits are used to ensure the seller that the prospective homebuyer is serious about their offer. The deposit amounts vary, but are usually around 1-3% of the home’s purchase price. If the sale goes through, the deposit is added toward your down payment. In the case that you back out unexpectedly, the money is lost to the seller.
Down payments are the most expensive upfront costs when buying a home. Some lenders will allow you to go as low as 5 or 3.5% on your down payment, but the ideal rate is around 10-20%. The higher your down payment, the lower your…