How much cash do you actually need to buy your first home?

How much cash do you actually need to buy your first home?
November 5, 2020 SophiaP
A couple, not sure how much cash you need to buy your first home.

Being a first-time homebuyer, you want to know as much as possible about the home-buying process. And when you start to go into details, you’ll realize that the down payment is not the only thing you need to save for.  Let’s see how much cash you actually need to buy your first home. Here’s a surprise – it’s more than you think. From closing costs to maintenance costs, there are expenses you’ll need to pay to get you started. And it’s better to be prepared for them than to be caught by surprise.

a house

There are other costs besides the down payment.

Down payment

A down payment is an amount you pay out of your pocket. The rest of the price of your home, you will finance with a mortgage.

A down payment is an amount you pay out of your pocket. The rest of the price of your home, you will finance with a mortgage. The amount of money you can get will depend on your credit score, though.

Buying a home for the first time, you might be tempted to pay a lower down payment. On the other side, consider a down payment of 20%, since there’s a significant advantage to it. The more you pay for the down payment, the lower your monthly installment will be. You can put 5% or 10%, but the lender may require PMI, or primary mortgage insurance. Added to your mortgage payment, the cost of PMI will make your effective interest rate higher. According to Zillow.com, this cost varies, but it can go from $30 to $70 for $100,000 borrowed. For some types of loan, FHA in particular, you are allowed to give less for the down payment.

Mortgage rates

A mortgage rate is going to become an important monthly payment from now on. And when you hear of low mortgage rates, know that this doesn’t necessarily relate to you and your situation.

Mortgage rates depend on the lender, the type of loan, and vary from one offer to another. The banks will determine your rate based on your credit score, the down payment, and other factors.

There are different types of loans, and choosing a particular one will affect your rate. ARMS or adjustable-rate mortgages offer lower initial rates. However, after a fixed time, the rate will go up, so you need to prepare for it if you decide on this loan. Conventional mortgages with a fixed rate are also an option.

A calculator, a notebook, and dollar bills

Make sure you can afford your mortgage rates

Maintenance fund

You might think that after you move in and buy some furniture, you’re free from expenses for a while. However, it’s necessary that you take this into consideration – your house is going to need some work in the first year of your life there. Painting and smaller cosmetic changes are most likely, but your new home might require some more significant work as well.

It would be good to set aside around $5,000 to $10,000 for a home maintenance fund. This should be enough to cover any initial repairs. However, think about saving 1% to 4% of your home value for maintenance your house might require in the future. This way, if your roof starts leaking, you’ll be safe and will be able to afford the repairs immediately.

Keep in mind that you should consider saving around 4% of the mentioned amount if your house is older. In this case, your home might require greater repairs, and it would be wise to play it safe.

Closing costs

After you finally find a home you like and your offer is accepted, it’s time for closing costs. Countless fees wrap up in what we refer to as closing costs. These costs vary from one state to another due to differences in real estate transfer tax and mortgage stamps. As these costs include title insurance, attorney fee, and appraisals, they depend on different rates. And they vary from one loan and lender to another. For this reason, you can check different lenders and see if you can get lower fees for closing.

Closing costs might run up to 2% or 3% to %5 of your loan amount, and they’re due at the time you close on your new home.

If you’re a member of your local credit union, you should see what they offer. Also, if it’s a common practice in the area, you can negotiate for a seller to pay the closing costs. Another option is negotiating that the lender pays the closing costs in return for your paying the higher interest rate on the mortgage.

Moving costs

After the sale has been finalized, it’s time to move in. And there are two options here. The first one is to call your friends to help you move and rent a moving truck. The second option is to hire a moving company and let the professionals take care of your relocation.

On average, the cost of a local move is around $1,250. However, in the case of a long-distance move, the average price is approximately $5,000. Also, know that the costs of long-distance house hunting might be much higher. Don’t forget that you’ll have to travel to your new town at least a couple of times before you find your dream home.

A couple carrying boxes.

Don’t forget the moving costs.

“Hidden” costs you’ll need to pay after you buy your first home

You are not done paying after you buy your first home. Once the house is yours, you’ll need to pay property taxes that depend on your city’s local government and the assessed value of your home.

Naturally, this varies from one state to another. Check out what Forbes says about property taxes. This can make a huge difference, especially if you’re buying a property in a state with the highest or the lowest rate.  For example, if you decide to live in New Jersey, you’ll pay around $5,000 for a year on property taxes, which is about $2,600 more than the average homeowner pays.

Don’t forget about the homeowners’ insurance, which is usually not more than $1,000 a year, and three times more for utility costs on average. Finally, optional services can add up, such as heating, ventilation, lawn maintenance, or gutter cleaning. As you might notice, after you buy your first home, there are other expenses you might not have considered. In total, these hidden costs can add up to around $9,000. With all of these costs in mind, make sure to take care of your financial situation before you decide on this big step.

Comments (38)

  1. porno 3 years ago

    Everyone loves it when people get together and share opinions. Great website, continue the good work. Rosella Bill Daberath

  2. sikis izle 3 years ago

    Way cool! Some extremely valid points! I appreciate you penning this write-up plus the rest of the site is extremely good. Isadora Wells Stoecker

  3. jonah fernatt 2 years ago

    You made some nice points there. I looked on the internet for the subject matter and found most individuals will agree with your site.

  4. israel naegeli 2 years ago

    Hello! I could have sworn I’ve been to this blog before but after browsing through some of the post I realized it’s new to me. Anyways, I’m definitely happy I found it and I’ll be book-marking and checking back frequently!

  5. You made some nice points there. I looked on the internet for the subject matter and found most individuals will agree with your site.

  6. marcelle darga 2 years ago

    You made some nice points there. I looked on the internet for the subject matter and found most individuals will agree with your site.

  7. kris penha 2 years ago

    You made some nice points there. I looked on the internet for the subject matter and found most individuals will agree with your site.

  8. oneida fesenmyer 2 years ago

    Hello! I could have sworn I’ve been to this blog before but after browsing through some of the post I realized it’s new to me. Anyways, I’m definitely happy I found it and I’ll be book-marking and checking back frequently!

  9. sikis izle 2 years ago

    The information mentioned within the report are some of the ideal readily available. Nance Tymon Culbert

  10. erotik izle 2 years ago

    I really like your writing style, wonderful information, appreciate it for posting : D. Peg Elliot Denae

  11. erotik izle 2 years ago

    Hello, its good article about media print, we all be familiar with media is a wonderful source of data. Audra Dame Lyall

  12. erotik izle 2 years ago

    Absolutely indited content material , regards for information . Bennie Vladimir Wadleigh

  13. jacinto seibt 2 years ago

    Hello! I could have sworn I’ve been to this blog before but after browsing through some of the post I realized it’s new to me. Anyways, I’m definitely happy I found it and I’ll be book-marking and checking back frequently!

  14. sikis izle 2 years ago

    Way cool! Some extremely valid points! I appreciate you penning this write-up and the rest of the website is very good. Fiona Benedick Johnnie

  15. erotik izle 2 years ago

    Im grateful for the article. Much thanks again. Much obliged. Gavra Adam Zacarias

  16. vanetta uribazo 2 years ago

    Hello! I could have sworn I’ve been to this blog before but after browsing through some of the post I realized it’s new to me. Anyways, I’m definitely happy I found it and I’ll be book-marking and checking back frequently!

  17. derick zavatson 2 years ago

    You made some nice points there. I looked on the internet for the subject matter and found most individuals will agree with your site.

  18. filmi İzle 2 years ago

    Thank you for your article post.Much thanks again. Cool. Arnulfo Loiseau

  19. Great article post.Thanks Again. Really Great. Javier Dilisio

  20. eric 2 years ago

    Hi, i read your blog occasionally and i own a similar one and i was just curious if
    you get a lot of spam comments? If so how do you prevent it,
    any plugin or anything you can recommend? I get so much
    lately it’s driving me insane so any help is very much appreciated.

    • Jerome Naleski 2 years ago

      Sorry. I am so new to this. I am dealing with each as they come in and just try and spam folder anything not helpful.

  21. 1080p izle 2 years ago

    I truly appreciate this blog post.Really thank you! Much obliged. Olen Stamand

  22. hd film izle 2 years ago

    Thanks for sharing, this is a fantastic article post.Thanks Again. Want more. Petra Strehlow

  23. Alexis 2 years ago

    Hey would you mind sharing which blog platform you’re working
    with? I’m going to start my own blog soon but I’m having a hard
    time making a decision between BlogEngine/Wordpress/B2evolution and Drupal.
    The reason I ask is because your design and style seems different then most blogs and I’m looking for something unique.
    P.S My apologies for being off-topic but I had
    to ask!

  24. abraham triglia 2 years ago

    I loved your blog.Really looking forward to read more. Will read on…

  25. fredrick molla 2 years ago

    Very informative blog article.Much thanks again. Fantastic.

  26. marta mungle 2 years ago

    I read a great article with pleasure, I hope it will continue

  27. mandie walvoord 2 years ago

    I randomly stopped by your site but you are really successful

  28. leisa friederich 2 years ago

    Thanks so much for the blog post.Thanks Again. Great.

  29. Amanda 2 years ago

    WOW just what I was searching for. Came here by searching for Gabriel

  30. rosaline biard 2 years ago

    Awesome article post.Much thanks again.

  31. Madeleine 2 years ago

    It was very useful, I can say it was a useful article for me.

  32. online 2 years ago

    It is not my first time to visit this website, i am visiting this web site dailly and take good information from here daily. Coraline Alonzo Stearne

  33. 720p 2 years ago

    I was pretty pleased to discover this web site. I need to to thank you for ones time for this particularly fantastic read!! I definitely loved every part of it and I have you book marked to look at new information on your site. Anselma Donalt Ho

  34. movie online 2 years ago

    Wonderful article! We are linking to this particularly great content on our website. Keep up the good writing. Tessy Duky Derinna

  35. yabanci 2 years ago

    This is a really good tip especially to those fresh to the blogosphere. Simple but very precise info?Appreciate your sharing this one. A must read post! Meghann Kin Coreen

  36. filmkovasi 2 years ago

    Hi, i must say fantastic site you have, i stumbled across it in AOL. Does you get much traffic? Marlane Albie Hesky

  37. online 2 years ago

    Thank-you for writing with such honesty and humility. It has great value to those who read it. Gayel Tadd Grossman

Leave a reply to leisa friederich Click here to cancel the reply

Your email address will not be published. Required fields are marked *

*