Did you know that people bought 5.64 million houses in 2020? Because buying a house is a big investment, it can be stressful. To buy a house, you need to find a real estate agent, find the right house, and figure out the financing.
If you are a first-time homebuyer, figuring out how much money you need to buy a house can be difficult. Besides the cost of the house, there are some other expenses that you need to consider.
How much does it cost to buy a house? Keep reading to learn how to afford a house.
Down Payment
One of the biggest expenses you will have when buying a house is the down payment. Depending on the type of house loan you get, you will have to pay a percentage of the total house price before buying.
On average, most lenders ask you to pay a down payment of 20%. If you buy a house worth $200,000, you will need to save up $40,000 for the down payment.
If you don’t have enough money saved up, you could find a loan with a lower down payment. Keep in mind that paying a lower down payment will increase your monthly house payments.
Closing Costs
In addition to the down payment, you also will have to pay closing costs before buying your house. Closing costs include title insurance, the home inspection fee, appraisal fee, and homeowner’s insurance fee.
These home buying fees are normally split between the buyer and the seller, but you may be able to negotiate these fees when buying a home. On average, closing costs are 2-7% of the house purchase price.
Mortgage Payments
If you want to buy a house, you need to make sure you can afford the monthly payments. Your monthly payments will depend on the cost of your house, your credit score, and the types of house loans you qualify for.
Some of the most common homeowners loans include conventional, adjustable-rate, fixed-rate, and jumbo loans.
What is a jumbo loan? Jumbo loans allow you to buy a property that is too expensive for other types of loans.
Homeowners Insurance
As soon as you sign for a house, you will need to pay for homeowner’s insurance. Homeowner’s insurance will cover the cost of your house and your belongings in the event of an emergency.
How much money you pay for homeowner’s insurance will depend on the cost of your house, how much coverage you choose, and where you live. On average, homeowners insurance costs around $100 per month.
How Much Does It Cost to Buy a House? Now You Know
Buying a house is a great investment. It gives you a place to call home, and it can help you build your credit.
Have you been wondering, “How much does it cost to buy a house?” If so, keep these expenses in mind.
Was this article on home buying fees helpful? If so, check out the home living and real estate category for more advice on the home buying process.