Well, that depends on a number of factors, including the cost of the house and the type of home loan you get. In general, you need to come up with enough money to cover three costs: the deposit you make on the home when you submit your offer – known as earnest money; the down payment, a percentage of the cost of the home that you must pay when you go to settlement; and the closing costs, the costs associated with processing the paperwork to buy a house.
When you make an offer on a home in Middle Tennessee, your real estate agent (hopefully us) will put your earnest money into an escrow account. If the offer is accepted, your earnest money will be applied to the down payment or closing costs. If your offer is not accepted, your money will be returned to you. The amount of your earnest money varies. As a general rule of thumb, count on between 1 and 2 percent of the home’s total value for a serious offer.
The more money you can put into your down payment, the lower your mortgage payments will be. Some types of loans require 10-20% of the purchase price. That’s why many first-time homebuyers turn to HUD’s FHA for help. FHA loans usually require only 3% down – and sometimes less. In fact, I have seen some loans that require $0 down, but be careful, your interest rate usually gets bumped up significantly for these types of loans and you’ll end up paying more in the end.
Closing costs – which you will pay at the closing table – average between 3% and 4% of the price of your home. These standard costs cover various fees your lender charges and other processing expenses. When you apply for your loan, your lender will give you a good faith estimate of these closing costs, so you won’t be caught by surprise!
Still have some questions? One of Nashville’s top Realtors will be more than willing to answer any of your questions. Contact the Remarkable Homes Team anytime!
Remember, if you are considering buying or selling Nashville real estate or just have real estate related question, trust the Remarkable Homes Team and our 17 years of real estate excellence!
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