As a renter you don't have many financial responsibilities to the property you reside in but you also don't receive many of the benefits you would receive as a property owner. So when you have chosen to buy a house, there are many benefits to your new endeavor, such as income tax write-offs and your ability to turn it into a rental property. However, with any new property purchase you need to be ready for the financial responsibilities that will come your way. Here are some of the expenses you will need to be ready to pay for when you buy a home.
One of the first expense items you need to plan for when buying a house is the down payment amount that you may need to put toward the initial purchase. You might be getting a mortgage loan to buy the home, but many mortgage companies will require you to put some cash toward the home's purchase, then they will finance the rest. You can save for your down payment, have someone gift you the funds where you do not have to pay them back, or also draw funds from a 401K or similar type of retirement savings account.
Depending on the loan you qualify for, you might need a small down payment or a larger down payment. This will also depend on the cost of your home. For example, some loans require you to only put down three percent of the home's cost, and other require up to twenty percent. However, if you qualify and can get a zero down payment loan, you won't have to bring any cash to closing. However, keep in mind you may still need to pay for closing costs.
Closing costs on the home's purchase are another expense you will need to plan for paying at the closing and settlement meeting. Closing costs go to pay a variety of fees and costs related to buying a home and are necessary when you complete the legal purchase transaction. They can pay for home buying costs, such as the loan origination fee and appraisal of the home, or go to cover the title insurance, property taxes, and prepaid mortgage insurance.
However, you may negotiate the purchase terms of the home to request the seller pays for your closing costs, but you need to handle this during the purchase negotiations. Talk to your real estate agent about working this request into a written purchase offer. Then, plan to pay anywhere from three to five percent of the home's price for closing costs.