How much does it really cost to buy a home?

If you’re in the market to buy a home…What’s it really going to cost you? How much money will you actually need? Let’s walk through an example. We’ll assume a purchase price of $150,000.

For starters, there’s a transfer tax. That tax (in the state of Pennsylvania) runs at 1%, or in our example, $1,500. Next, we have title insurance. This can vary based on the price of the home, but typically we see it around .7% of the home price. This puts it a little under $1,100. If you’re putting less than 20% down, you’ll need to escrow your taxes and insurance. Again, this will change based on the exact location of your home. It will also depend on when, during the year, you close on your home. We’ll assume for our example, $3,000 in taxes, and insurance of $500. Next we have mortgage fees. This will vary from lender to lender. I work directly with Dominion Mortgage, who guarantees the lowest closing costs and the lowest rate, which is typically $1,000. Next we have an appraisal, which costs about $400.

Lastly is inspections. These aren’t necessarily a direct closing costs, but definitely an ordinary expenses when buying a home. They can range from $350-$700, depending which inspections you have done. So let’s take a look at all this:

Transfer Tax$1,500
Title Insurance$1,100
Taxes$3,000
Insurance$500
Mortgage Fee$1,000
Apprasial$400
TOTAL$7,500

Comparing these costs to the purchase price, we’re looking at about 5%. On top of that, you may need to put money down on the home. For an FHA finance, the most common type of financing, you’ll be required to put down 3.5%. Here, that comes out to $5,250. Add that to the $7,500, and we’re looking at a pretty big bill.

So what are your options? How does anyone afford a home? In some cases, we still have access to 100% financing programs for qualified buyers. If this is of interest to you, please call me, and we’ll see if we can get you 100% financed. If this isn’t an option, we can also ask for what’s called, seller assistance. This is where the seller agrees to roll the closing costs, into the purchase price. Essentially, this allows the buyer to finance these closing costs over the life of the loan, and only require the buyer to bring the 3.5%.

So what’s best for you? That’s a great question, and I’d love to help you work through it. Give DLP Realty a call and we’ll help you through the details or what will best suit your situation.

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