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A Down Payment.  What Else?

Saving more than downpayment to buy Fort Worth home

A down payment.  That’s usually at the top of  peoples mind when they’re thinking about buying a home.  That’s the money you pay toward the purchase upfront. It’s your “skin in the game” for a lender because YOUR down payment helps offset THEIR risk. The more money you have invested in a house, the less they end up losing if they foreclose. But the downpayment ISN’T the only piece you need to include in your budget. Today we’re talking about the costs to get into a home.

INTRO

 

Hi, I’m Cindy Allen and I've been working with home buyers and sellers here in the Dallas Fort Worth Metroplex for 30 years and this channel is dedicated to all things Dallas/Fort Worth real estate.  If you’re interested in learning more about the area, buying, selling, or relocating just look below and hit that thumbs up, hit the subscribe and hit that little bell to be alerted when new videos are posted. 

 

When it comes to the fees to buy a house, everyone talks about the down payment.  But you’ll need to save for 2 other expenses to close on a home as well. What are those expenses?  How do you know how  much they’re going to be????  Everyone knows about the down payment . But what about the Closing Costs and Escrow Fees?  

 

 

Let’s start with closing costs.  Those are the fees to pay the people who work on your loan….OR,  who appraise the house or survey the lot…. Closing costs pay the people who verify that the house isn’t in a flood plain, or people who do the legal work involved in making the house yours.  They’re one time fees, paid at the time of closing. 

 

 

Now let’s talk about the cost of the escrows.  If you’re getting a loan, your lender will likely set up an account to pay your yearly taxes and homeowners insurance from.  The lender gets  the  tax and insurance bills every year and pays them for you from a portion  of the money  you send them every month in your monthly payments.  

 

 

Those accounts for your taxes and insurance are called escrow accounts. At closing the lender is going to collect money to act as a CUSHION for those accounts that you’re adding to each time you make your house payment.  These are called escrow fees.

The Down payment,  the closing costs and the escrow fees…. 

 

 

Lots of people lump together  these 3 expense categories paid at closing  and call them  “closing costs” or “downpayment”.  It doesn’t really matter what you call these three groups of  expenses as long as it’s clear what’s  being discussed. 

 

You wouldn’t want someone to tell you your closing costs were, ..say $3000 and you thought that’s all you needed but they were talking about just 1 of the 3 expenses to close. 

So how much does all of this cost?  The total cost to close is going to depend on what type of loan you get. Different loan types require different down payments - anywhere  from zero if you’re VA or USDA eligible -  to maybe 40% if you’re an investors.  That’s why you need to talk to a lender and get approved before you make an offer. 

 

Beyond the down payment tho, the closing costs and escrows generally run between 2 and 5%.  Again, it depends on the type of loan, and the area’s property taxes.   Your lender will give you a Loan Estimate within three business days of receiving your completed loan application.

So What’s the Bottom Line? 

If you're searching for your next DFW area home and  figuring out how to get started and what to aim for, give me a call.  We can talk about your situation and what you hope to buy so you can make sure your plan includes budgeting what you need to purchase your dream home – without any surprises!