Buying a home is an exciting time, but it’s also important to be financially prepared. Let’s break down how much you need to account for before and during your home buying process. The more informed you are, the smoother your home buying experience will be!

Down Payment: Don’t Stress About 20%

Let’s address a common concern: the 20% down payment. While a larger down payment can affect your monthly mortgage payment and potentially eliminate private mortgage insurance (PMI), it’s not mandatory! Many people put down 5-10%, and some programs even allow as little as 3% down. There are also down payment assistance programs available, so be sure to consult a reputable lender to explore all of the options available to you.

Now, let’s explore the additional expenses that arise once you’re under contract on your dream home.

• Earnest Money: This shows the seller you’re serious (like a good faith deposit). It typically ranges from $500 to $1,000+, and may be higher in competitive situations. In Ohio, it’s not mandatory, but standard practice. Expect to submit it within days of your offer being accepted.
• Inspections: Budget $750 to $1,000+ for inspections. Usually, a bundled package covers the whole house, termites, and radon. These inspections happen right after going under contract, and payment is due at the time of service. If you need additional specialists to visit the property, I recommend saving a little extra on the side to cover those costs.
• Appraisal: This is lender specific, but typical costs range anywhere from $400 to $800. Payment may be due at the time of the order or added to your closing costs, depending on your lender, so be sure to reach out to them for specifics so you can budget accordingly.
• Home Warranty: Home warranty plans range from $450 to $750. Some cover extras like electrical and plumbing systems. I always recommend that my buyers research different plans to find the best fit for their future homes as each one will be different and specific to your specific home.
• Owner’s Policy Title Insurance: While the title company will provide the policy amount, budget $1,500+ if you choose to purchase it. While it isn’t mandatory, I do believe that protecting your investment with title insurance is important and I recommend my clients purchase this to protect this large investment.

Finally, let’s touch on closing costs.

Closing costs are essentially the final expenses you’ll pay to finalize your home purchase. They cover a range of services, from loan origination fees to title insurance. In Ohio, both sellers and buyers shoulder some of these costs.

Your lender will keep you updated on costs once your offer is accepted and the home buying process is underway!

Happy House Hunting!