For your dream home. This beginning of 2023 has brought a series of goals for many and one of the most common is to buy a house, for which the person who is about to acquire his first property must have a certain amount of money in order to achieve it. This and here we will roughly estimate how much is needed.
And that is what a house will cost according to the location, state, size and more details, so a preliminary budget should be made to be able to analyze the offers.
A person must determine the budget in order to be able to acquire their own home, as they have to see how much money will be allocated for the said purchase. Also, to get a mortgage, you must have at least 3% of the sale price of the home as a down payment so that it signals to the seller that you are committed to paying the price over a long period of time.
It is recommended to make a down payment (as high as possible) to reduce the interest rate and the amount you have to pay monthly for the mortgage. This will reduce the cost of the loan and also the amount of interest in the long run.
use credit card or not
It is recommended that you do not. Well, in order to keep the monthly payments and mortgage rates of a home low, it is advisable to contribute the largest amount in cash towards the purchase price, even if you use a credit card.
It is important to do a cost-benefit evaluation before deciding whether using a credit card for the down payment is worthwhile, as there can be advantages and disadvantages.
One of these benefits includes earning points or rewards from your bank or not using cash that you currently want to allocate to other expenses or investments.
consider other expenses
If you are planning to buy a house, you need to understand that there will be other expenses involved in closing the sale. These closing costs typically equal 3% to 6% of a property’s total and cover various fees required to close a real estate deal, such as attorney fees, title insurance costs, and more.
For example, if you want to buy a house that is worth $350 thousand dollars. In most cases, you’ll need a down payment of at least 3% of $350K, which is $10,500.
After the initial payment, you’ll need to pay those closing costs. To split the potential cost in half, plan on paying 4.5%.
4.5% of $350,000 is $15,750. overall it means You would need about $26,250 to buy that $350,000 home.
It’s worth noting that you can negotiate closing costs and get a loan for a lower down payment. However, it may be better to save more than you need so that you can easily outbid other parties interested in buying the same home and win the purchase quickly.