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Buy a House | 4 Posts
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May
9

If you want to buy a home but haven't been saving up, you need to start. Here's how you can determine how much to put away.

There are a lot of expenses associated with purchasing a home, like the down payment, money for moving expenses, and loan fees. Fortunately, setting aside a little money now will ensure that you're prepared for the costs of buying a home. Here are a few guidelines our real estate agents suggest following to help you get started.

  1. Set Up a Separate Account
    Establish a savings account that's separate from your primary savings account to start setting aside your homebuying funds. Putting the money in a separate account means that you're less likely to spend it because you know it's for a specific purpose. You can also gauge your savings progress better when your house fund has its own account.
  1. Estimate Your Homebuying Expenses
    General recommendations state that you need anywhere from 10 to 25 percent of the home's selling price. However, this figure will vary widely depending on what kind of mortgage you're using, the size of your ideal downpayment, and how far you need to move your belongings.

    To get a better estimate of your homebuying expenses, calculate the amounts for your costs before you start looking at Lewisburg homes for sale.

    Home Downpayment
    Your home's downpayment can be as low as 3.5 percent (when using an FHA mortgage), or you might prefer the conventional 20 percent downpayment. Assume that your new home costs $250,000. If you make a 3.5 percent downpayment, this means that you need $8,750, while a 20 percent downpayment requires $50,000.

    Closing Costs for Your Mortgage
    Your mortgage requires you to pay closing costs to take out a home loan. These closing costs include items like your appraisal fee, home inspection fee, loan origination fee, expenses for establishing escrow accounts for your property insurance and real estate taxes, and an attorney fee for overseeing your closing.

    Closing costs are usually two to five percent of your home's price. For a $250,000 home, this means that your closing costs will likely be between $5,000 and $12,500.

    Moving Expenses
    The average cost of a local move is $1,250, while a long-distance move costs an average of $4,890. Your moving distance, whether you want the movers to pack your belongings, and if you're moving any items that require special handling will all affect your final moving bill.

    Total Estimated Costs
    Using more exact estimates, your total moving expenses will run anywhere from $15,000 to $66,890. This is a wide range, but this is partly due to the variety of mortgage options available. Utilizing a mortgage with low downpayment requirements is an easy to reduce your housebuying expenses.
  1. Start Putting Something Aside Today
    It can feel daunting when you realize that you need to save thousands of dollars. Don't let fear keep you from starting your house savings. Even small amounts will quickly add up, allowing you to build your savings quicker than you envisioned.

    Imagine that you decide to increase your income or lower your expenses (or both!) so that you can save $25 a day. If you save $25 every day, in a year you'll have $9,125 for your home savings. Lowering your expenses by $10 each day can be done by reducing the frequency that you eat out, combining your trips to save on gas costs, and avoiding impulse purchases.

With a little time and dedication, you'll quickly have the money you need to become a homeowner. Ready to start looking for your new home? Contact us to get started!

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