One of the greatest disappointments for homebuyers when they go house searching is how much it really costs to purchase a property.
The expense of living is rising. According to the National Association of Realtors, the median selling price of an existing single-family house increased 18.4% in March to $334,500.
According to Unison’s 2019 Property Affordability Report, it takes 14 years to save for a down payment on a home.
Where Do I Start?
You should be considering savings, income, and good credit when thinking about buying a house.
You should have a stable job, some funds, and be able to get a decent mortgage with an exceptional credit score.
Annualcreditreport.com provides a free credit report. According to Equifax, a decent credit score ranges from 670 to 739. It varies on the lender, but a score of 700 or above is excellent if you want to be preapproved for a mortgage.
Some experts recommend making a 20% down payment to avoid the added expense of private mortgage insurance (PMI).
However, by utilizing government-backed loans from the FHA or USDA, you may purchase a house with as little as 3.5% down or no down payment at all.
As a general rule, experts advise spending less than 30% of your salary on housing.
Aside from the down payment, homeowners must pay closing costs, which include fees and expenditures such as title insurance, attorney fees, appraisals, and taxes.
Closing costs typically range from 1% to 5% of the transaction amount.
What’s the Verdict?
To buy a home that costs $300,000, you’ll need to put down $60,000 (20%) to avoid PMI. If taking advantage of a government-backed buyer program, you may only need $10,500 (3.5%).
Your closing costs will range from $3,000 to $15,000.
Your monthly payment at a 3% interest rate on a 30-year mortgage will be approximately $1,265 and $1,610 at 5%.