Adams Equity Group | Top Atlanta Real Estate Agents: What Does It Truly Cost to Buy a Home?
Channel: Adams Equity Group | Scott Adams Real Estate
Date: 2017-08-14

When purchasing a home, there are several costs you should be aware of before moving forward. Even within the last year, this process has changed quite a bit. In today’s highly competitive market, staying informed is key. Not only will understanding the current process make you more prepared, it will also make your offer much stronger, as well. Today, I want to give you a basic overview of what some of the costs you can expect will amount to. If you aren’t careful, you could be forgetting something. To learn more, watch my latest video. 

Learn more: http://www.adamsequity.com/blog/what-does-it-truly-cost-to-buy-a-home.html

Adams Equity Group | Top Atlanta Real Estate Agent Scott Adams | Atlanta Luxury Real Estate | Selling Atlanta Luxury Homes | Scott Adams Luxury Agent, Economist

TRANSCRIPTION: 
Even within the last year, the process of a buying a home has undergone some big changes. 

Therefore, before you dive into finding your new home, there are a few things you should know.  First of all, the current market is very competitive. 

Right now in Metro Atlanta, inventory is sitting at just 3.4 months. In fact, depending on where you look, certain areas are even more competitive. 

So how can you make yourself stand out as a buyer in a strong seller’s market?  

Depending on the lender, getting pre-qualified simply isn’t worth the effort. Getting pre-underwritten, in many cases, can actually be a much more effective route.

By taking items like your credit score, income, and taxes and getting all the paperwork in place, you’ll then be able to make an offer as an already-approved cash buyer. 

Another way you can differentiate yourself as a buyer is by putting down at least 1% in earnest money. 

On top of that, you should try to have as much money as possible saved up for your down payment. Having 20% is ideal, since it will help you avoid purchase mortgage insurance (PMI.) PMI is basically insurance taken out by the bank in the event you put down less than 20%. 

However, putting down 20% isn’t absolutely necessary. For conventional loans you can put down as low as 5%, and you can put down as little as 3.5% for FHA. No matter what, the most important thing is understanding how your down payment will affect your purchase overall.

It’s also crucial that you factor in money for closing costs. This amount can depend on a number of things, including the property, the contract, and negotiated terms. In certain cases, the seller may offer to pay a portion of the closing costs for you.

However, in today’s seller’s market, this isn’t as likely. As a general rule of thumb, you should estimate the money needed for closing costs at about 2.5%. 

These costs will include paying homeowner’s insurance for the full year, paying property taxes for the current year, and pre-paying the escrow fund. This way whenever these funds are due, the money is already taken care of. 

You should also expect to pay loan origination costs to your lender. These can run between about $1,000 to 1% of the loan. 

Another cost to expect is the money paid to the home inspector. This number can vary, but I typically see about $350 to $600 in our area. Along with this, remember the cost of appraisals—which can run between $400 to $450. 

Overall, the area into which you’re moving will determine a lot of these costs and how they might vary. But the neighborhood itself could carry additional costs you should be aware of such as HOA dues, a clearance letter, and initiation fees. Initiation fees tend to be about two months of HOA dues. 

The most important thing is to stay ahead with your paperwork. There are a lot of things to be taken care of, so things will go much more smoothly if you are prepared ahead of time. Not only that, but it will make your offer much stronger. 

If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.