It is pretty common practice to save for a down payment in preparation for buying a home in Austin or anywhere else. With the mortgage market melting down, it is very rare or even impossible to find a mortgage that will allow zero down payments. Although VA and FHA loans still require little to no money down, most potential homebuyers will have to first save at least 5 to 20% of the home’s value.
Many first-time homebuyers are unfortunately not aware that apart from the big down payment, they also have to pay thousands of dollars for closing costs that they may not have budgeted for. The national average, including for Austin real estate, for closing costs is between 2 and 4% of the purchase price, which adds a considerable amount to the savings required to buy a home. Although not a closing cost as such, most lenders also specify that buyers need a savings reserve equal to at least two months of the mortgage payment. As you can imagine, this tends to add up tremendously.
Costs Breakdown
Closing costs include fees charged by the closing attorney or escrow, together with costs associated with obtaining a home loan. These include:
• Title search and filing fees
• Escrow fees
• Home inspection fees
• Appraisal fees
• Wire transfer fees
• Loan costs – These include what are known as “points”. A point is 1% of the buying price and is used as both an upfront fee to reduce the loan interest rate and commission for the lending officer.
These are only a few of the extra costs you will need to consider with buying and closing on a new home. It is very important to know what these costs are beforehand, so potential homebuyers are able to save the appropriate amount required to buy a home. Nobody wants to end up missing out on the perfect property because they were not prepared for the cost of buying a home in Austin.
Related articles:
Top Neighborhoods in Northwest Austin