How much money do I need to buy my first home?

This is probably the number one question a first-time home buyer will ask... or will think about asking. Buyers (who are probably renting) spend thousands of dollars a year on rent and think they need thousands more to buy. It's just not true (in most cases).

OK... so what's the answer? How much money do you need to buy your first home? Well... there's Earnest Money, Option fees, Inspection Fees, Appraisal Fees, Down Payment, Closing Costs and Pre-Paid Items. I know it sounds overwhelming, but don't worry... you may not have to pay all of them! Believe it or not, a Seller can cover some (or most) of these expenses for you!

When you hear... "No Down Payment," it is relieving you of ONE of the required expenses listed above. Down Payments may equal 3.5% to 20% (or more) of the Purchase Price. For example, on a $100,000 home, a 3.5% Down Payment would be $3,500.00. If you have a "Zero Down Payment" mortgage, the $3,500.00 expense is either waved or rolled into your mortgage balance. There are a variety of Mortgage Programs available that may provide this type of Down Payment Assistance.

As for the rest of the fees and expenses, they are (for the most part) negotiable.

• Earnest Money or "Good Faith" Money ($500 is customary) can be negotiated with a Seller.


• Your Closing Costs and Pre-Paid Items may be negotiated and even paid by the Seller at closing. (Pre-pays are your taxes & insurance paid in advance. Closing costs are your lender fees, title fees, attorney fees, etc...). Equals approx. 6% of the sales price.


• Your Appraisal Fee (around $350) is required by the Lender and usually paid upfront.


• The Option Fee ($25 and up) and your Property Inspection Fee ($275 +/-) are expenses that I strongly suggest to my Clients, but they are not required.


• Termite Inspection ($65 +/-) a Lender requirement for FHA & VA loans.

Every REALTOR has a guideline for their Buyers. I try to prepare my Buyer/Clients with over- estimated figures so there are no surprises.


My Financial Guideline for First Time Home Buyers: Fees paid when your offer is accepted

• Earnest Money: $500


• Option Fee: $25


• Property Inspection: $275 (+/-)


• Appraisal: $350 (+/-)


• Termite Inspection: $65 (+/-)

Total Upfront Cost: $1215.00 (estimate)

Fees Paid at Closing: Closing Costs and Pre-Pays due at closing will depend on the final purchase price, your property taxes, your homeowner insurance, and the amount of the Seller's contribution (if any). Your lender will calculate this for you.

For Other FREE Real Estate Reports and Advice (for Texas Home Buyers) visit me online at http://www.ownapieceoftexas.com/ or http://coachingtexasbuyers.com

Thanks for visiting!

Val J Aranda, Your Texas REALTOR

"Coaching First Time Texas Home Buyers and Sellers"