helping you through the house-selling process

Selling real estate can be just as much work as buying. There are so many things to worry about as you prepare your home to list on the market. Then you have to worry about the real estate agent you will hire to help you get the house sold. After that, you have to worry about who will be coming in to tour your home throughout the week. Will you hold an open house? Do you take the first reasonable offer you are presented with? Our blog was designed to assist you through the selling process a little bit easier.

Do You Have Enough Cash To Buy A House? Adding Up The Cash Requirements


If you're hoping to purchase a home soon, you're probably saving like mad to get the required down payment. While the down payment is usually the largest amount of cash that you need to close on a home, it isn't the only cash you'll need. In addition to paying for home inspections before closing, you will need to have cash on hand for the following at closing, depending on your purchasing terms and the arrangements you have with your lender. Following are four items you will need to cover. 

Down Payment

Down payment requirements vary widely, depending on the type of loan you go with. Traditionally, down payments ran about 20 percent. However, most loans do not require that type of down payment in today's market. Some loans, such as USDA mortgages and VA mortgages, do not require a down payment at all. FHA loans require about 3.5 percent down. Down payments for conventional loans vary greatly, depending on the county where you live and your lender's requirements. With a conventional loan, you can pay anywhere from 3 to 20 percent down. If you only have a fair credit rating, your down payment will likely fall on the more expensive side.

Closing Costs

Closing costs are administrative costs that need to be covered for items, such as the loan origination fee, appraisal fee, survey fee, title insurance, title search fee, and more. They range between 2 to 5 percent of the loan amount. You must have this cash on hand at the time of closing or have an agreement about who is covering this cost. In some cases, you can negotiate for the seller or lender to cover the costs.

Prepaid Expenses

Items, such as property tax and home insurance, are paid in advance, so you may have to make these initial payments at closing. In the future, the payments will be added to your mortgage payment. 

Cash Reserves

If your lender requires it, you may have to prove that you have enough cash in reserves to cover a set amount of mortgage payments. If you have a poor credit rating, your lender will want to see that you have more cash on hand than if you have a stellar credit rating. 

As you can see, there are several things you will need cash for at closing. Be sure to talk to your real estate agent and lender throughout the process about the cash you will need so there are no surprises at closing. To learn more, contact a real estate agent like Dennis Crecelius - Realtor


11 July 2016