How much upfront cost to buy a home?

Okay, we are talking about cash to close and how much money you actually have to have at the closing table to be able to buy a house. Also, how much you're going to need. There are three things that you are going to have to deal with. 

1. Earnest money.

Ernest money is what secures your loan, it is basically showing the seller that you are motivated and that you are willing to put a little skin in the game. What this means is if you back out of the contract for no reason at all that the seller gets to keep your earnest money. However, if the inspection shows any issues or your finances end up falling through then the buyer will always get their earnest money back. Also that earnest money goes to clothing cost.  Now as far as how much you will need for earnest money depends on the property and a few other factors but I always say a good baseline is 1% of the purchase price.

2. Down Payment. 

The one thing everyone seems to worry about is down payment. There are ways around this If you do not have the money to cover closing cost and down payment. There are multiple zero down payment loans out there. There is a USDA loan and VA loan, in Tennessee you have a THDA loan and Kentucky you have was called a KHC loan.  However if you are still wanted to put down payment in their is a conventional loan and FHA low. All sellers usually prefer the conventional loan because of the fact that there are no stipulations with the condition of the property like the government loans we just spoke of.  Usually FHA loans require 3.5% down payment, and conventional loans require 5% down payment. 

 And there is one more thing I want to worship on is what's called PMI or private mortgage insurance.  You will have to pay PMI until you have at least 20% down on the home. A good base number would be 30 to $70 for every $100,000, so if You purchased a $300,000 home you're talking around $150 extra a month you have to pay for private mortgage insurance. 

3. Closing Costs. 

The last thing you have to consider is closing cost. Unfortunately this is one thing that a lot of people do not talk about and do not know about until they are actually trying to purchase a home. The problem is up until the market got so hot buyers could ask the seller to pay for closing costs and many times the sellers would do it. However times have changed! Now it is very unlikely for the seller to pay for the buyers closing cost. This is usually around 3% of the homes purchase price. I know this is very daunting, however if the home has been sitting on the market for a while there is a special stipulation that you can ask the seller to cover the closing cost. In this market it is difficult to do that, however with homes sitting on the market much longer now it is definitely a possibility.