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What Kind of Cash on Hand If You're Getting a Loan to Buy a House?
Aug 12, 2024
The median sales price of the houses that sold in the greater metro Atlanta area in July 2024 was $447,125.
If you're thinking about buying a house, you may wonder how much cash you have to have available to buy a home.
To answer that question, let's look at an example using July 2024 median sales price.
If you're not paying cash for a house, most people understand they'll need some kind of a down payment when they buy a house. How much that down payment needs to be will vary by what kind of loan program you qualify for.
While VA loans for veterans require no money down, most loans require some amount of a down payment. There are loans that, if you qualify, may require as little as 3.5% of the sales price as a down payment.
For our example using the median sales price in the greater metro Atlanta area in of $447,125, assuming you have a loan that requires only 3.5% down, 3.5% of that median sales price is $15,649.38.
Know that you'll want to provide earnest money when you go binding on a contract to buy a property. That amount will be between 1-2% of the sales price typically. That money will be held by your real estate agent's broker or the closing attorney and will be applied to the down payment. That's money that you'll need to provide at the time of going under contract so be ready. In the case of our median list price then, plan to provide earnest money in an amount between $4000-9000.
But that's not all the money you need. You'll want to get a home inspection which will normally cost around $500. If there's a septic system, if you have doubts about the HVAC system, if you want to check for radon, you will incur additional costs for those inspections as well. The cost of any inspections is paid upfront at the time of the inspection.
The lender will also require you to pay for a home appraisal which will cost around $600. This is normally paid upfront as well, at the time the appraisal is ordered.
You also have to pay closing costs. Closing costs are a combination of items and include things such as: the lender's fees, the closing attorney fees, the title insurance costs, homeowners insurance, prorated HOA fees, HOA initiation fees, prorated taxes, credit report fee, flood certification fee, prepaid interest for the month of closing, recording fees, transfer taxes, etc.
I recommend clients expect between 2-3% for the closing costs. It could be more. It could be less. You will get an estimate from your lender once we provide them with an address. Let's estimate 3.5% just to be on the safe side for closing costs too... so another $15,649.38.
So between the down payment, the home inspection, the appraisal cost, and the closing costs then, expect that you could need over $32,000 to close in our hypothetical situation.
Again, that's assuming only 3.5% down. If you don't qualify for such a program, or if you want to put more money down, your total needed to close will go up.
If you're interested in buying a house and getting connected to a great lender, text me, Kelly Vandever, at 770-597-1108 and let's set up a time to meet!
