How Much Money Do I Need to Buy a Home in San Diego?
Requirements for down payments, Closing costs, & out-of-pocket expenses
Between the down payment, closing costs, and other out-of-pocket expenses... it can be confusing to figure out exactly how much cash it will take to buy your home. But I'm here to break it all down for you. In this video I talk about the myths around how much your down payment should be, how and when closing costs can vary, and strategies you can take to plan out exactly how much you'll need to buy your home.
Introduction
Hey, everyone! It's Brent the Broker here. Today, we're diving into the nitty-gritty details of how much cash you need for your home purchase. But before we get started, do me a favor - hit that subscribe button, ring the notification bell, and if you find this video helpful, give it a thumbs up. Your support means the world to us. Stick around until the end because we've got a killer Pro Tip of the Day for both buyers and sellers!
Three Buckets of Home Purchasing
Cash requirements for buying a home typically fall into three buckets: the down payment, closing costs, and expenses paid outside of closing.
Home Down Payment
The down payment is your initial payment towards your home. If you're a part of the military, there's an awesome zero-down payment option for VA loans. But if you're not, don't worry, there are still options available ranging from 3.5% to 20% or even more. Now, let's bust a myth – you don't need a massive 20% down payment to buy a home.
The average down payment for first-time homebuyers is just 7%, and for all homebuyers, it's 13%. So, most folks aren't putting down a hefty 20%. But, here's a perk - if you put 20% or more down, you can avoid Private Mortgage Insurance (PMI), which is an extra monthly fee. That's a win-win!
Example:
Imagine you're a first-time buyer looking for a starter condo in San Diego, priced at $600,000. We'd typically recommend starting with about 5% down. So, for this example, that's a $30,000 down payment.
Home Closing Costs
Now, let's talk about closing costs. They can vary depending on various factors like when you close, your loan type, and whether you'll be paying property taxes and insurance within your monthly payment. Your closing costs encompass title fees, escrow fees, and lender fees. They generally range from $8,000 to $15,000, but the exact amount depends on several factors. So, saving within that range should usually cover your closing costs.
Paid Outside of Home Closing Costs
Lastly, there are expenses paid outside of the closing process. These include home inspections and, in some cases, the appraisal. The cost here can vary widely based on the extent of your inspection needs, usually falling between $1,000 and $3,000.
When you add all these numbers together, you're looking at a ballpark figure of $39,000 to $45,000 in cash requirements, considering a 5% down payment on that $600,000 condo.
Remember, each scenario is unique, so don't hesitate to reach out if you have specific questions. We're here to guide you through your unique situation.
Pro Tip of the Day
Here's the golden nugget of wisdom – you don't need any of your own money to buy a home! Yes, you heard that right. In terms of closing costs, there are three ways to cover them:
Cash out of pocket
Seller credit (the seller pays them)
Lender credit (in exchange for a slightly higher interest rate)
For military buyers, with a zero-down payment, it's entirely possible to get your closing costs covered through seller and lender credits. Non-military folks who need a down payment also have an option. Your down payment can be in the form of a gift from a family member. So, you can buy a home without shelling out your own cash by utilizing these strategies.
And there you have it, folks – the breakdown of how much cash you need for a home purchase. With the right strategy and a bit of financial creativity, you can make your homeownership dreams a reality. Thanks for tuning in today. If you found this video helpful, please subscribe, like, and share our content. We'll catch you next time!
