How Much Money Do I Need to Buy A Home

There are several things to consider when you start planning to buy a home. Probably the most important is, how much money will I need? The answer is simple! There are to many factors to put an exact number on each sale. Many factors, seen, and unseen can impact the amount of liquid cash you will need to purchase a home. Having expendable cash on hand can definitely give you some added negotiating power that other buyers might not have.

Times When Cash Is Helpful

  • Inspection

The inspection period is the time when the buyer has the opportunity to fully inspect the property before closing. Although inspecting the property is not a requirement for the completion of the sale, I always suggest that my clients inspect the home. A home inspector can tell you the overall condition of the property and make suggestions if he/she notices potential issues for the new home owner. 

  • Earnest Deposit

The earnest deposit is money that is deposited with the title company to show “good faith” on the side of the buyer. Any money that is deposited as an earnest deposit WILL be credited towards the purchase price of the home. Although an earnest deposit is not a requirement, most sellers prefer offers that include an earnest deposit. Offers that don’t contain an earnest deposit are more likely to not be  accepted.

  • Appraisal

A very important part of the contract is the appraisal. Anyone who is financing the purchase of a home will be required to have the property appraised. Sometimes the appraisal can be added to the loan amount borrowed from your lender. But if you have the money to pay for an appraisal it will be cheaper in the long run. Why pay 30 years worth of interest if you can pay for the appraisal with cash?

  • Closing Costs

This might be the biggest hurdle that most buyers run into when writing an offer. We must remember that there are closing costs associated with each transaction. There will be costs accrued from your lender and costs from the title company. These costs are sometimes negotiated in the contract, but not all sellers are open to negotiating your closings costs. If closing costs are something that you can pay for at the closing table you will have an extra edge when it comes to negotiations. Don’t worry, if these are not costs that you can afford at the time of closing, we have other options.