You need money to buy a home

Sounds logical, doesn't it? Unfortunately, many folks have been misled as to what it actually takes to purchase a home - and what they will need to bring to the table.

The main discrepancy I see is the confusion between your down payment, and your closing costs.

The down payment is the amount of money that your lender will require that you pay upfront on your home. Based on the loan terms, this amount will vary but at this point in time, you will need AT LEAST 3.5% down on a home purchase. To put this in perspective, when buying a $150,000 home, the lender will require at least $5,250 to be placed towards the purchase. Remember, this is a minimum.

This amount of money, however, is not to be confused with closing costs. In Florida, the buyer will incur closing costs of roughly $2,270 on the same $150,000 purchase, which includes title insurance, required taxes, and professional fees. For a handy closing cost calculator, check out

http://www.sarasotaclosings.com/ClosingCostCalculator.shtml

Perhaps the most misunderstood element of money required at closing, however, comes in the form of lender fees. When obtaining a loan, the lender will assess fees. Make sure that you get a clear schedule of fees from your lender.

You will also need to pay for inspections and appraisals, and possibly a survey. Together, these are generally about $1,000. Often, these can be paid at the time of closing and "added into" closing costs.

This blog is not to scare you, simply to point out all the elements involved.
1) Down payment
2) Closing costs
3) Inspections, appraisals etc
4) Lender fees

IMPORTANT - if you are a first time home buyer, you are likely eligible for the federal governments tax credit up to $8000. This credit can be applied to your closing costs - however cannot be used for your down payment.