Buying a home involves multiple costs that go beyond just the down payment. When budgeting for a home purchase, buyers need to consider the earnest money deposit, which typically ranges from 1% to 3% of the home's price, and various closing costs, encompassing taxes and lender fees which can total between 2% to 5% of the purchase price. For a median U.S. home price of $420,000, expenses could amount to over $30,000, emphasizing the importance of thorough financial planning in the homebuying process.
Earnest money usually ranges from 1% to 3% of the home price, serving as a good faith deposit to assure sellers of buyers' commitment.
Homebuyers typically need to budget for multiple costs, including earnest money, down payment, and closing costs, which can significantly impact their overall expenditure.
Closing costs, usually 2% to 5% of the purchase price, include taxes, title insurance, and lender fees and can add up to $21,000 for a median-priced home.
A higher down payment can reduce monthly mortgage payments and total interest paid over the life of the loan, impacting long-term financial health.
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