What You Need To Know About Saving for a Home in 2024
Knowing what to budget for and how to save can seem intimidating as you plan to purchase a home in Kansas City. The good news is that it doesn’t have to be! Understanding some of the upfront costs is one way to ease those concerns. The trusted real estate professionals at Just Say Home KC can help you develop a plan and take a strategic look at your budget as you begin your homebuying journey.
Real estate experts have highlighted just a few upfront costs Kansas City buyers should be considering.
As you set out to buy a Kansas City home, saving for your down payment is likely at the top of your mind. Do you know how much you’ll need? Every buyer’s situation is distinct, but there’s a common misconception that putting 20% of the purchase price down is a requirement. An article from the Mortgage Reports explains why this is not always the case:
“The idea that you have to put 20% down on a house is a myth. . . . The right amount depends on your current savings and your home buying goals.”
To understand your options, partner with trusted real estate professionals to review the various loan types, down payment assistance programs, and what each requires. The more you know ahead of time, the easier the process will be.
Closing costs are a collection of fees and payments to the various parties involved in your transaction. Budgeting for these costs at the beginning of the homebuying process is essential. Bankrate explains:
“Closing costs are the fees you pay when finalizing a real estate transaction, whether you’re refinancing a mortgage or buying a new home. These costs can amount to 2 to 5 percent of the mortgage so it’s important to be financially prepared for this expense.”
The best way to understand what you’ll need at the closing table is to work with a trusted KC lender. These experts can provide you with experienced answers to your questions.
Earnest Money Deposit
Consider saving for an earnest money deposit (EMD) to cover all your bases. What is an EMD? This cost is money paid as a show of good faith when making an offer on a Kansas City house. According to Realtor.com, it’s usually between 1% and 2% of the total home price.
This deposit works like a credit. It’s not an added expense, but instead, paying some of your costs upfront. You’re using a portion of the money you’ve already saved for your purchase to show the seller you’re committed and serious about buying their home. Realtor.com describes how it works as part of your sale:
“It tells the real estate seller you’re in earnest as a buyer . . . Assuming that all goes well and the buyer’s good-faith offer is accepted by the seller, the earnest money funds go toward the down payment and closing costs. In effect, earnest money is just paying more of the down payment and closing costs upfront.”
It’s important to remember that an EMD isn’t required and won’t guarantee the acceptance of your offer. Working with the real estate advisors on the Just Say Home KC Team can help you understand what’s best for your situation and any specific requirements in the Kansas City area. These experts can advise you on how to make the best possible decisions throughout the homebuying process.
Knowing what to save for is key when buying a Kansas City home. Connect with the Just Say Home real estate experts to gain insight into your budget as you begin buying your home today!