How to buy our first home

Question

My wife and I found a small and cheap home for sale that we are interested in buying. How do we buy it? We are first time home buyers and not sure other than a down payment. How much money do you need for closing costs?

Answer 1

The closing cost will depend on your mortgage company, etc.  There are tons of things to pay for at closing.  Inspections (house, septic, etc) , Points/fees (a percentage of the loan amount paid for the priveledge of banking with a mortgage company and a lower interest rate), lawyer fees, title search, pro-rated taxes (what the previous owner put toward the next year's taxes), realtor fees, Oil/gas (that amount left in the tank that the oprevious owner paid for).

Figure $4000 as a general number.  A call to the Realtor will bring the number into a ball park that you can plan for.  Plan for unforeseen costs on the day of the closing - $1000 or so.  Some fees can be paid by the SELLER, so include that in negotiations for the final cost of the house.

The seller can pay for a lot of things:  realtor commission, lawyers fees, etc.  All that can be negotiated.  For instance a house at $150000 asking price will sell for $140000 and you pay everything OR $145000 and they pay everything OR $142500 and you pay some....

Lastly, don't be afraid of walking away or slowing things down.  The owner DOES NOT WANT TO PAY ANOTHER MORTGAGE PAYMENT on this house!!!!  They want to be free and clear ASAP.  That will make them work with you more.