What Money Will You Need to Purchase?

Every purchase is different but this post will give you some idea of what you'll have to come up with during the purchase of your home.

The first money you'll put down is called an earnest money deposit. This is not to be confused with your downpayment. The earnest money deposit is typically $500 - $1000 although there is no set standard. I've been asked to make higher deposits to accompany my offers on properties and I've also read that one investor doesn't even make a deposit. In any case, this money goes towards escrow closing costs if your offer is accepted and gets returned to you if your offer doesn't get accepted.

At closing, you'll put down your downpayment. The amount of your downpayment is worked out between you and your lender during the escrow process and you should expect to show up at your closing appointment with a certified check (not a personal check).

At closing, you'll also pay the remainder of the closing costs which can be estimated to be 3% of the purchase price. You'll be getting a HUD statement prior to closing which will tell you how much the balance is. If there were any additional costs that arose during the escrow process it gets settled here. Closing costs are listed on your purchase agreement (the form you signed when you submitted your offer). Typical closing costs include escrow fees, taxes, inspections, legal fees, etc.

The following situation is not typical, but if for some reason you worked with a seller who was not willing to pay for realtor commissions, you'll be paying for it here as well. It will all be listed in the HUD statement. Keep your HUD statement for tax purposes.

There may be a remaining amount that escrow will hold to cover unexpected charges that come up after closing. Any unused portion will be returned to you within a few months.

Lastly, you'll have to find and purchase home owner's insurance. This is for flood insurance, fire, etc.

As you can see, the amount of what you'll need at closing varies depending upon the sale. It's a good idea to keep up with your lender, escrow agent, and realtor during the escrow process so you'll know what you need.

This is your year!

Coreen K. Nishijo (RA)
The Master's Plan Realty, LLC
ckn0316@hawaiiantel.net
Office: (808) 488-2992