Courtesy of Clint Proctor
Clint Proctor's home in Florida.
- The down payment is only one of the costs of buying a home. In most cases, you'll have lender fees, title fees, and other closing costs to pay for as well.
- You'll also need to have cash on hand to pay for moving expenses and any necessary repairs.
- Having extra cash on hand could help you afford to buy a "fixer-upper" that's being sold for a great price.
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My wife and I live in a 3-bedroom, 2-bath home, 1,361 square-foot home in South Daytona, Florida. When we bought our home in May 2014, we didn't have any children. But in the last five years, our family has grown and we now have two sons - ages four and two.
Since our home was a bit of a "fixer-upper," we were able to get it for a fantastic sale price: $92,700. But it also meant that we needed to invest more money upfront to make our home livable.
We also needed to have cash on hand to pay for our down payment and closing costs. Here's exactly what it cost to buy my home.
Down payment and closing costs were about $8,400
Let's begin with closing costs. Below is a quick list of the various fees that we owed our lender at the closing table.
- Mortgage origination fees: $945
- Appraisal fee: $400
- Survey: $250
- Credit report fee: $44
- MCC Tax Credit issuance fee: $500
- Settlement fee: $475
- Owner's title insurance: $535
- Lender's title insurance: $250
- Florida Form 9.1 and environmental 8.1 endorsements: $200
- Recording fees: $225
- City/State tax stamps: $485.33
- Total lender fees: $4,309.33
Lender fees aren't the only costs you'll need to pay for at closing. Your mortgage bank will also need you to fund your escrow count with prepaid deposits for things like your homeowner's insurance, mortgage insurance (if you need it), and property taxes.
We had to pay $2,016.30 in prepaid costs. Added to our lender fees, that brought our total cash needed at closing to $6,325.63 before any adjustments.
We asked the seller if they would be willing to pay for $2,500 worth of our closing costs in exchange for us increasing our offer price from $90,000 to $92,700. They agreed and that brought our final closing costs to $3,825.63.
Finally, we needed to add in our down payment. We bought our home with a conventional loan and a 5% down payment (we paid PMI until we later refinanced), so that added another $4,635 in cash required to close.
Total cash needed at closing: $8,460.63
Repairs and remodeling expenses were almost as expensive
With our home, the down payment and closing costs weren't the only expenses that we needed to worry about. In our case, the roof on our home was so old that we couldn't get homeowner's insurance unless we agreed to replace the roof within 30 days of completing the sale.
Putting the new roof on our home cost us another $6,500!
In addition to the roof, the wood floors in our home needed some serious TLC as well. They were severely scratched in several places and, in some spots, had deep dents and gouges.
To repair the wood floors, we needed to sand them down with a drum sander and refinish them with wood stain and a fresh coat of polyurethane.
This repair cost us nearly another $1,000. So that brought our move-in costs up to $7,500.
Having available cash can help you pounce on the best deal
So, yes, we paid nearly the same amount in repairs and remodeling expenses as we spent on our down payment and closing costs. And this doesn't even include the cost of paint, appliances, furniture, and other move-in costs.
But even without considering those expenses, I know that we needed at least $15,800 in liquid income in order to buy our home.
Even though repairs and remodeling caused our move-in costs to double, I'm so glad that we bought the home that we did.
By buying a home that needed some work, we were able to get a deal that was incredible even at the time and sounds absolutely ridiculous today. When we refinanced our home last year, the appraisal indicated that our home was worth nearly $100,000 more than we paid for it five years ago.
Part of that increase is due to overall market growth. But, honestly, our home was already a great deal to begin with. So why did other buyers stay away? Probably because a lot of them were scared away by that $6,500 roof repair.
But we were willing to pay a little more cash upfront for a killer deal. And, today, we couldn't be more happy with our home - and we definitely love our monthly mortgage payment.
If you plan to buy a home soon, try to kick your savings rate into high gear now. Not only will it take a lot of stress out of the home buying process, but will also give you the freedom to pursue the best home deals on the market.
- Read more about buying a home:
- 7 signs you can actually afford the home you want to buy
- How to buy a house with no money down
- 10 years after I bought my house, I spent over $21,000 for updates and repairs. Here are 6 expenses I never saw coming.
- A financial planner explains why you shouldn't invest the money you're saving to buy a house in the next few years
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