I find that often people are on one side of the spectrum.  Either they have been told by others that in order to own a home they have to have tens of thousands of dollars or on the flip side they think that just anyone can buy a house, no problem.  The realistic answer probably falls somewhere in between.

When you purchase your house you will likely be responsible for the following . . . .

The down payment is the amount of money that you must pledge for the right to obtain permanent financing for your purchase.  The amount of the down payment necessary will vary largely depending on the loan program that you’ve decided to pursue.  Some first time home buyers will choose to use FHA financing which only requires an initial down payment of 3.5% but requires certain ongoing fees such as mortgage insurance.  Other move up home buyers or investors will choose to put 20% or more down on their purchase in order to get the best interest rate and increase monthly cash flow.  Click here to find out more about home financing options.

The earnest money deposit is the amount of deposit money that a buyer will pledge along with their offer as a good faith initiative remain committed to the process of purchasing the property.  Essentially its putting your money where your mouth is.  Get more details about earnest money and how much you might need.

The option fee is the small amount of money that the buyer pledges along with the contract for the unrestricted right to terminate the contract inside of  X number of days.  The option period basically cements the fact that the contract is contingent upon things like  a property inspection and due diligence.  Find out more about the option period and how long it lasts.

The closing costs are the fees associated with closing on the loan and subsequent purchase of your new home.  The bulk of these fees are related to your financing and loan approval and can vary depending on what loan program you are working with.  Real more about closing costs and how much you should budget.

Once you’ve purchased the house and are a home owner, you will face a separate set of ongoing monthly and yearly responsibilities.  Find out how much it costs to own a home.