What You Need To Know About Saving for a Home in 2024

If you’re planning to buy a home, knowing what to budget for and how to save may sound intimidating – but it doesn’t have to be. One way to ease those concerns is to make sure you understand some of the costs you may encounter up front. And to do that, always turn to trusted real estate professionals. They can help you set a plan and take a strategic look at your budget and your process before you even get started.

Here are just a few things experts say you should be thinking about.

1. Down Payment

Saving for your down payment is likely top of mind as you set out to buy a home. But do you know how much you’ll need? While every buyer’s situation is different, there’s a common misconception that putting 20% of the purchase price down is required. An article from the Mortgage Reports explains why that’s 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 go over the various loan types, down payment assistance programs, and what each one requires. The more you know ahead of time, the easier the process will be.

2. Closing Costs

Make sure you also budget for closing costs, which are a collection of fees and payments made to the various parties involved in your transaction. 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 lender. They can provide you with answers to the questions you might have.

3. Earnest Money Deposit

If you want to cover all your bases, you can also consider saving for an earnest money deposit (EMD). An EMD is money you pay as a show of good faith when you make an offer on a 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 – it’s paying a portion of your costs upfront. You’re using some of the money you’ve already saved for your purchase to show the seller you’re committed and serious about buying their house. 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.”

Keep in mind, an EMD isn’t required, and it doesn’t guarantee your offer will be accepted. It’s important to work with a real estate advisor to understand what’s best for your situation and any specific requirements in your local area. They’ll advise you on what moves you should make so you can make the best possible decisions throughout the buying process.

Bottom Line

Thank you for taking the time to read our blog on the essential aspects of budgeting for your home purchase. Navigating the financial considerations involved in buying a home can be overwhelming, but with the right guidance, you can confidently plan for a successful investment.

If you're considering real estate in the picturesque Telluride area, Mountain Rose Realty is here to assist you every step of the way. Led by the experienced Anne-Britt Ostlund, our team is dedicated to providing personalized and expert guidance to make your home-buying journey smooth and enjoyable.

As you explore Telluride real estate and search for Telluride homes for sale, remember the importance of understanding key financial aspects such as the down payment, closing costs, and earnest money deposit. Contrary to common myths, a 20% down payment is not always necessary, and our professionals can help you explore various loan types and assistance programs tailored to your unique situation.

Closing costs, comprising fees and payments related to your real estate transaction, typically range from 2% to 5% of the mortgage. Working closely with our trusted lenders ensures you are financially prepared for these expenses and have a clear understanding of the financial commitments involved in the process.

Considering an earnest money deposit is an excellent way to demonstrate your commitment to the home purchase. Ranging from 1% to 2% of the total home price, this deposit serves as a show of good faith and can be applied towards your down payment and closing costs. Our real estate advisors can provide valuable insights into whether an earnest money deposit aligns with your goals and local requirements.

In summary, partnering with Mountain Rose Realty and Anne-Britt Ostlund means having a dedicated local expert by your side throughout the entire home-buying process. With our guidance, you can make well-informed decisions, ensuring a seamless and enjoyable experience as you embark on the exciting journey of homeownership in the beautiful Telluride, CO area.

Contact Mountain Rose Realty today to discuss your Telluride real estate aspirations and let us help you turn your homeownership dreams into reality.

Phone(970) 759-4886

Email[email protected]

Address Anne-Britt Ostlund | Mountain Rose Realty
Mountain Rose Realty
220 East Colorado Avenue Suite 210
Telluride, CO 81435

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