Do You Know What It Costs To Buy a Home in Texas?
It’s one thing to want to own your own home…it’s another to be able to afford one. Here is a run-down of estimated costs to buy a home in Texas you must consider…
Understanding Down Payments and PMI
PMI – Private Mortgage Insurance
“PMI is a type of mortgage insurance that buyers are typically required to pay for a conventional loan when they make a down payment that is less than 20% of the home’s purchase price. Many lenders offer low down payment programs, allowing you to put down as little as 3%. The cost of that flexibility is PMI, which protects the lender’s investment in case you fail to repay your mortgage, known as default. In other words, PMI insures the lender, not you.
PMI helps lenders recoup more of their money in a default. The reason lenders require the coverage for down payments below 20% of the purchase price is because you own a smaller stake in your home. Mortgagers are lending you more money up front and, therefore, stand to lose more if you default in the initial years of ownership. Loans insured by the Federal Housing Administration, or FHA loans, also require mortgage insurance, but the guidelines are different than those for conventional loans (we’ll cover that later).”
– Source: Investopedia
The following example is for a $360,000 home with a 3.5% interest rate conventional 30-year mortgage. Includes $8000 property taxes and $2000 annual home owners insurance (both are estimates…amounts vary depending on home).
|
|
5% Down |
10% Down |
15% Down |
20% Down |
|
Purchase Price |
$360,000 |
$360,000 |
$360,000 |
$360,000 |
|
Down Payment |
$18,000 |
$36,000 |
$54,000 |
$72,000 |
|
Loan Amount |
$342,000 |
$324,000 |
$306,000 |
$288,000 |
|
Monthly Payment: |
|
|
|
|
|
Principal & Interest |
$1535.7 |
$1454.90 |
$1374.08 |
$1293.25 |
|
Property Taxes |
$666.67 |
$666.67 |
$666.67 |
$666.67 |
|
Home Owners Insurance |
$200 |
$200 |
$200 |
$200 |
|
PMI |
$213.75 |
$202.50 |
$191.25 |
$0 |
|
Monthly Payment |
$2616.15 |
$2524.07 |
$2431.99 |
$2159.92 |
NOTE
You can play with a calculator on Investopedia.
All the Home Buying Costs Explained
It’s one thing to want to own your own home…it’s another to be able to afford one. Here is a run-down of estimated costs you must consider when buying a new home.
Read: https://www.consumerfinance.gov/owning-a-home/loan-estimate/
NOTE
Please note these are estimates only and will change based on the area where your home is located, price of home, lender requirements, negotiated terms on sales contract, etc.
The following estimated example is for a $360,000 home with 5% down payment with a 3.5% interest rate conventional 30-year mortgage. Includes $8000 property taxes and $2000 annual home owners insurance (both are estimates…amounts vary depending on home).
|
Item |
Estimated Cost |
Your Cost |
|
Purchase Price |
$360,000 |
|
|
Down Payment (5%) |
$18,000 |
|
|
Loan Amount |
$342,000 |
|
|
TO MAKE AN OFFER & INSPECT HOME |
||
|
**Earnest Money (typically 1% of purchase price) |
$3600 |
|
|
**Option Fee (negotiable) |
$500 |
|
|
Home Inspection |
$450-800 |
|
|
Termite/Pest Inspection (required by lender) |
$125-150 |
|
|
Pool Inspection (if home has pool) |
$150-200 |
|
|
HVAC Inspection (usually recommended on older homes) |
$160-200 |
|
|
Total to Get Started |
$4675–5450 |
|
|
PREPAIDS |
||
|
Prorated Taxes |
$2000 |
|
|
Prorated Home Owners Insurance |
$2858.33 |
|
|
Pre-Paid Interest |
819.86 |
|
|
Total Prepaids |
$5678.19 |
|
|
CLOSING COSTS |
||
|
Title Insurance (calculate) sometimes paid by the Seller |
$2202 |
|
|
HOA Transfer Fee + Capitalization Fee |
$300 |
|
|
Loan Application Fee |
$300 |
|
|
Credit Report Fee for Lender |
$65 |
|
|
Appraisal Fee |
$400 |
|
|
Loan Origination Fee (negotiable) |
$3600 |
|
|
Survey |
$425 |
|
|
Flood Certificate |
$40 |
|
|
Doc Prep Attorney Fee |
$200 |
|
|
Settlement Fee |
$250 |
|
|
Recording Fees |
$50 |
|
|
Underwriting Fee |
$200 |
|
|
Tax Service Fee |
$75 |
|
|
Total Closing Costs |
$8107 |
|
|
TOTAL TO PURCHASE HOME |
||
|
Down Payment |
$18,000 |
|
|
Earnest Money, Option Fee, Inspections |
$5050 |
|
|
Prepaids |
$5678.19 |
|
|
Closing Costs (minus earnest money & option fee already paid) |
$4007 |
|
|
Sellers Contribution to Closing Costs** |
$0 |
|
|
Total Paid at Closing |
$32,735.19 |
|
|
TOTAL TO BUY HOME |
$37,785.19 |
|
|
OTHER THINGS TO CONSIDER |
||
|
Moving Costs |
|
|
|
Yard Maintenance Equipment |
|
|
|
New Appliances (W&D and Refrigerator) |
|
|
|
Repairs to Home |
|
|
|
Updates to Home |
|
|
|
Window Coverings (new construction homes) |
|
|
You may be able to negotiate for the Seller to pay part of the Closing Costs up to a certain percentage (read more), depending on the loan. This could reduce your total amount to buy a home by a few thousand dollars. However, in a HOT real estate market, most Sellers will not agree to this.
Buying & Selling Real Estate Is a Huge Investment
Don’t You Deserve a Five Star Real Estate Agent?
Sheila Cox
832-779-2890
REALTORS DON’T “JUST” SELL HOUSESReal estate agents don’t “just” sell houses; we sell a SERVICE to effectively guide home buyers and sellers through the entire real estate transaction, which usually takes several months. We are more like real estate consultants than we are salespeople. That’s probably why 86 percent of all home buyers and sellers choose to hire a real estate agent when buying or selling a home! Buying or selling a home is not like buying or selling a TV, a computer, or a car. You can’t buy/sell a home on the Internet with a couple of clicks. There are MANY legal aspects, deadlines, and requirements that most people are not trained to handle. What’s more…mistakes along the way can cost you thousands and even hundreds of thousands of dollars. The financial risk is much greater than just about anything else you may buy.
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