When buying a home there are several expenses you’ll face : Down payment, closing costs, good faith deposit, appraisal fee and inspection fee (also note that some lenders will charge an upfront credit report fee). tale a look at how this all breaks down:
Down Payment : Generally speaking, in today’s economic climate, you can expect to pay anywhere from 0% – 20% or more in down payment. However, for the purposes of this illustration we’ll assume a 3.5% down payment (the statutorily required down payment on an FHA loan).
Closing Costs : are direct and third party costs that must be paid in connection with your loan and typically include the following: Lender origination fees, discount fees (i.e., fees paid in exchange for a lower interest rate), appraisal fees, credit report fee, escrow (settlement) fee, title insurance fees, notary fees, recording fees, underwriting fees, and impound deposits, etc. Nationally, closing costs are estimated to be 2% – 5% of the loan amount. For the purposes of this illustration, let’s assume your closing costs will amount to 2.25%.
Good Faith (Earnest Money) Deposit : When a buyer makes an offer on a home, the seller will ask for a Good Faith (Earnest Money) Deposit. The earnest money deposit shows that a buyer is in good faith and is serious about purchasing a property. The earnest money deposit is usually about 1% of the purchase price. It’s important to note that the earnest money deposit is not additional funds required to closet, but rather credited toward the buyer’s down payment and closing costs at closing. For example, assume you’re buying a $100,000 home and the down payment is 3.5% or $3,500. Further assume that when escrow is opened you deposited 1% of the purchase price ($1,000) in earnest money. At closing you’ll only need to deposit an additional $2,500 toward your down payment because you’ll already have a credit of $1,000 because of your earnest money deposit. (Of course this does not include closing costs).
Appraisal : Part of your closing costs will include the fee for an appraisal. The appraisal fee, depending on the transaction is typically $350 – $550, with most appraisals in the $350 – $400 range. The appraisal is an advance out-of-pocket fee that must be paid at the time the appraisal is ordered. Like the earnest money deposit, the appraisal fee is not an extra cost, but rather quoted as part of your total closing costs.
Inspection Fee : The inspection fee is paid to the home inspector who prepares a written report for your review after investigating the condition of the home. Inspection fees are based on property type and square footage and usually range from $200 – $500. We’ll assume an inspection fee of $325 for this illustration. The inspection fee is not quoted as part of the closing costs unless an inspection is required by the lender.
So, assuming you’re buying a $100,000 home, here’s the amount of cash you’d need:

* Can you buy a home with lower costs and lower percentages? Yes! There are loan programs that require less down (VA and other programs). In addition, your lender has ways of reducing out-of-pocket expenses, and if asked, the seller will often agree to pay part (sometimes all) of your closing costs. Give us a call and tell us what you have to spend. You’ll be surprised at what we can do

On its face this question seems simple enough, but depending on the circumstances we can really get into the weeds. For the sake of FAQs on this site, set forth below are general guidelines (again, general guidelines). In qualifying to purchase a home, there are four things to consider: Cash to close, income, debts, and credit. Let’s take the last issue first. As a general proposition a middle credit score in the 640 – 660 range will qualify you for the 3 most common loan programs; Conventional, VA and FHA. Of course you can qualify for financing with lower scores (and there are some loans that may require scores that are higher), but generally speaking 640 – 660 will get you in the kingdom. Of course there’s a plethora of other assumptions at work here (no unpaid liens, no bankruptcy within the past 2 years, etc).
Stable, sufficient, verifiable income is also required with no major employment gaps. Gaps must be explained and should not have resulted in a failure to meet financial obligations. As is the case with all underwriting guidelines there are exceptions as well as supplemental rules for certain situations.
Debts are evaluated in relation to income to determine a debt-to-income ratio. This is a key component of mortgage loan risk assessment. For example, assume your monthly gross income is $5,000. Generally speaking, the maximum debt permissible is about 42% of your income. Debt is defined here as revolving and installment payments (those items appearing on your credit report) along with your mortgage payment (principal, interest, taxes and insurance-also mello roos & homeowner fees, if applicable). Consequently, no more than $2,100 of the $5,000 monthly income can be allotted for repayment. If your current bills and proposed mortgage payment exceed this amount you may not qualify. Again, this is a general guideline. There are some circumstances in which FHA and VA may allow you to go a little higher than 42% and some instances where conventional financing my insist that the DTI ratio is a little less.

As technical as real estate can get, interestingly enough, this is one of the most difficult questions to answer. It seems like a no brainer on the surface – just give the 30 day notice 30 days before escrow is scheduled to close. Unfortunately, it really isn’t that simple. The key phrase here is 30 days before escrow is scheduled to close. Unfortunately, escrow does not always close when scheduled. In fact, if you speak with any escrow officer they they’ll tell you that 50% or more of escrows don’t close on the date specified in the Purchase Contract & Escrow Instructions. And it doesn’t mean that anyone did anything wrong or any party to the contract failed to perform.
In 20+ years we’ve learned that every transaction has a glitch-sometimes it’s a major glitch and sometimes it’s minor. A glitch in this instance is simply a problem that arises that must be solved before escrow can close. The timeliness of the resolution often depends on the skill of the problem solvers. Sometimes the solution is simple. Perhaps the termite inspector forgot to note on the termite report that the property is free of visible infestation. Correct, sign and re-submit. A slight delay ensues, maybe 24 hours. But other problems can be far more complex. Remember, it takes an army of people to facilitate a real estate closing-appraisers, inspectors, underwriters, doc drawers, insurance brokers, title officers, escrow officers, loan officers, government agencies, selling brokers, listing brokers, buyers, sellers, lawyers, etc. As you can see, with this many hands in the fire there are ample opportunities for things to go awry. Unfortunately, this is the nature of the beast.
This doesn’t even take into consideration those factors outside of everyone’s control. Consider the following :
1) A brand new vacant home was severely vandalized during the last week of escrow and the condition was unknown until the buyers did their final walk through 2 days before closing. A 2 week delay ensued (windows and new granite had to be ordered and installed).
2) On the Friday our buyer’s loan was to fund, the lender’s system went down and no wires could be sent. The problem was not resolved until Wednesday morning of the following week.
3) On the morning of the closing, a water main burst two doors down from the subject property and flooded the lower end of the street, damaging the first level flooring and drywall.
4) The week before closing a major lien arose against the seller (this lien did not appear on the preliminary title report). Escrow still closed, but it was six and a half weeks later—when the lien was withdrawn after an audit by a government agency.
So yes, you have to submit the 30 day Notice, but explain the complexity of the matter and ask the landlord to give you some wiggle room. Clearly, you don’t want to have payment overlap, but try not paint your self into a corner wherein you tell the landlord you’re closing on the 29th and vacating by 5 P.M. on the 30th, with the landlord scheduling a carpet cleaning on the night of the 30th, and a new tenant is scheduled to move in on the morning of the 1st. Don’t do this!!!
If there is a single hiccup, and often there is, you may find your self standing there at 5 P.M. on the 30th with two eighteen-wheelers full of furniture and no where to move. It is imprudent to cut it this close. In submitting your 30 day Notice, save yourself some grief by leaving yourself some room to breathe.

Following our earlier example of a $100,000 purchase, here’s a breakdown of the payment (this example assumes FHA financing with an interest rate of 3.75%, taxes of 1.25% annually [San Diego County], up front mortgage insurance of 1.75%, annual mortgage insurance of .85%, and a loan amount of $98,188—hazard insurance is not included):

We’d then take the monthly payment of $627.24, and divide by the number of thousands borrowed, 98.188, to determine the payment for each thousand borrowed.
$627.24 / 98.188 = $6.39.
Having this knowledge, we now know that based on today’s interest rates and other associated costs in San Diego County, we’ll have to pay about $6.39 for each thousand we borrow. Consequently, if the desire is to buy a $450,000 home, the mortgage payment is roughly $2,875.50 (450 x $6.39).
Again, this is FHA and does not include fire insurance. If you’d like to use our mortgage calculator, visit our Financing Tab and select Calculator.