How much does it cost to buy a home?
Family & Consumer Science News
By Terri Black

Buying a home can be a very overwhelming process, both financially and emotionally. From

the paperwork to the fees and the furnish- ings, you will probably wind up spending more

than you

first anticipated. There are several costs associated with buying a home. They can be divided into the following four categories: down payment, upfront, closing and settling-in.

Your down payment ranges from zero to 10 or 20 percent of the purchase price of the home. How much you need varies according to type of mortgage, price of the home, and your credit history and income. You may qualify for 100 percent financing or a down payment assistance program that provides the funds to cover the down payment. In these instances no money is required from the borrower up front. Your best strategy is to plan on a minimum down payment of 3 to 5 percent of the purchase price. Remember, the larger the down payment you make, the lower your monthly mortgage payment.

Upfront or out-of-pocket costs are commonly incurred when buying a home. The two primary costs are for earnest money and a home inspection. When you make an offer on a house, it is usually accompanied with earnest money to show the seller that you are serious about buying the house. How much earnest money you offer de- pends on a number of factors. You should plan on setting aside $500 to $1,000 in earnest money. When your offer is accepted and you close on the property, the earnest money will be credited to you on the HUD 1 closing statement. Another important upfront cost is for a home inspection. You should always get an outside professional to inspect the home before buying it. The price of a home inspection varies depending on the size of the property. You should plan on paying $300 to $400 for a home inspection.

Closing costs are paid at settlement and average 3 to 4 percent of the purchase price. These costs include processing fees, taxes, title insurance, application fees, points and attorney fees. The HUD I settlement statement will indicate line-by-line what each fee covers. Ask questions if you do not understand something on the closing statement.

Finally, don't forget to save for settling into your new home. Settling in costs include connection fees and deposits for utilities and services. You also need moving costs to get your stuff from the old place to the new place. If you have never owned a home before you will probably need a refrigerator, washer, dryer, lawn mower, hose and several home maintenance items. You may even need blinds or window coverings. Make a list of the items you will need to purchase and estimate how much money you will spend in your first few months as a home owner.

To learn more about buying a home contact the Burke County Extension Office at (706) 554- 2119 or visit the HUD website (http://www.hud.gov/offices/hsg/ sfh/hcc/hcs.cfm) for a homebuyer workshop near you.