The Total Cash Needed to Buy a Home


Purchasing a home can be overwhelming. Aside from many of the intangible aspects to the home buying process, the money it takes to purchase a home can be overwhelming as well. Preparation is key, the core of that preparation are your finances. Understanding what to expect and being prepared financially will make the process less stressful. I thought I would go through the an example of the amount of cash that goes into a home purchase from starting your search to getting your keys on closing day.

For my example I will use the following property currently listed:

Address: 8345 9th Ave NW, Seattle 98117

List Price: $680,000

Taxes: $4,461

1. Down Payment - 20%, $136,000

2. Closing Costs

- Title/Escrow/Appraisal - $2,600

- Loan Origination - $1,600

- Insurance Premium/Homeowners Insurance - $1,100

3. Inspections

- Home Inspection - $550

- Sewer (scope) Inspection - $250

4. Miscellaneous - $500

$5,300 - Items 2, 3, 4

$1,300 - Items 3 and 4

$2,230 - Assuming this is happening on June 1st, you would be paying the rest of the years' taxes

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$8,830 Total Cash in Addition to Down Payment

While the numbers above are on the conservative side, in addition to the down payment of $136,000 (20%), the buyer will be bringing an additional $8,830, cash, to the closing table.

The amount of cash required by the buyer comes to a total of $144,830.

Closing costs can have a major affect on a buyer's purchasing power especially when a buyer only has 3-5% of the down payment in cash. I encourage all my buyers to get a cost estimate from their lender to get an idea of how much the closing costs are so they can adequately prepare.

© 2015 by Cyrus Fiene, Coldwell Banker Bain