How much money does it cost to buy a home? What are some loan options that are available? What are the different types of fees that come with buying a home in addition to your down payment?

How much does it cost to buy a house in San Diego?

Now, some of you probably have enough cash to actually just buy a house outright. And if you do awesome, you're rich, call me. 🤑

But the rest of us, we don't have enough cash to buy a home outright, so we're going to be financing it. So let's talk to you about how much out of pocket it costs to buy a home in San Diego.

Your out of pocket costs will come into two categories,

1. Down Payment

2. Closing Cost.

How Much Money Do You Need For A Down Payment?

Your down payment can range from zero to hundreds of thousands of dollars. Let's start with zero.

• The number one zero down loan product is going to be the VA Home Loan. The VA Home Loan is reserved for those of you that have served in the military. So if you or your spouse have served, you probably have access to this loan product.

• The next zero down loan product is going to be the USDA Loan. Yes, the same USDA that tells you you're buying choice or prime beef. The USDA home loan is for homes that are being bought in agricultural areas. So in San Diego think Ramona.

• The third zero down product if you're buying a home, it's going to be down payment assistance. For down payment assistance. You're basically using funds provided by the state or the state room program, that's a grant for your down payment. There's extra guidelines that come involved in that. You can give me a call if you want to chat about that.

Now, if you're not falling into one of those categories for the zero down, which most of us don't, then you're going to have either an FHA or conventional loan, and your minimum down payment is going to be three to three and a half percent down.

Obviously you put more down, and the more you put down the less your monthly payment is going to be because you're borrowing less money. Now, if you put less than 20% down, then you're going to have a small fee added on to your monthly payment called private mortgage insurance or PMI.

The next fee involved in buying a home that's going to come out of pocket is your closing costs.

Now your closing costs can vary quite a bit. They're comprised of basically three things. You have prepaid interest, property tax, and then you have some miscellaneous fees.

1. Let's start with prepaid interest. So your lender is going to collect interest from the day you close through the rest of that month, because you're not making a payment for that month. So they're going to pre charge you for that interest.

2. The next is property tax. Your lender is going to pay your property taxes for you typically. So what they're going to do is they're going to collect a certain amount of month's worth of property tax to have a reserve, so when those taxes are due, they can pay it for you. How many months are they going to collect? That depends on which month you close in. This is why it can be very difficult to tell somebody upfront how much their closing costs are going to be.

3. The third category closing costs are basically miscellaneous fees. So escrow fees, courier fees, notary fees, small things like that that add up. Once you place an offer and the seller accepts, then your lender will be able to tell you much more accurately how much your closing costs are going to be. If you're looking for a ballpark number though, around 2% is usually a pretty safe number to use.

I'm sure you have more questions, if you do, please call or text Jeremy McHone at 971-0791.

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