Zero Down = Zero Cash-Not really


I can’t begin to tell you how many people are under the misconception that “Zero Down” means you will need no money what-so-ever to buy a home. Folks, not to bust your bubble, but it just isn’t true. Even with a “Zero Down” you will need some cash for some of the cost associated with buying a home, so prepare.

Let’s start with OBVIOUS cost:

1.      There will always be Earnest Money. Normally this is 1% of the purchase price of the home and yes folks, that check will be cashed! Earnest Money is due almost immediately upon the acceptance of your offer and must be receipted by the title company.

2.      Then there’s the Option Money. This is the money, normally $150 to $250 that allow you a set amount of time, normally 7 days, to have the home inspected. This check is made out to the seller and yes, it is cashed immediately.

3.      Home inspection cost are paid by the buyer up front and run $375 and up depending on the home and types of inspections.

4.      You will have the appraisal to pay for; this is normally upward of $350.

5.      If your lender does not accept the survey, then you’ll have survey cost that will be $400 plus.

6.      Don’t forget final closing cost which can run 2 to 4% of the purchase price depending on the type of loan you’re securing.

These are the OBVIOUS cost, and few are negotiable; they’re just part of the buying process. What about the “HIDDEN” cost? Here are the ones most often forgotten.

The HIDDEN cost of buying:

1.      If currently in a lease and you must break it, the payout of the lease.

2.      Utility deposits, unless you are staying with the same utilities. Even then there may be disconnect and connect fees.

3.      Packing supplies.

4.      Moving company or truck rental cost.

5.      Lease back cost or temporary lodging cost.

6.      Storage cost.

7.      Time off.

Suddenly feeling overwhelmed? Have that “Lions and tigers and bears, oh my!” feeling? Stop, breathe and call a Realtor.

There’s always HOPE and HELP

The beauty of buying a home these days, is there is always HOPE and HELP. I tell my kids, UTILIZE YOUR RESOURCES. If you’re reading this, you’ve obviously taking the first step by beginning to educate yourself on the buying process. Now, take the next step and reach out to a Realtor, who can answer any lingering questions you have.  They’ll explain the rest of the process and more importantly introduce you to lenders that will be able to help you realize your dream of home ownership. In fact, all through the deal, your Realtor will provide support, coordination and professional recommendations.

So even though “Zero Down” doesn’t mean what you thought, at least you now know a little more then you did, and that’s half the journey; let’s travel on together.