What to Save For When Buying a Home: A Complete Guide for Homebuyers in 2025

Richard Cunningham • February 5, 2025

Purchasing a home is one of the most significant financial decisions a person can make, and the process can feel overwhelming, especially when it comes to saving. While many people focus on the down payment, there are numerous additional costs to consider when preparing for homeownership. Understanding what to save for will help potential buyers better prepare financially and avoid surprises along the way. Here’s a comprehensive guide to the essential expenses every homebuyer should factor into their savings plan.

1. The Down Payment


The down payment is often the first thing that comes to mind when thinking about home buying expenses, and for good reason—it’s one of the largest upfront costs. Typically, the down payment will range from 3% to 20% of the home’s purchase price, depending on the type of loan you choose and your financial situation.


  • Conventional Loans: For a traditional mortgage, most lenders require a down payment of at least 20%. However, there are options that allow for lower down payments, such as 3% for first-time homebuyers or 5% for a typical buyer.
  • FHA Loans: If you are a first-time homebuyer or have a less-than-perfect credit history, you might consider an FHA loan, which allows for a down payment as low as 3.5%.
  • VA Loans: Veterans, active military personnel, and eligible surviving spouses may qualify for a VA loan, which often requires no down payment at all.


While a larger down payment can reduce your monthly payments and help you secure a lower interest rate, it’s crucial to balance this goal with other financial needs, such as closing costs and emergency savings. It’s important to be realistic about how much you can comfortably save while still meeting other financial goals.


2. Closing Costs


Once you’ve saved for the down payment, don’t forget to account for closing costs. These expenses occur at the end of the buying process, typically at the closing table when you sign the official paperwork to finalize the sale. Closing costs can range from 2% to 5% of the home’s purchase price, and they cover a variety of fees, including:


  • Lender fees: These fees cover the cost of processing your loan application and any associated paperwork.
  • Appraisal fees: Lenders often require a professional appraisal to determine the home’s value before approving your loan.
  • Inspection fees: A home inspection is essential to identify potential issues with the property before finalizing the deal.
  • Title insurance: This protects you and the lender against any legal issues that may arise with the property’s title, such as unresolved ownership claims.
  • Attorney fees: In some states, hiring an attorney for the closing process is required.
  • Escrow fees: These fees are for the services of a third-party company that ensures the transaction is handled fairly and securely.


While it’s easy to focus solely on the down payment, homebuyers should also factor in these additional costs and make sure they have enough saved up to cover them without sacrificing other financial goals.

3. Home Inspection and Appraisal


Before buying a home, you’ll need to conduct a home inspection and appraisal. These are both essential steps in the home buying process, as they help ensure that you’re making a wise investment.


  • Home Inspection: This is an important step in identifying any underlying issues with the property. The cost of a home inspection typically ranges from $300 to $500, depending on the location and size of the home. The inspection can uncover problems such as plumbing issues, roofing concerns, or electrical problems that may require costly repairs. Some buyers may even request additional inspections, such as pest inspections or mold assessments, which come with extra costs.
  • Appraisal: Lenders require an appraisal to ensure that the home’s value justifies the loan amount. Appraisals typically cost between $300 and $600. If the home’s appraised value comes in lower than the agreed-upon purchase price, you may need to negotiate with the seller or cover the difference yourself.


Both of these steps are crucial in making an informed decision, and homebuyers should be prepared to pay for them upfront. The cost of these services should be considered as part of your overall savings plan.


4. Property Taxes


Property taxes are an ongoing cost of homeownership and can vary greatly depending on your location. Some states or counties have higher property taxes than others, which can impact your monthly mortgage payments. Property taxes are typically collected by the lender as part of your monthly mortgage payment and placed in an escrow account until they’re due.


When buying a home, it’s important to research the property tax rates in your area. Understanding how much you’ll owe each year can help you budget for this recurring expense. In some cases, your lender may require you to prepay a portion of the property taxes at closing.


5. Homeowners Insurance


Homeowners insurance is required by lenders to protect the property in case of damage or loss due to accidents, theft, or natural disasters. The cost of homeowners insurance varies depending on factors such as the location, value of the home, and coverage limits.


Typically, homeowners insurance costs anywhere from $500 to $1,500 per year, depending on the home and its location. Many lenders require you to pay for your first year of insurance upfront at closing. It’s important to shop around for the best rates and coverage to ensure that you’re adequately protected in the event of an emergency.


6. Moving Expenses


Once you’ve bought your home, you’ll need to plan for moving costs. Moving can be expensive, and the cost can add up quickly depending on how far you’re relocating and how much stuff you need to move. Some of the common expenses include:


  • Hiring a moving company: Hiring professional movers can cost anywhere from $500 to $2,000, depending on the size of your home and the distance you’re moving.
  • Packing supplies: Boxes, tape, bubble wrap, and other packing materials can add up to several hundred dollars.
  • Cleaning and repairs: Before moving in, you may need to clean the house or make minor repairs. Setting aside funds for these tasks can help ensure your move is smooth.


7. Home Maintenance and Repairs


Finally, it’s essential to budget for home maintenance and repairs. Owning a home comes with ongoing upkeep, including things like lawn care, HVAC maintenance, roof inspections, and plumbing repairs. Setting aside a small emergency fund for home repairs can help prevent you from being caught off guard when issues arise.


A good rule of thumb is to set aside 1% of the home’s value each year for maintenance and repairs. If your home is worth $300,000, that means setting aside $3,000 annually for upkeep.

8. Incorporate Multifunctional Furniture


For small spaces or homes that need to maximize functionality, multifunctional furniture is a game-changer. Items like storage ottomans, coffee tables with hidden compartments, or sofas with built-in storage help optimize space while keeping your home organized. Choose pieces that serve dual purposes to avoid overcrowding and maintain a tidy, uncluttered look. Dining tables that double as workstations or storage benches that also function as seating provide both practical storage solutions and style. Multifunctional furniture is especially important in homes where space is limited, making it easier to keep everything organized while maintaining an attractive living space.


Final Thoughts


Buying a home is an exciting but costly endeavor, and understanding the full scope of expenses can help you be better prepared. While saving for the down payment is important, it’s equally vital to budget for closing costs, inspections, property taxes, insurance, and other ongoing expenses. By planning ahead and saving for these costs, homebuyers can ensure a smoother transition into homeownership without the stress of unexpected financial burdens.


If you’re considering buying a home, it’s always a good idea to speak with a financial advisor or real estate expert who can help guide you through the process and provide tailored advice based on your specific situation. With proper planning and savings, you’ll be well on your way to achieving your dream of homeownership.

Source: https://www.keepingcurrentmatters.com/2025/01/09/what-to-save-for-when-buying-a-home/


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MARCH 2025 EVENTS

By Richard Cunningham • March 1, 2025
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By Richard Cunningham • March 1, 2025
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By Rick Cunningham • March 1, 2025
Selling a home in the spring is an exciting opportunity for homeowners looking to capitalize on the season’s energy and warmth. But even with the market heating up, sellers can still make mistakes that hinder their chances of achieving a quick sale at top dollar. As spring brings fresh opportunities, it's essential for sellers to avoid common pitfalls to maximize their success. Let’s take a look at the three biggest mistakes that homeowners often make when selling—and how to avoid them. 1. Overpricing the Property Spring often brings an influx of buyers eager to make moves before the summer. However, some sellers make the mistake of overpricing their homes, thinking that a higher price will net them a bigger profit. While it’s tempting to aim high in a competitive market, setting the right price is one of the most important factors when selling. Overpricing can backfire, leading to fewer showings, longer market times, and potentially price reductions that make the property seem less desirable. When pricing a home, it's crucial to look at comparable properties in the neighborhood, taking into account location, square footage, and amenities. A listing price that's too high can result in missed opportunities as buyers may quickly bypass your home in favor of better-priced options. Buyers are often well-versed in market trends and will shy away from homes that seem out of their price range or don't offer the same value as others in the area. 2. Neglecting the Home’s Curb Appeal In the spring, homes with a fresh, inviting appearance stand out. Sellers who fail to focus on curb appeal may miss out on capturing the attention of potential buyers. First impressions matter, and your home’s exterior is the first thing buyers will see when they pull up. A well-maintained yard, vibrant flowers, and a clean driveway make an immediate impact. Neglecting your home's curb appeal could signal to buyers that the home’s interior may be in disrepair too. To avoid this, take the time to trim the lawn, plant colorful flowers, and ensure that the exterior is clean and free of clutter. Minor repairs such as repainting the front door, fixing a broken fence, or power-washing the siding can all contribute to creating a welcoming atmosphere. Enhancing curb appeal not only helps your home stand out but also establishes a sense of pride in ownership. 3. Failing to Stage the Home Properly When preparing to sell, it’s easy to overlook the importance of staging. Spring is all about renewal and freshness, and your home should reflect that by showcasing its best features. A cluttered or outdated interior can discourage potential buyers, who may have a hard time visualizing how their belongings will fit in the space. Staging is more than just cleaning and organizing—it's about creating an environment where buyers can imagine themselves living. Consider using neutral tones, optimizing lighting, and rearranging furniture to highlight the flow of each room. If your home is empty, renting furniture or bringing in a professional staging company can make a significant difference. Buyers are often drawn to spaces that feel welcoming, spacious, and stylish. With proper staging, a home can appeal to a wider range of buyers, especially in the busy spring market. Spring Sellers: The Right Mindset for Success The spring market is one of the most favorable times to sell a home, as many buyers are eager to find a place before the summer months. However, achieving a successful sale requires preparation, strategic pricing, and a little extra care in presentation. Avoid these common mistakes to give your home the best chance of standing out and attracting the right buyer. By pricing your home correctly, enhancing curb appeal, and properly staging the interior, you’re setting yourself up for a smooth and successful sale. When the seasons change, so do opportunities. Buyers are more likely to be attracted to homes that reflect the vibrancy and freshness of spring, so use this to your advantage. Take the time to showcase your property in its best light, and you'll be more likely to receive offers that match your expectations. To get expert advice tailored to your local market, reach out to a trusted real estate agent. They can help guide you through the selling process, avoid common pitfalls, and create a strategy that works for your unique property. Spring into action now, and with the right steps, you’ll be well on your way to a successful sale! Source: https://www.keepingcurrentmatters.com/2025/02/05/the-3-biggest-mistakes-sellers-are-making-right-now/
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