It may not seem very safe to plan a budget and know how to save money if you are planning to purchase a home. But it does not have to. To ease your concerns, it’s important to understand the costs that you will face upfront. To do this, you should always seek out trusted professionals. You can set up a strategy and look at the budget and process before you start.

Here are a few tips from experts on what you should consider.

Pay Down Payment

As you prepare to purchase a house, saving for your deposit will likely be at the forefront of your mind. What amount will you need? There’s a misconception that a 20% down payment is necessary. While each buyer’s situation may be different, it’s not always the case. An article in the Mortgage reports explains that this is not always true:

“The myth that you need to put down 20% on a home is false. . . . “The right amount to save depends on how much you have saved and what your goals are for buying a home.”

Partner with a trusted real estate professional to discuss the different loan types and down payment programs. They will also explain what is required for each. You will find the process easier if you are prepared.

Closing costs

Budget for closing costs. These are the fees and payments you will make to all parties involved in your deal. Bankrate explains

“ The closing costs you pay are fees that you must pay to complete a real estate deal, such as refinancing your mortgage or purchasing a home. These costs can be anywhere from 2 to 5 percent on the mortgage. It is important to prepare financially for these costs.”

Working with a lender you trust is the best way to know what you will need at closing. You can get answers to any questions you may have.

Earnest Money Deposit

You can save for an earnest deposit (EMD) if you want to be sure you have covered all bases. The earnest money deposit (EMD) is a sum of cash you pay to show your good faith in making an offer. Realtor.com states that it is usually between 1% to 2% of the home’s total price.

This deposit is similar to a credit. This is not an additional expense but a payment of a portion upfront. You are using money that you have already saved to show the seller that you are serious and committed to purchasing their home. Realtor.com explains what it is and how it can be used as part of the sale:

It shows the seller that you are a serious buyer. . . If all goes according to plan and the seller accepts the buyer’s offer in good faith, the earnest funds will be used for the down payment and closing cost. Earnest money is essentially paying more upfront for the down payment and closure costs .”

Remember that an EMD is not required and does not guarantee your offer’s acceptance. Working with an advisor is important in order to determine what’s right for you and to learn about any local requirements. You’ll get advice on how to proceed so that you can make the right decisions during the entire buying process.

Bottom Line

It is important to know what you should save up for when purchasing a home. You’ll be able to get answers from a real estate expert if you partner with one.