Down Payments, Mortgage, and Closing Fees - How First-Time Buyers Need to Plan

Buying a house for the very first time can be exhilarating--at least, up until the harsh reality of what exactly it's gonna cost becomes apparent. If down payment and walk away has been your strategy, then congratulations, you're sadly delusional. There will be surprises awaiting you faster than there are tickets on the road in Nassau County. So, let's detail what first-home buyers **really** need to be ready to fork out for today, without the spin.

The Down Payment: Your First Hard Lesson

Let’s start with the biggie—the down payment. Everyone speaks of 20% down, but be realistic—most first-home shoppers can barely muster 6-7%, says the National Association of Realtors. On Long Island, where the average house value is around $650,000, that's $39,000-$45,500. If you're house-hunting for FHA loans, you can drop down to 3.5%, but then you're forced to deal with private mortgage insurance (PMI), aka another way for lenders to guarantee you keep paying them.

Mortgages: It's All About the Payments

Your mortgage isn't what your lender tosses your way. It's principal, interest, taxes, and insurance (PITI). Interest rates haven't been very stable, hovering around 6.7% for a 30-year fixed mortgage. So for a $650,000 house with 10% down, your mortgage (plus taxes and insurance) can be between $5,000 and $5,500. And don't even get me started on prepaid interest—you're paying for interest ahead of time even before your very first mortgage payment even begins. Because why not, of course, should the bank take a little extra from you?

Closing Costs: The Sneaky Wallet Slayer

Closing costs are the luxury hotel's version of resort fees—a surprise, yes, but unavoidable, yes. Oftentimes, they're between **2-5% of the purchase amount**, so on a **$650,000 house**, be ready to write a check for another **$13,000-$32,500**.

What’s included? That's where money ends up disappearing.

Loan Origination fees - Lenders love their fees.

Title insurance – So your house can't be claimed by some cousin from afar.

Appraisal and house inspection – So your house isn't a money pit.

Attorney fees – There's nothing done in New York without a lawyer.

Prepaid taxes and insurance on your house – Lenders compel you to prepay them so that you don't 'forget.'

Even better? Some of them are negotiable, i.e., if you're smart, you can persuade the seller to cough up some cash for your closing fees.

The Hidden Charges First-Time Buyers Miss

Even after you've signed away your life, there's still more money being shelled out. There's still money for:

Moving fees – If you don't wish to beg your friends for cash (and risk your sofa being smashed), professional movers will be between **$2,000-$4,000**.

Home maintenance and repairs – Budget for paying a minimum of **1-2% of your house's value every year** for mending what's broken when least convenient.

Furniture and appliances – don't include your futon and your Ikea lamp when stocking a house. Figure on laying out **$5,000-$10,000** with impunity.

Utility bills and property taxes – New homeowners are surprised with **big utility deposits** and the very first wave of property taxes, which arrive earlier than expected.

Prepared, not Surprised

Buying a house is possibly the single biggest money decision you’ll ever make, and not being fully aware of the actual costs can leave you with some serious remorse. Plan ahead for your down payment, mortgage, closing costs, and post-move bills, and you’ll avoid money meltdowns. If you must **deal with Long Island's mercurial real estate scene**, find an agent who can **advise on strategy and steer you away from headaches.

Buying your first home should be exciting—not overwhelming. With the right plan, you can avoid surprise costs, negotiate smartly, and secure a home that fits your budget.

📩 Email me at Dean@TheBeaconTeam.com
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