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Financial Coach Breaks Down the Hidden Costs of Homebuying in the US

Buying a new home in the United States is a significant financial decision that goes beyond the initial down payment and mortgage. As a master financial coach and debt elimination expert, Jade Warshaw of Ramsey Solutions shares her insights on the hidden costs of buying a new home and offers advice for both buyers and sellers in the current market.

The Hidden Costs of Homebuying

Jade explains that there are several hidden costs associated with buying a new home, including:

  1. Down Payment: While it’s common knowledge that buyers need to put down a down payment, Jade advises putting down at least 20% to avoid the hidden cost of private mortgage insurance.
  2. Earnest Money: This is a deposit that shows the buyer’s seriousness about purchasing the property. It is typically 1-3% of the purchase price and is rolled into the down payment once the deal closes.
  3. Closing Costs: These can be anywhere between 3-5% of the purchase price and include fees for appraisals, inspections, and property taxes.

Advice for Buyers

Jade advises buyers to make sure they have no debt, save 3-6 months of expenses, and put down at least 5% for a down payment. She also cautions against jumping into a new home purchase without selling and closing on the previous home first, and advises making the offer contingent on the sale of the previous home.

Advice for Sellers

For those considering selling their home to buy a new one, Jade advises making a contingent offer and selling and closing on the previous home before buying another one. She also emphasizes the importance of not floating two mortgages at once, which can be a risky financial position to be in.

Hot Locations in the US Housing Market

Jade notes that South Florida and Nashville are currently popular markets, with property rates increasing rapidly. She advises consumers to think of the market as concentric circles and to be willing to expand their search radius to find more affordable properties.

DIY Home Upgrades

For those looking to upgrade their existing home before selling, Jade advises doing so at the speed of cash and avoiding going into debt to finance the upgrades. She emphasizes that the goal is to build wealth through homeownership, not to pull out equity in the form of home equity lines of credit.

As you consider buying or selling a home in the US, how can you best navigate the hidden costs and make financial decisions that will help you build wealth for the future?


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