When buying a home, there are several expenses that you need to be prepared for. The first expense is the initial deposit(earnest money), which is typically paid when you make an offer on a property. This deposit shows the seller that you are serious about purchasing the property, and it is usually around 1-3% of the purchase price. In the competitive Monterey Peninsula market, strong offers are putting down 3% earnest money. The second expense is the down payment, which is a percentage of the purchase price that you will need to pay upfront. This amount can vary depending on the type of mortgage you choose, but it is usually between 5% and 20% of the purchase price.
In addition to the initial deposit and down payment, there are also closing costs to consider. These are the fees associated with finalizing the sale of the property, and they can include things like escrow fees, title insurance, appraisal fees, legal fees, and home and pest inspection fees. Your initial deposit can go towards some of these costs. Overall, buying a home can be a significant financial investment, and it's important to be prepared for all of the expenses that come with it. Often sellers will cover many of these.