How Much Cash Do you Actually Need to Retire to Delaware?

Are you thinking about what it actually cost in cash the week you moved to Delaware? I'm not talking about the price of the home. I'm not talking about your mortgage or your property tax bill. I'm talking about the cash. The cash that you'll need the week of settlement before the keys ever touch your hand. Most people budget for the down payment, which yes, that is a very large number. It is definitely something that you want to take into consideration because that is the biggest number. But that is just one of five buckets that you will need. And we're going to go over all five of those buckets today. Because while yes, the down payment may feel like the whole number, it is not. So let's just start off with that down payment first, because in most cases, your down payment is coming from the sale of your current home, or it may be coming from your savings account. But in most cases, it's usually coming from the sale of your current home when you choose to retire to Delaware. And if we look at the most recent national buyer data, it appears that the average down payment is about 23% of the purchase price, which is a record high. And close to a third of all repeat buyers, meaning people that are selling their home and purchasing another home, are paying all cash. But both numbers are driven by the same thing. And that is pulling equity out of your current home to either do the down payment for your next home or pay for the entire purchase of your next home in cash. That single fact is why the next four budgets matter as much as they do. If your down payment rides on you selling your current home and the timing of all of this, that's what can make this either very, very comfortable or a little painful as we go through the process. That's exactly why that fourth bucket that we're about to talk about is overlapping costs. So let's move into the next bucket, which is closing costs. And your closing costs does include your transfer tax. Closing costs are made up of a bunch of different fees. You have attorney fees, you have title work. If you are using a mortgage, then you have financing fees. You also have the transfer tax, you have a recording fee. You also have some county tax or you have to prorate back the seller or the builder. Sometimes your appraisal is included in that, but it really depends on A, if you're using cash or B, if you're using financing. But that all makes up your closing costs. And the one item that seems to surprise people the most is the transfer tax. Delaware has a 4% transfer tax. That is 4% of the sale price. It is typically split between buyer and seller, so 2%, 2%. So whether you are purchasing a resale home or a new construction home, or you're purchasing in New Castle County, Sussex County, Kent County, it does not matter. There is a 4% transfer tax on all residential real estate. It is a one-time cut that the state gets at the time of settlement. You'll never see this bill ever again unless you sell your house, in which case you will also have the 2% transfer tax. So how do you prepare for these closing costs and what is a good estimate? I like to tell buyers whether you are purchasing new construction or a resale home, you should estimate around 4% to 5% of the purchase price that will take care of those closing costs. So on a $400,000 home purchase, you're looking at anywhere between $16,000 to $20,000 in closing costs, which I know is a huge number and a big surprise, especially for those moving out of state where your state may have 1% or 1.5% or even maybe 3%. But Delaware is the highest in the nation. It is 4% of the sale price. So in new construction, you will hear me say, if you are adding all of these options, maybe things that you could do after you purchase, I will say, hey, don't forget that transfer tax because if you continue to raise the purchase price, you are also raising that transfer tax on top of it. So your closing costs will be a little bit more expensive than if you were to take some of the options out. Now, if you are using cash and not financing, meaning not using a lender, you may have slightly less. You may be on that lower 4% of the purchase price because you would not have the financing fees. But let's talk about the closing costs and then the cash needed to close because they are two different things. So when I talk about closing costs or cash needed to close, in Delaware, you are required to have a closing disclosure sent to you at least three days before settlement so that there is no surprises at the settlement table. So at the bottom of your closing disclosure, you will see what says cash needed to close. This is your down payment, your closing costs minus your deposit. So if you are purchasing a resale home, for example, I will then ask you, what would you like to do for your EMD, which is your good faith deposit? That is part of our contract. That good faith deposit, say you put $5,000, $10,000, $20,000 down, will come off of your closing costs and your cash needed to close. But cash needed to close, you will have your down payment, your closing costs minus any deposit that you have put down. Something else that I want to bring up is in some cases, if you're purchasing a resale or a new construction home, the lender may have you purchase the appraisal before closing. That will show on the closing disclosure, but it will show as you have already paid for it. So you're not paying for it twice. They do need to put that on the closing disclosure. Also keep in mind, if you were interested in purchasing an inspection by a third party, you will need to pay for the inspection upfront at the time of the inspection. It will not be on your closing disclosure. It will not be part of your closing costs. This is something that is paid for at the time of the inspection. If you are interested in doing a home inspection, a radon inspection, and also a termite inspection, you are looking at roughly $800 on the higher side. Could be around like 790, which is why I said 800. I would just round it to that number. That is something that is paid for at the time of the inspection. The reason that I like to bring this up is because a lot of people want to focus on just the down payment, or they are not really sure the differences between the down payment and the closing costs, and the fact that sometimes the lender will ask you to pay for the appraisal upfront, as opposed to at settlement, and then you have that inspection fee. So there's things that you need to take into consideration that there's cash needed to close. There's closing costs. There's down payment. And then there's money that's already basically gone that you've paid for upfront. And listen, if you want to lay out your own numbers, not go off of what I'm just saying as a generic number, I have made a quick, real cost to moving to Delaware worksheet, and that is below in the description. It's going to walk you through all of the numbers that I'm going over, but you can insert your own numbers so you have real numbers in front of you, so it's not just a guessing game or generic of what are the numbers I'm giving right now. That is below in the description. So go ahead and grab that if you are interested. Okay, let's move on to the next bucket, the third bucket, which is moving costs. And this is something that actually has taken me by surprise multiple times. So it really depends on where you are moving from. I have some buyers that are just a state over. I have some buyers that are two states over. I have some buyers that are coming from across the country, which is going to be a more expensive move than someone that maybe lives in Pennsylvania or Maryland or even New Jersey. Let's just say that you live under 300 miles from Delaware, and these are all rough numbers. You would be looking to pay roughly $1,000 to $5,000 if you hire a moving company. If you live, say, 350 miles to 750 miles away, you would be looking at spending roughly $3,000 to $7,000, depending on the moving company that you choose. Also, keep in mind with these numbers, if you are looking for a white glove service that is going to come in, they're going to pack you up, they're going to put the, your boxes in the moving truck, they're going to then bring it here, unpack you, get you all set up. That's going to be a little bit more expensive. This is really just a moving company coming to pick up your boxes, put it in their truck, bring it with them. And then sometimes they'll help you unpack. Sometimes they won't even help you unpack, and they're really just dropping off the boxes. This is where I look into maybe a pod service, depending on if you can physically put the boxes in your own pod, but it really depends on your particular situation. Now, if you are looking from coast to coast, say you're in Washington State or California, I would be roughly looking at anywhere from $10,000 to $14,000, depending on the service and the company that you are choosing. With gas prices rising, it may be slightly more expensive than what I am estimating, but this is what I have seen across the board with people moving from out of state here. Here's also something that I want you to keep in mind. A lot of times a company will give you a quote over the phone, and what I have found in many cases is that once they get to your house and they are looking at how much stuff you have, almost always that conversation changes, not for the best, and it's more expensive than what they originally quoted you. You really want to lock in a price, if you can, with a contract before actually deciding that this is your budget, because nine times out of 10, they always say, you have more stuff than you said you did, even though you didn't. Unfortunately, you just have a quote. You don't have a binding contract. You also want to get in that contract when they are planning to drop off your items. I have seen some stories, I will not name names, but they have gone like a week, week and a half without having their furniture, they're basically living in their house or condo or wherever else they've decided to purchase, and they're just sitting on the floor or they've had to purchase an air mattress or something. You really want to have a date in your contract as to when they are dropping off your items so that you don't end up in a situation where your items, for some reason, went to a different state and they're going to take a while to get to you, because I've seen that happen too. Do a lot of research on your moving company. There's anything that I've learned in this business, do a lot of research on your moving company. This fourth bucket is for anyone that has a home that they need to sell in order to purchase the next one, or maybe they don't need to sell in order to purchase the next one, but you're essentially carrying either two mortgages or one mortgage and then still paying the property tax on the other one. Some people would like to wait to sell their old home, purchase the new one, slowly move in, and then sell their old home. In some cases, this can't happen, whether it be that your equity is tied up and you cannot float a HELOC loan or a bridge loan. Because a HELOC loan, you are looking at rates that are slightly cheaper than if you were to do a bridge loan. In a bridge loan situation, you are looking at a higher interest rate, you are looking at an origination fee, and then you are then floating both mortgages. In a HELOC loan, which stands for a home equity line of credit, you are pulling out the equity out of your old home, you will have a slightly smaller interest rate. I would estimate anywhere between 7% to 9% in order to either purchase the next one or put a down payment on the next one. But just keep in mind with either option, you will have some fees, you will be floating two different mortgages depending on how long it takes you to sell that older home. So this just comes with a lot of carrying costs that you may not be prepared for in this overall moving experience. And the last bucket that I want to talk about is basically what I'm going to call your buffering bucket. And what I'm talking about when I say buffering bucket is things that you probably weren't thinking about. The travel to get back and forth, regardless of where you live, maybe it's a drive, maybe you have to stay in a hotel, maybe you have to get an airplane ticket, or some other things that you're not thinking about is when you set up the utilities, a lot of times they want a deposit. So that's $200 to $300, depending on the utility company, you have to set up a new service for Verizon or Xfinity, and maybe they want to charge you an install fee. Clearly, if you are moving from way out of state, maybe you want to ship your vehicle here. That is also an expense. Maybe you have a pet that you don't feel comfortable with traveling in an airplane with. That is another expense. Maybe your home isn't ready exactly when you get here and you need doggy daycare. That's another expense. I mean, there's all these little things that will start to add up. So I do recommend to have anywhere from 10 to 20% buffer just to cover those costs that you may not be thinking about, but they all are included on the worksheet that is down below in the description. So like I said, if you want to insert your own numbers, if you are, hey, Jen, I don't want these generic numbers, I really want to see what the real picture is when I moved to Delaware, then by all means, download that guide is super, super helpful. It will really give you a strong vision on what the budget is, but there you have it. There are five different buckets all to take into consideration of all the moving costs and cash needed for retiring to Delaware. Not only the down payment, the closing costs, the cash needed to close your moving expenses, maybe some things that you were not thinking about. It's a really good idea to get a full picture on what your particular situation looks like before you ever take a look at Delaware. If you are interested in retiring to Delaware, I would absolutely love the opportunity to help you. My information is down below in the description, so go ahead and get set up on my calendar or you can send me an email or you can leave me a voicemail or send me a text and we can get set up for a meeting. Once again, I really hope this video helped. If it did, be sure to give me a thumbs up and be sure to subscribe to the channel. I will see you on next week's video. Hey, if you were interested in retiring to Delaware and you would love more content, check out this video right here. And if you would love to tour Delaware new construction communities with me, check out this playlist right here. And don't forget, subscribe to my channel.