IS A DOWN PAYMENT REALLY NEEDED?

One of the biggest barriers to home ownership in the country is the money needed to buy a home. The money you need is broken down into 2 categories: downpayment and settlement costs. Your downpayment will vary depending on which loan program you choose.

The three major loan programs are:

FHA - Federal Housing Administration

VA - Veterans Affairs Loan

Conventional

Each of these programs has its own loan limits, down payment requirements and qualifying guidelines which do occasionally change so please contact our office for the most up-to-date information.

Real estate closing practices vary widely from state to state and even county to county but normally fall between 4-7% of your purchase price. Where you live will determine exactly what you will have to pay.

One little known loan program is the USDA Rural Home Loan.  This program finances 100% of the price of the home, But the "Property" must be qualified as well as you the borrower.

Even if you are not required to escrow money for taxes, you may want to set aside this amount to assure that you will be able to pay those tax bills when they fall due.

Remember, all lenders and brokers are required to provide you with a Good Faith Estimate detailing the services you may be required to get and pay for in connection with your loan.

This Good Faith Estimate will give you a way to compare loans and see what your closing costs would be. Click the link below to find a list of coded names that describe the different fees, which may be associated with the services previously mentioned. These codes and names correspond to those found on the HUD-1 Settlement Statement.

Lenders will want to see that you have had these funds in the bank for the past 60-90 days and will request your last 2 months bank statements.

If you do not have a lot of money available to buy a home, here are some ideas:

1. Borrow against your 401(k)

2. Withdraw money from your 401(k)

3. Get a gift from a relative

4. Ask the seller to help with closing costs 

5. Get a grant from a non-profit organization

Get a Gift From You Employer

What If None Of These Sources Are Available?

The good news is that there are several programs that will allow you to purchase a home even if you truly have no funds.

No...this is not like the infomercials.

In the past few years, with homes appreciating rapidly across the country, lenders have come out with new products to address these issues.

It is still possible that we may be able to offer you a loan that allows you to finance 100% (or almost 100%) of the purchase price of your home.

In my next Blog I will cover getting pre-approved and the CORRECT pre-approval process...

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Until our next lesson,

God Bless