Your Savings And Down Payment

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Your Savings And Down Payment

Your First Step Toward Buying A Home

When preparing to buy a home, the first thing many homebuyers do is look at the real estate ads in newspapers, magazines and listings on the Internet. Some potential buyers read how-to articles like this one. The next thing you should do - before you call on an ad, before you talk to a REALTOR®, before you shop for interest rates - is look at your savings.

Why?

Because determining how much money you have available for down payment and closing costs affects almost every aspect of buying a home - including how you write your purchase offer, the loan programs you qualify for, and shopping for interest rates.

Mortgage Programs

If you only have enough available for a minimum down payment, your choices of loan program will be limited to only a few types of mortgages. If someone is giving you a gift for all or part of the down payment, your options are also limited. If you have enough for the down payment, but need the lender or seller to cover all or part of your closing costs, this further limits your options. If you borrow all or a portion of the down payment from your 401K or retirement plan, different loan programs have different rules on how you qualify.

Of course, if you have enough for a large down payment, then you have lots of choices.

Your loan choices include such varied programs as conventional fixed rate loans, adjustable rate mortgages, buydowns, VA, FHA, graduated payment mortgages and all the varieties of each.

Shopping For Rates

A very important reason you need to have at least some idea of your down payment is for shopping for interest rates. Some loan programs charge a slightly higher interest rate for minimal down payments. Plus, the interest rates for different loan programs are not the same. For example, conventional, VA, and FHA all offer fixed rate loans. However, the rates vary from one program to another.

If you shop lenders by phone, the loan officer will be able to tell you which programs fit and quote your rates accordingly. However, if you are shopping on the Internet, you have to develop some idea of your loan program on your own.

Writing Your Offer

Another reason you need to have a clue about your down payment is because it affects how you write your offer to purchase a home. Not only are you required to put your down payment information in the offer, but also different loan programs have different rules that also affect how you write your offer. This is especially important when dealing with FHA and VA loans.

If you are asking the seller to pay all or part of your closing costs, you have to be certain your loan program allows what you are asking. For smaller down payments, lenders allow the seller to pay less closing costs than for larger down payments. Some loan programs will allow a seller to pay certain types of costs, but not others.

Finally, your down payment also affects your ability to qualify for a loan. When you make a small down payment, lenders are fairly strict about having you conform to their underwriting guidelines. For larger down payments, they will tend to make allowances or exceptions to the rules.

Conclusion

As you can see, the down payment affects every choice you make when you buy a home. Although you should look at ads, familiarize yourself with neighborhoods, learn about prices, and read as much as you can - when you get ready to take action - the first thing you should do is figure out how much money you have available for the purchase.

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Thank you for lowering your fees to get our offer accepted. Thank you for paying for the home inspection and termite inspection to get it done quickly. Thank you for understanding that my deposit should not be put at risk if I don't feel comfortable. Every time I called with lender complaints you where there for me and got on the phone and straightened it out for me. You explained documents when lenders could not help me understand. You were the best buffer I have experienced. I trust you like family. I will use you again when it's time to buy or sell. Thank you so much. A.Wouldo, Buyer
Lady, you are amazing. Sold my house and pushed for more than what those agents wanted to give. Helped me clean and organize. Dropped stuff off for me and pushed those vendors to do what they said they would. It was fun and I love my new house you helped me by way out of your service area so I did not have to look for another agent. You knew what I wanted and we got it done. Your family now and forever. W. Terry Seller/Buyer
We can't imagine having a better home-buying experience than the one we had with Leah Stapleton. We were first-time home buyers and were nervous about the whole process. Leah is warm and personable but also extremely savvy and professional. When we first met her, she immediately put us at ease. She showed us houses for 6 solid months and never made us feel pressured to buy. She consistently told us that all she cared about was finding us a home that we loved. We eventually found a house that was perfect for us. Leah helped to get any issues resolved and pushed to get us credits toward our closing costs. We've been in our new home for 2 months now and we absolutely love it. It's the perfect home for us and we're so glad that we waited for the perfect one to come along. We love Leah and miss house hunting with her. We would highly recommend Leah Stapleton for anyone who's interested in buying. J. and B. Smith, First Time Home Buyers
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