I'm a 1st time home buyer.?

Question

I have yet to get pre-app but I'm sure i will since I have low debt and high credit score. How does the process work. I olny have appx 5% to put down ($10,000). I will likely have to put a $500-$1000 down payment. Then I undersand appx 5% for escrow within 7 days. Now is that 5% i'm putting down for escrow additonal to my 5% down payment or is that the same thing? hopefully my question make some sense. Also, can I tell the developer when I would like to close e.g. early spring/ late winter or no. I would like to wait so I can save up more $$.

I'm actually looking into a condo. Either a new development or conversion. What I really want to know is after I put 5% in earnest money then what? b/c that 5% was basically my down payment money?

Answer 1

If you are a buyer with that much cash upfront, you can pretty much call the shots as to when you want to close. You talk about the developer, are you building new construction? Check with them to see if they have a mortgage company you can work through. Often times, they will give you free closing costs if you use their company.

Answer 2

There are typically 3-4% of the purchase price in additional closing costs. Remember that when considering how much money you actually have towards the purchase of a house.

A down payment is just a way to secure a contract, the signature on the contract is only as good as the amount of money you are willing to put behind it. $500 is a very low down payment, $1-5K is normal. The down payment goes in escrow and counts towards the purchase of the home (counts towards your goal of having 5% down). So with the goal of putting 5% down and having $10K available, you can afford a house in about the $150K range.

You can only close on the house after it has a 'certificate of occupancy' CO. This means if you are building a house and the contractor says it will take 6 months, it really takes 10 months, you will have to wait until the end of the 10 months. The bank will no pay for a house that they can not immediately resell.

An option for the mortgage of the house is to roll the 3-4% of closing costs into the mortgage. For example if you agree with the builder that the house costs $150K, the closing costs will be around $4500, you could get the builder raise the cost of the house to $154,500 and then they can cover the closing costs at the time of closing. Sounds confusing but a local real estate agent or mortgage broker/banker will know about it. You would only do this so that you can keep more of your cash to equip the house. You will need a lawn mower, appliances that might not be includedin the price of the house. It would be silly o finally own a home and still have to take your laundry to the local laun-dro-mat.

Answer 3

It seems that you are trying to purchase a home in a new subdivision project. Many of the larger builders throughout the country now own their own mortgage company. They may be willing to offer you the ability to reduce your closing costs or offer upgrades of the home at below their standard published prices if you agree to use their lending services.
They also require earnest money to be included as good faith with the contract. Builders will usually ask to have the earnest money increased to 5% of purchase price to lock you into the deal. I haven't seen many contracts below that these last few years.
The actual down payment you will need depends on the mortgage product you choose to use. There are mortgages that have 0 down payment requirements to as much as you can put down. As your down payment increases you will find the better lending terms, a conventional mortgage will require Private Mortgage Insurance until you have 20% equity. Of course there are 80/15 combo loans or other mortgage available that are used to get around that requirement. The closing cost are determined by the lender and the required services you will need to close the transaction.
Do yourself a favor and call a well known lender in your area or ask a family member who has bought recently for a referral. Talk to that lender about all your options and then talk to the builders sales person to see if they have a lending branch. That might save you some money or at least you'll have a competative quote for the type of mortgage you feel most comfortable with. Good luck you have a lot to learn, be careful.

Answer 4

If you want to wait to close to save up more money, than you shouldn't be in the process of buying a house yet. It usually takes around 4-6 weeks to move into your house - is that enough time to save up enough money? Usually they like you to have 10% of the house down (escrow does not count in this), so if you want to buy a $100,000 house, you'll need $10,000 down. You may be able to work with the Realtor & loan processor to get this more personalized for you, maybe they'll work w/ u & you'll only need 5% down, etc. Maybe the homeowner is willing to wait to close, but usally the longer the house goes without a buy, the more money they lose, so I doubt they'd hold out too long.

Answer 5

Here is the best advice you will recieve.
Before you even step foot into a realtors office I would suggest you get approved for a mortgage. You can get an official approval, competitve rates and programs at my company site www.JustGetALoan.net. Getting approved does two major things for you: 1 it lets the realtor know they have a real client, I know it sounds lame but they will treat you 100% better when you have been approved. 2) Being approved gives you buying power. Imagine you were the seller if you wanted to sell your home for $300,000 and i walk up to you and said Ive been approved for $285,000 and can close within weeks they are more willing to take that official offer than trying to hold off for people who they do not know they can really buy the home. This creates a better situation for you becuase now you have equity or money in the home. We have been able to help many clients get 100% financing. If you would like further assistance feel free to contact me at 866 530 7300 ext 7305 or email me Jenold Freeman at [e-mail]

Answer 6

First of all, PLEASE PLEASE PLEASE find a reputable lender. Someone like Wells Fargo who will get you the best interest rate. I have seen one too many of my clients find their loan on line and not only does the closing date never turn out right but you can't trust online lenders to have your best interest at heart. After you get your loan started and you're pre-approved, start looking for something in your price range. Once you find what you're looking for start negotiating on a price. Also try to find a Realtor who has been in business long enough to truly know what they are doing. Find someone you trust. After that you should be good to go!!! Good Luck!

Answer 7

Get a Realtor to represent you. Your question and assumptions indicate your lack of knowledge in this area. A purchase this big is not something to do without knowing how and without having someone to guide you through.

Would you represent yourself in court?

Answer 8

Talk this through with an experienced Loan Officer.