Considering purchasing a home, i'm first time buyer. Could use help on closing costs and down payment please

Question

Ok so I'm thinking of purchasing a home. I'm new to this whole home buying process and had a few questions. First of all do you have to pay a down payment on the loan? Because I have money now but home and new job is out of state. So by the time I get there I don't really know if I would have enough for down payment or closing costs. So are there any loans that would take care of down payment and closing costs for you or do you have to pay something up front? Also they keep asking me if I want to take an interest only loan. Is that good thing or bad thing?

Should I disclose that i'm just going to be starting a new job? I know I will have the money by the time the payment is due but do you have to disclose employment or income information? Any help would be greatly appreciated!

Answer 1

There are no-down payment loans, but unlike one of the previous answerers wrote, you will need a score much higher than 600 to qualify. Keep in mind--the lower your down payment, the higher your interest rate.

Yes, there are loans in which you can pay the closing costs also--all the way up to 107% LTV (loan-to-value). But you'll need almost perfect credit to qualify for that type of loan. Most often, you can negotiate with the seller for him to pay your closing costs. Sometimes this requires you to raise the sales price accordingly, but it is one way to finance the closing costs.

Interest-only loans aren't bad, just not for everyone. If you think you'll move within a few years and home values are appreciating, then why not? Keep in mind however, that IO (interest-only) loans have higher interest rates than fully amortizing loans.

You'll have to disclose that you're getting a new job. First, it's illegal to withhold that information--it's called fraud. Second, the lender won't approve you if you don't. How can you live in one state and work in another? The lender will want evidence that you have a job in the new state and can make payments.

If your loan officer can't answer these questions for you, or hesitates, fire him/her and contact Julie at http://primelendingonline.com

Good luck!

Answer 2

The down payment is not on the loan, it is on the house. Lenders want you to have committed at least some of your own money to the deal; they will lend you the rest. The more of your own money is in the deal, the happier the lenders will be and the better the terms you can get. Closing costs on a typical house deal will run a few thousand dollars; they usually include:
- Title insurance for you.
- Title insurance for the lender.
- Prorated property taxes, and possibly utilities.
- Transfer taxes, if your state or county collects such.
- Escrow fee: what the paperwork preparer gets for doing all the documentation.
- Points to the lender, if the deal includes such.
- Miscellaneous recording, delivery, and courier fees, and other such nuisance charges.

To begin, prepare a balance sheet (what you own, and what you owe) and an operating statement (where your money comes from, and where it goes), and take these to a bank in your proposed new community. The banker will tell you what terms might be available, and how much you can afford to spend. You may also be able to get a commitment letter, saying that they will lend you up to so many bucks.

Next, you go shopping. Identify from a real estate broker's listing books, or from a web site such as realtor.com, some houses that may be of interest, and go see some. For a first-time buyer in a new community, especially if there is time pressure, I recommend working with a broker. Once you have found a house you want, the broker will help you prepare a purchase offer. The broker will go over the contingencies that may or should be in the offer, and collect a deposit check (maybe $1000). The broker presents the offer to the seller, and the haggling begins. If a deal is struck, the check goes into the broker's trust account, where it will stay until closing. The escrow agent will prepare the paperwork to correspond with the sales agreement, and at some future time, you will sit down at the escrow office and sign your name to a pile of paper several inches thick. You then get the keys and call the mover.

A final note, about interest only loans: these can be helpful, but be sure that the loan amount is enough less than the property value so that there is not a negative equity situation, even if the property value should fall a bit. Negative equity is bad news for lender and borrower alike.

Answer 3

In addition to the great advice already given, you may also want to see if you qualify for first time home buyer programs in the state you will purchase a home. You may qualify for down payment or closing cost assistance, as well as a discounted loan interest rate. This could help you afford your first home.

Check out the site below for more info. Good luck!

Answer 4

Most banks and loan companies have Loan Officers that will help you get through this process. There are a number of different programs that allow you to finance the charges you are talking about along with the amount needed to buy the house. Naturally, there are costs associated with doing that, but if you are set on buying instead of renting, that may be what you need to do.

Interest only loans allow you to get into the house with lower monthly payment. The problem is that you are only paying interest on the loan and never paying off the original amount you borrowed. This type loan was popular a year or two ago when the housing market was going up rapidly. In other words, your house was increasing in value, so if you ever needed to sell it, it was worth a lot more than you paid for it, so having only paid interest was no big deal. You could sell it, pay off your loan, and still be money ahead. The problem is that Real Estate markets are never a sure thing. As we have seen lately, housing prices sometimes go down, not up. If that happens on an interest only loan, and you need to sell the house, you end up getting less than you paid for it, so instead of getting money when you sell, you have to pay the bank to get out of the loan, sometimes several thousand dollars.

As far as disclosure goes, tell them everything. The Loan companies, obviously, are trying to make money, but they are, literally, your partner in owning a home. They need to know about you, just as much as you need to know about them. If they have your full history, they can get you into the type loan that fits you best. Now, having said that, they will also try to get you into the loan that makes them the most money. They are, however, required by Federal and State law, to give you a document called a "Good Faith Estimate" that will detail all the costs, fees, and charges that you have to pay (including estimates for taxes and insurance) as well as everything they are charging to establish the loan. In other words, they have to tell you, before you ever sign for the loan, all the fees they are charging and what you will end up paying each month for your house. That is why you should talk to at least three lenders, get their Good Faith Estimate, and put them side by side and see who has the best rates and most reasonable fees. They are in a competetive bidding process to try to get you to use their service, so make sure they know you are comparing them against each other and you will very likely get better terms.

The first step in the loan process is to get "pre-approved". This just means that they take your financial history, check your credit and income, and tell you how much they think they can loan you and at what rate. They can give you a letter with that info, and you will have a pretty good idea of what price range house you can afford. Keep in mind, most lenders will lend you more than you really should borrow. I would say, look for a house that is selling for no more than 80 to 90 percent of what they say they will loan you. (By the way, unless you are in sales, a letter from your new employer stating your wages and overtime, if any, will be needed. Most companies are used to doing that, so it should be no big deal. If you are in sales and the majority of your income will be commission, that is a whole different thing.) Also, just because you get pre-approved by a lender does not mean you have to get your loan from them. You only need to get your pre-approval from one lender. You will shop for the loan with multiple lenders when you have actually picked out the house you want to buy and are ready to make an offer. A lot of Realtors won't even show you houses until you have been pre-approved. They want to know (and so should you) if you can afford the house they are showing.

Make sure the lenders know you are a first time home buyer, there are some special government programs for that. You can also ask about down payment assistance. There are income limits, but since you are in a new job, that probably will not be an issue.

Finally, even though I am a Realtor and encourage home ownership, if you are not familiar with the city you are moving to, there is nothing wrong with planning to rent for a year. That way you can take your time on finding the property that is right for you, your commute, and your own personal likes and dislikes. Explore, check law enforcement web sites for crime statistics, talk to your new co-workers, get advice from people you get to know at clubs, churches, and social gatherings. Be asking, too, for a referral to a good Realtor. A Realtor working for you that is well versed and successful can make a huge difference in you overall level of satisfaction with your new house. Also use the internet for house searches, it is a great tool.

Best Wishes!!

Answer 5

there are 100 percent financing loans but you need a crdit score of 600 or more. Try Lending Tree, they very helphul and flexible. Interest loans mean that you have to pay extra money for interest montly toward the loan, The lower the ineterest rate the better. There are flexible and fix interest rates, They both have thier consequences. If you have a flexible ineterst, it can go up or down anytime depending on the market. If you have a fix ineterst it remaims the same all the time but if the ineterst rates go down your wont because it is fixed. I hope it helps.

Answer 6

get a real estate agent and discuss this need with him/her, there are ways to do it...u can also opt for 100% financing if ur fico score is more than 700...

Answer 7

Get advise to a good financial adviser.