put money towards down payment, or keep it in savings to use for other home expenses?

Question

I'm looking to buy a home, and my parents have said they would help me with a down payment. I really don't have that much saved due to some unforseen circumstances the last few years, and so I was wondering if it's worth putting what money they give me towards the down payment of a house, or should I put some of it towards that, and save some of it for other unforseen expenses, or should I have nothing down, and use all of it for other homeowner expenses? I'm not sure how much my parents could give me, maybe 10% down or something like that, and they won't just give me the money to do whatever I want with, it would have to be invested in the house in some way.

Answer 1

Since it is not your money, best discuss this with your parents!!! My opinion is since it is money from your parents it goes into the equity as a down payment. If you can't afford home owner's expenses you cannot afford to buy regardless of whether your parents help or not.

Answer 2

100% financing programs are becoming a thing of the past. Some lenders are still offering it but you need to have a fico score of about 680 and above and I wouldn't be surprised if they eventually get rid of the 100% financing in the near future. The mortgage industry policies are changing daily it seems.

And it also depends how much of a monthly mortgage payment you could actually afford. Logically the more you put down, the lower your monthly payment AND interest rate will be.

You will also need to have reserves (checking, savings, 401K) which would need to be appx 2-4 months of your monthly payment. So for example your monthly payment is $2500/mo with taxes & insurance, times that by 2-4 and that's how much you'll need as reserves in addition to whatever down payment you choose to put down which realistically nowadays would need to be about 5%-10% minimum.

It is a buyer's market right now, so you may be able to get help with your closing costs from the seller. In some cases sellers are paying most if not all of the buyer's closing costs nowadays which is approximately 3% of the sales price.

Let me know if you need additional advice. You can e-mail me at [e-mail]. Good luck!

Answer 3

You will most likely need the whole 10% down these days, even if you have perfect credit. 100% financing has become rare due to the recent mortgage lender crisis on the subprime side.... it is shaking up the whole market. 46 banks have gone out of business in the last month.

for more detailed info, read this

http://www.helium.com/tm/226327

Answer 4

I am totally on the saving side! Keep saving, the longer u do, the better house u can buy!