How Much Cash Do I Need To Buy My
Home?
 Down
Payment Closing
Costs Pre-Paids
When purchasing your home, Theresa
Springer, Senior Mortgage Banker, will take the time to sit down with you to out together
the best information on the current home loan market situation.
The home loan market is very dynamic and conditions are changing
constantly, therefore effecting underwriting standards. Theresa
will make sure that you are getting the most up to date information
to make the best decision for your financial well being.
There are three main components that will determine the amount
of money needed for closing a purchase home loan. They are as
follows:
1. Down payment
This is typically a percentage of the home purchase price. Down
payments start from 0%, (VA loans and USDA
loans)
to 3.5% (FHA loans) and go up from there. FHA
loans are guaranteed
by the federal government and are the only low down payment loans
available that are not employment, income or location restricted,
such as VA (Veterans Administration) and USDA (United States
Dept. of Agriculture) loans, which are also guaranteed for the
federal government. If you want to put more down you can go to
a conventional loan and these allow for the minimum down payment
of 5%. You can always put more down, but you should discuss this
with your Mortgage Banker to make sure that the amount you want
to put down fits in with your overall financial situation. You
do not want to run your accounts dry and have no money left at
the end of closing.
Remember : When you put less than 20% down you will have mortgage
insurance which you can pay monthly, in a lump sum or split it
both ways depending on how your loan is structured for your financial
situation. Please see the Mortgage Insurance section of my website
for more information on how this fee is added to your loan if
you are putting down less than 20%.
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2. Closing Costs
Closing Costs are incurred when closing a home loan. You can
have your Realtor negotiate the closing costs to be paid by the
seller in full or in part or you must include them in your cash
to close. They normally are made up of the following fees:
- Points (discount, origination, broker fees, loan fees)
- Appraisal fees (appraisal and management company fees,
re-inspections)
- Credit Report Fees
- Flood Determination (third party verifies the home location
pertaining to floods)
- Tax Service (third party that verifies annually that
your property taxes are paid)
- Processing
- Underwriting
- Wire Fee
- Escrow Fees (closing, courier, gov’t charges, remote
closing fees)
- Title Insurance (ALTA Extended and Early Issues)
- And other fees associated with your home loan program
Check out HUD's Shopping
for Your Home Loan: HUD’s Settlement
Cost Booklet. This document covers this information as well.
You will also receive a copy of it as part of your loan package
from Theresa with your loan application package.
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3. Pre-Paids
Pre-paids are not fees, but costs associated with the closing
of your home loan. They are usually made up of the following
items:
- Property
Taxes
- Home Owners Insurance
- Daily Interest through the end of the month in closing
- Impound (aka Escrow or Reserves) Account Set Up for your
property taxes and home owners insurance
Keep in mind that, through your purchase negotiations, you can
arrange for the seller to pay if not all, then most of these
costs. This is something you definitely want to think about as
it can lower your cash needed to close, sometimes substantially.
Also, if you do put 20% or more down, you can opt to pay the
property taxes and home owners insurance on your own and not
have the bank hold the money needed to pay these items annually
(or in Washington State, semi-annually).
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Experience extraordinary...
Call Theresa Springer today at 360-210-7984 to
see the difference that working with an experienced home
loan professional can make for you. |
