For homebuyers purchasing their first house, the biggest obstacle to overcome is often the down payment. Making sure you fully understand the down payment and closing costs will help you throughout the home mortgage loan process. Many options for first-time homebuyers allow for little or no down payment on your home, and I am here to help answer any questions.
Depending on the loan program, the down payment may not have to come from your savings. A family member can sometimes make a "gift" to you to cover the down payment, or you could choose to pull money from your retirement plan. A mortgage planner can help you understand ways to take money from a retirement plan to buy your first house, without paying any tax penalties. If you choose a down payment of more than 5% but less than 20%, you will have to pay private mortgage insurance. Known as PMI, private mortgage insurance protects the lender in the event the loan goes into default.
In addition to the down payment on your mortgage, closing costs and pre-paid expenses are also involved with a home purchase. You usually must pay lender costs, an appraiser and legal fees associated with transferring the title on the house from the seller to you, the buyer. In addition, you will pay homeowners insurance for one year in advance, and the lender will establish an escrow account, which will take a portion of your monthly payment and save it to pay your future property tax bills and homeowners insurance bills. Most first-time homebuyer loans will require you to have an escrow account to pay for the future tax and insurance bills.
Some first-time homebuyer programs allow negotiation with the seller of the home to have them pay a portion of the closing costs. Doing so can help reduce how much money is needed to purchase your first house. Be sure to talk with your real estate agent before making an offer to negotiate that into the deal. It is always a great idea to talk with a lender first, so you can understand exactly what the closing costs will be and how much you will need the seller to pay.
As qualified FHA, VA and USDA mortgage lenders, we can help you determine the best loan program to use for your first home. I will help you decide which loan program is best for you, the right amount for your down payment and how much the seller should pay for your closing costs, and I will give you other considerations to make sure you get the best financing for your first home purchase. You can trust me to make your home loan as stress-free as possible. Call me today to set up an appointment.