We're real estate agents too and many of our loan clients don't understand the value of a good agent.
People often believe a real estate agent is simply someone who knows about homes for sale in their area, hammers signs into front yard lawns, and makes a slew of money just showing up at an open house. A no-brainer, right?
According to Zillow, saving for a down payment is no walk in the park for future home buying couples, but an even more challenging prospect to singles, for whom it may take up to 11 years to save up for a down payment for a typical U.S. home (even longer in pricey markets). This is more than twice the time it takes a married or partnered couple.
Statistics show nationally that fewer than half (45 percent) of all U.S. homes are affordable for credit qualified single buyers. Couples, by contrast, could afford 82 percent of all homes. Banks are not allowed to discriminate based on marital status, but tighter lending standards can potentially pose a challenge to single buyers because they only have their own income to qualify for a loan.
A 20% down payment is anything but standard. Making a smaller down payment does involve some form of mortgage insurance (MI). This is a fee paid to limit the lender's risk when there is a lower down payment.
Conventional loans are available with as little as 3% down. The cost of the mortgage insurance depends on the borrower's credit score. Lenders will allow borrowers to drop the monthly MI once the loan-to-value ratio reaches 80%. They will typically require an appraisal (about $600) to show the value, and the loan should have been in good standing for at least the previous 12 months. Different lenders have different procedures, though, so it is worth making a call to them to get their specifics.
"Hello, We're in the process of hopefully purchasing our first home, and I'm a little lost on everything that is going on. What's the best advice you would give to first-time home buyers?"
Without question, your first step in the home buying process is to begin getting your financing in order. I realize this may seem like slightly self-serving advice since I am in the mortgage business, but the fact is that most people who buy homes today do so with a mortgage. That part is often the most challenging, with far more moving parts and potential snags than in years past.
There are two aspects to this question. How does the loan side work? How does the life side work?
From a lending standpoint, you typically on need two months reserves after the purchase. You can buy a home for as little as nothing down if you are a veteran, or 3% - 5% for a conventional loan. We offer a 2% down payment assistance for FHA loans reducing the total down payment to 1.50%. You’ll just have to be able to document the source of the down payment and closing costs. So you could use up every penny of your available cash with your purchase, and as far as the lender is concerned, you’d be okay.