Step Three: How much is a down payment?

When purchasing a home you will need to have some money for a down payment. There are all types of loans even 0% down, but no matter which loan, you will need to have assets in the bank or someone able to give you assets to purchase your home. When making an offer on a home the seller will want a good faith deposit. This is money that you give to the escrow company to be held until the property is ready to be transferred to you at sale. The seller wants to know you are serious and can ask for as little as .5% to 10%. Most commonly we see a minimum of $1000. That $1000 will be credited to you and will reduce the amount of money you need for your down payment and/or closing costs.
Typically if you do not receive or qualify for 0% down or any second mortgage or grant programs and you are a first time home buyer, you will need 3.5% of the purchase price plus closing costs to purchase your home. If you are purchasing a home for $150,000 you will need $5,250. This can be in your bank account, your 401k or retirement account, or can be gifted to you by an immediate family member. But that is not all you will need, there are the fees to pay the bank/lender, the title/escrow company, the notary, appraiser, pest inspector, etc...also, you will need to set up your impound account, the account that holds the funds to pay your taxes and insurance when due. These costs can reach 4-4.5% of the sales price (depending on time of year and current rates). That could be an additioanl $6750. Now, you can ask the seller to help you with closing costs, but there is no law stating that they have to.
Don't let these figures scare you, there are programs and loans available to help, but if you can start saving some of the money today, getting your loan in the future will be much easier. Contact me for more information and to get onto the road of home ownerhsip

Step Two-Employment and Income

If you have had your credit pulled, or you know that your credit is good (over a 660 middle score from a mortgage source), then it is time to consider your employment and income. Investor's are looking for job stability. That doesn't necessarily mean you have had to be at the same company for the last 10 years, but they do want to make sure that if there has been any changes in the past two years that it was for good reason. If you just went from being a warehouseman to a car salesman, you will probably need two years of history before they will consider your income. But each case is different and you should talk to your lender about it. In the new conservative world we live in, it is best to take a two year average of your income. Now if that income includes Bonus or Overtime a written verification of income from your employer will need to be requested by your lender. The reason is that the overtime and bonus income has to be verified as usual and customary. A one time bonus or a season of overtime (that does not happen every year)will not be used to help you qualify.
Stay tuned for more "how to" information.