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I Have $$ Saved – Now Let’s Go Buy A House!!!

December 28, 2012

dollar house“Ok, I have $$ saved and my letter of Pre-Approval and I’m ready to buy a home.”  You have how much saved?  And you are pre-approved for how much?  And your lender pre-approved you for that much on how much you saved for your downpayment???  What am I missing here?

First, did your lender tell you that you either have to have 3.5% of the purchase price saved, minimum, for an FHA loan, 3-5% saved for a HomePath financed loan and if you are really special, it could be 5% for a conventional loan.  AND did they also tell you about closing costs?  “Closing Costs, what is that?”

Did either your Real Estate Agent or your lender tell you that there are additional costs to purchasing a home, not just your downpayment?  There are always escrow fees, title fees and lender fees and these are based on the purchase price/loan amt too. These costs are on top of the downpayment. When we place an offer, we also have to submit proof of funds – proof that you have the additional funds need to close an escrow, above and beyond your loan. Oh, and did they also tell you that if you purchase a short sale, there will also be seller fees that the lender may not pay and that the seller might be deficient in his property taxes or HOA fees – and the buyer may have to pay some of those fees too?

No, don’t glaze over your starry eyed looks, just realize that you may need to save more before jumping into a purchase – before falling in love with a home that you say you are pre-approved for, and then find out that you don’t have enough saved to close an escrow. Besides, if you save more than you need, you will have the money for that new refrigerator (which you also don’t buy until after escrow closes, but that’s another story entirely). You will need to have the downpayment saved, for whichever type of financing you will be using, so keep this is mind of a percentage of the purchase priced. You will also need to have around 3% (+ or-) of the purchase price for the closing costs. Some loans can be structured to finance some of the closing costs, but not always (check with your lender) Now, I know that we cannot get any seller contributions from a short sale and may not get them from either a standard sale or bank owned home either, but we can ask on those. No we cannot ask for the entire amount, because then your offer will more than likely not even be looked at. Place yourself in the position of the seller – they are being asked to pay all commission and their own closing costs. Do you think they really want to pay yours too? There are many factors to take into consideration when asking for closing costs back from the seller and I do that work for you – I know when to ask and how much to ask for based on type of sale and other factors.

After my buyers walk out of our Buyer Consultation, most of the time they can’t see straight from all the facts that were presented to them, but when they hear those words again, they will remember what they mean. We go over all of it again and again, since it is very confusing, but my buyers know upfront what they could be asked to pay so that we don’t get into any situation way beyond their control, or beyond their finances. I love my first time buyers and I like to sleep at night, so I will never steer anyone into anything beyond what they say they can do, even if their lender says they can do more. I want them to feel as good as possible during the tumultuous time period of any escrow, and I must do it right as the majority of my business these last few years has been referrals, and most of them, young people buying their first homes!

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