Before you go house hunting make sure you have enough money available to get your loan approved and your house closed.
…I know it sounds simple, but many people don’t realize the amount of funds they will need to get into a house.
Here is a simple breakdown of your out of the out of pocket costs you could expect by loan program.
1) VA: 100% loan. No down payment.
2) USDA: 100% loan. No down payment
3) FHA: Minimum 3.5% down payment.
4) Conventional: 5% minimum down payment, or 3% down if your score is over 680.
…but you can expect more out of pocket than just the down payment. There are two other costs you can expect to pay when you purchase a home…
1) One, is prepaids. This is pre paid interest, taxes, and insurance. Typically your prepaids will run 1% to 2.5% of a sales price.
2) Then there are your closing costs… Typically closing costs (from all entities – title, appraisal, mortgage, survey, etc.) will add another 1.5% to 3% to a sales price.
Be prepared for these additional costs. However, there are a couple of ways to help you lower the closing costs and prepaid expenses.
The best way is to ask the seller to help you. However, there are limits to the amount the seller can help you.
Please review this recent blog post on the max seller contributions by loan program: http://berkshirelending.com/best-way-to-get-the-seller-to-pay-your-closing-costs/
Have a good day today! …and thanks for reading.