new here/need down payment advice

kristikay52 · March 2010

Hi all! My DH and I are currently renting an apartment but are looking forward to buying our first home. But to be perfectly honest, we don't really know where to start. I think the down payment is going to be our biggest obstacle. Can you guys offer any insight as to how much of a down payment is acceptable/preferred?

seujoanne · March 2010

I purchased my first home in 08 with an FHA loan -- with only 3.5% down. There were obviously additional closing costs, but the 3.5% down payment made the purchase very doable. I have a great mortgage broker who was awesome with me when I bought and is helping me again with my next purchase if you'd like her information... She was very informed about all the different loan options and which would work best for my scenario.

kristikay52 · March 2010

That would be great! I have always heard 20% and that's just not possible for us.

seujoanne · March 2010

Send me an E-mail at mostdramaticlife at hotmail and I'll pass her info onto you.

She's great!

mandasue178 · March 2010

You can do a loan for less than 20% down, but I've talked to many a financial advisor, and been told that the 20% is really for your own good. It proves that you are capable of budgeting and saving money and really saves you alot of interest! There's nothing wrong with not putting 20% but really watch that interest rate. Paying 30 years worth of interest turns out to be alot of money. Just put as much down as you can!

babs568 · March 2010

If you want some hard truths about what you can afford, you may want to post on the Money Matters board.

I also agree with a 20% down payment, or at least 10%. And I highly suggest you be realistic about what you can afford. Things in a home break, so it can cost $200-$400 extra a month on average to cover those items (and you need to be able to save that money, because usually it costs a couple thousand when something breaks). Also keep in mind the size of the home. You can get large homes in Texas, which come with large energy and water bills. Consider talking to friends with similar sized homes to find out energy and water costs.

Consider new versus old homes. Some Texas homes have foundation problems which are expensive to fix, so learn a ton about that now before you buy. Some new homes might be part of an HOA which may or may not be really restrictive (and costly).

Consider how long you'll be in the home. If you might move within 5 years, buying might not be a good idea.

Good schools do affect the cost of a home. It could affect resale later on.

Get a buyer's agent. This means that the seller pays their commission, not you. For example, our seller's paid the commissions, 3% to the seller agent and 3% to our agents.

Do the math on what a mortgage actually costs you over 30 years. You will pay twice the cost of the home in interest. It's a bit ridiculous. If you can afford a 15 year mortgage, you pay less than the cost of the home in interest. If you go with a 30 year, make one extra payment a year and you shave off 7 years from your mortgage.

Every agent will show you homes at your maximum price. Keep to your guns and drop any agent that doesn't listen to you.

You might be approved for a mortgage that's actually way more than you can afford. Keep your monthly payments at about 20% of your monthly take home.

Don't feel pressured to fill your home with furniture right away or to jump in and redecorate the whole thing. Those are expensive activities.

Keeping texas lawns alive requires water, lots of it, which makes the water bills high. Property taxes are high (annoying).

DH and I were also clueless when we started looking at buying our first home. We bought the book "Buying/Selling a Home for Dummies". Smile

bkilinc · March 2010

We bought a house in November and put down 3.5% with an FHA loan. I think we had a great realtor and mortgage broker - if you want their info email me at dragonfly7518 at yahoo.

We would have loved to put more down, but it was better for us to go with the 3.5% in order to get into the house, get the tax credit and still pay for the wedding. We can now go back and put money from the tax credit, etc. into the house. The other thing we did was buy the house based on a single income. That way we were sure to get something we could afford (be able to save money, be prepared for extra expenses and afford everything if one of us lost our jobs).

It's hard and the buying process will be stressful, but it's absolutely worth it!

prlmrg08 · March 2010

Right now FHA loans require 3.5% down. In April they are changing a few things which is going to make you have more money at the closing table(the big one is sellers can only contribute 3% in closing costs instead of 6% like they can do now)! You will need to plan on having about 6-7% to bring to closing including your down payment.

There are also USDA 100% financing right now as well. This limits where you can live, but a great option if you are wanting to live on the outskirts of town.

A good realtor is key, and not every realtor will show you homes you cannot afford... some of us are still good and care about your needs too

If you have questions feel free to email me... meagan.lewis@coldwellbanker.com

hmp1 · March 2010

Don't let anyone tell you what you can afford. We bought our house 4 years ago when they were giving out mortgages and qualified for twice what we bought for because we knew what we were willing to pay each month. We have an FHA loan and paid 3% down plus our closing costs and have a low interest rate. I'm glad we kept our money in savings instead of putting 20% into the mortgage. We had to buy a new air conditioner for $5k and had to pay our insurance deductible for a new roof last year. We also pay an extra payment each year which will make our 30 year mortgage paid in full in 23 years (not that we plan to stay here that long).

new here/need down payment advice

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