Homeowners, a ? for ya

meggiednm · April 2010

Hi ladies. So i'm a little confused...and i'm kind of embarassed to admit this cuz i use to *work* in real estate...but i don't remember and we pretty much worked with rich people who had money coming out their ears!! Embarrassed

Down payments...I know what they are and i know that they range in amounts. But do you actually *pay* the full amount, or is it somehow covered in your mortgage? Say that we like a place for $200k, with a down payment of 20%...we don't have $40k for that!! DH and i are nowhere near ready to buy a place, but i want to know if we have to scrimp and save for 15-20yrs to have barely enough for a down payment.

Thanks!! Big Smile

MrsDe2008 · April 2010

First of all, no reason to be embarrassed...Real estate, to me, is soooo very confusing...I don't know how we made it through the closing process. lol

As for a down payment, I don't think you are allowed to attach that to your mortgage. =/ The closing costs? Possibly...but, the down payment? I really don't think so. But, I am going to my 'rents in a few and my sis will be there and she is an RA, so I will be sure to ask her and let you know for sure.

meggiednm · April 2010

Sweet!! RA means real estate agent, right? Tongue Tied

lawby2005 · April 2010

Hey Meggie! Although 20% downpayment is the ideal. There are lots of people buying homes via FHA loans where the min DP is 3.5%. True, you will have less equity in your new home, but if you plan on being there for a while and if you don't plan to do those equity loans thingies, you should be good. The few things that you need to know about FHA is that not all condos accept them. Also you cannot buy a fixer upper with this type of loan since certain livable conditions have to be met. So on a $200,000 house a 3.5% DP would be $7K. Not bad huh? We didn't do a straight FHA (house was a fixer upper), we put down 5% and we paid our closing costs. We saved for 2 years like crazy! And we are not rich by any stretch. So, it can be done but you will know when the time is right. Good luck whenever you feel you are ready!

Temp663997437501443 · April 2010

I am super conservative when it comes to these things, plus we were looking at coops which sometimes have a min DP. We paid the full 20% DP. We saved for several years to do so since we are by no means rich. Probably could have done more but we wanted to have some savings left just in case and for other expenses. I do think that it is possible to not have that high of a DP as PP said, but the more you can put down, the better off you will be for payments and equity.

meggiednm · April 2010

Thanks ladies!! Great info! I'm amazed and impressed that people save for so long for the DP, but i totally get it!! I'm still crossing my fingers for the lottery!! Big Smile

Nova726 · April 2010

We put down 10% and that took up most of our savings. We had to give 5% when we signed the contract and the other 5% at the closing.

MrsKocal · April 2010

In addition to what the other ladies have said, just keep in mind that if you don't put 20% down, you will probably have to pay a monthly mortgage insurance until you reach 20% equity in your house (not sure about the FHA loans, those could be different). This is because you don't have a lot of equity in your house and it protects your lender from default. I don't think it's super expensive but you'll need to factor that in to your monthly expenses as well.

dnagal · April 2010

In our case, we put down 10%, then financed 10% through a Home Equity LIne of Credit (HELOC), then the mortgage for the balance. This kept our mortgage balance below the "jumbo" that would have required PMI (mortgage insurance). However, if you buy a co-op or a property that is part of an owners association, there may be additional requirements in terms of down payment.

MrsDe2008 · April 2010

meggiednm:
Sweet!! RA means real estate agent, right?

Yes, RA is Real estate agent.

I spoke to my sis and she seems to think that they won't let you put your downpayment in with your mortgage because of a lot of new rules the banks are now implementing because of all the foreclosures and issues banks have been having. But, I guess it all depends on whether or not a particular bank will allow it. I guess it doesn't hurt to try. But, she said the same thing about the closing costs...those you can put in with your mortgage.

meggiednm · April 2010

Thanks again ladies!! Fantastic info! Now i'm less confused. Big Smile

Homeowners, a ? for ya

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