Cash And Credit For A Real Estate Purchase
Topics: cash, credit, loans, real estate loans, real estate finance
In an age of instant gratification, this may be a bitter pill to swallow. But when it comes to buying a home, The first thing to know is that maybe you can’t buy a home today. Depending on your situation, it may take some preparation.
You have heard about 100% financing - this kind of financing does exist for people with stellar credit, but it is now much more difficult to get than in years gone by. Even if you can get it, however, you will still need some cash (at least 3% of the purchase price, typically) to purchase property in most places.
So if you have absolutely no cash, start getting some together now. This might be easier than you think, though. You can borrow against your 401k plan if you have one. You can liquidate an IRA. You can get a gift or a loan from your family. You might also consider doing an equity share - find someone to provide you with the down payment, in exchange for a small ownership stake in the property. There are many creative ways to get sufficient cash together.
How is your credit? You can pull a credit report yourself from many sources online. However, it is a good idea to start talking to a Mortgage Planner (loan broker) as soon as possible. Very likely, he or she will pull your report for free.
The Mortgage Planner will go over your report with you, and talk about ways to improve your credit score if it is low. Credit scores will rise over time, so long as you address the issues which are dragging your score down.
In six months or a year, it’s very possible you could raise your score to the point where you can get a loan at a rate low enough to make your mortgage payments affordable.
Your Mortgage Planner (loan broker) will be able to supply you with a key instrument in buying property: a pre-approval letter. This is a guarantee of a loan for a certain amount of money, subject to approval of the property. That is, before the lender actually gives you the money, the lender will have an appraisal done on the property, to ensure that it is at least equal to the value of the amount being loaned.
If the property appraises, and if nothing significant has changed in your financial picture between the time you were approved and the time the loan funds, you will get the loan.
Armed with a pre-approval letter from a lender and at least 3% of the purchase price of a property, you will be in an excellent position to purchase a home.
Where does that 3% come into play? You’ll need at least that much even with 100% financing. You will need 1% of the purchase price for “earnest money.” You pay that immediately after the seller has accepted your offer.
You will then have a period of time (the “contingency period”) to inspect the house to make sure you know what you are getting. When you release your contingencies, you are committing to buy the house. At that time, you will increase your deposit an additional 2% of the purchase price, to a total of 3%.
During the contingency period, you will need some additional money to do inspections: home inspection, termite inspection, septic inspection, etc. The 3% you use as the deposit can be used to cover your closing costs (typically about 1.25% of the purchase price), and the balance can be returned to you at Close of Escrow (COE).
This article was written by Seb Frey, a Real Estate Broker and Realtor in Capitola, California (Santa Cruz County). Seb runs the county’s most-complete Real Estate web site, SantaCruzHomeBroker.com. Seb is Fluent in Spanish, and delights in working with with buyers from all walks of life.
Previous Articles Highlighter:
Business Plans Are For Small And Home Businesses Too (1)
Back-up your application for funding To make your dream business work, you might need external sources of funding like a Business Loan from a bank or investment from Venture Capitalists or other funding agencies.
Coleman Sleeping Bag - 4 Essential Factors For Choosing The Perfect Sleeping Bag (2)
Those with a natural down insulation are light-weight, warmer and more long-lasting but sleeping bags affording synthetic insulation are these and more: for they fare better even in clammy conditions.
Devon - The Most Amazing Camping Site In The UK (3)
As regards the backpack camping, Devon authorities are more generous and unless you are trespassing into the privately owned stretches of land and causing some sort of pollution or damage to the area, they will allow you to enjoy your camping experience.
Fees Associated With Mutual Funds (4)
They do typically have fees, but they are usually very low. Bear in mind that even no-load fees will typically charge you a fee if you sell your shares within a certain time frame after purchase.
Recognizing The Fact That Your Blog Is Low Quality (5)
Just make your blog professional and great and don't ever be afraid to make changes. Court is an expert on the best methods for starting a blog. You can read more of his work by visiting courtneytuttle.com.
Camp Cooking Recipes - The Fun Activity On A Camping Expedition (6)
You can play on any of your recipes by altering your fun foods like sloppy joes, a bit. Other camp recipes include something like tacos in a bag. All you need to do is take some plain tortilla chips in a bag and crush it up.
Your Camping To Do Checklist (7)
Learn from your previous camping experiences and ask from friends who have organized camping and other outdoor activities. Derive a set of to-dos from gathered information. Choose what time of the year to hold your activity.
Camping Supplies - 3 Best Places To Buy Camping Supplies In The UK (8)
All types of camping enthusiasts, be it hikers, those keen on extreme outdoor sporting activities or even the family vacationers, are in for a treat when visiting any of the above camping supplies UK stores.
Cold Weather Camping Tent - Feel Snug As A Bug In A Rug (9)
Thus, the 4-season camping tents made exclusively for the expedition-trekker kind are ideal for facing inclement weather conditions! Kinds of Tents The best cold weather camping tent is rounded, has a double wall protective shield of material that faces the wind and shrugs off the snow while also acting as a suitable lining support.
Need To Shop For Your Skateboarding Gear? (10)
Easy Navigation Need something? Just search it on the search page and there you go, you can find your eyes looking at what you just need the next second.
Newer Articles Highlighter:
Decorating Your Home With Flowers (1)
It is the one place where we can be ourselves in the company of people we love most, our family. It is only appropriate therefore that we surround ourselves with things that can make us feel comfortable, relaxed and at peace.
What Will Be The Consequences If I'm Not Current On My Business Loan Payments? (2)
Topics: student loan consolidation programs, federal student loans, personal loans Being the owner and leader of any minor company is usually very complicated for them to accomplish, especially if these owners have not gained a good deal of knowledge or experience in dealing with business affairs.
What Are Money Market Accounts? (3)
The main difference is that money market accounts will usually pay higher interest, have higher minimum balance requirements, and often they only allow three to six withdrawals from the account per month.
Affordable Disney Vacation - Discounts On Vacation Packages (4)
Taking a holiday in the Disney World, is a reason for tremendous enjoyment and a chance to visit your favorite Disney characters or explore the wilderness. The only worry involved is the cost of tickets to enter the park and the expenses likely to be incurred on all the things you might need when on your Walt Disney World Resort vacation.
Consolidate Debt Loans To Put Over Debts (5)
Some people say you are getting a qiuck fix but not a cure to your debts. Always assess your situation and what you are getting into. You can also move the payoff time to several years depending on your eligibility (though this will increase your total interest to be paid on the life of the loan).
Don't Ever Get Lost Again - Get A GPS System For Your Car (6)
With that said, that doesn't imply that everyone stops to ask for directions, especially if you are a man. There are some of us who hate to stop at the random gas stations or pit stops to get that much-needed input thinking that it implies something about our manhood.
Do Not Neglect Your Marketing Plan (7)
Renting roadside billboards is another fantastic way to catch the eye of the right people. This can be quite costly and does need to be budgeted for appropriately. Classic advertising such as flyers, business cards and car decals remain necessary but inexpensive.
Blogs As A Social Bookmarking Platforms (8)
Providing users increased interaction. You'll be surprised how many static sites that make this shift can start building traffic with very little direct marketing. Once the news spreads that you are offering this added value to your website, you can look forward to increased traffic on a regular basis.
Brummies Beat The Winter Blues! (9)
Tenerife's Costa Adeje, the area that includes Las Americas and Los Cristianos, offers many wonderful opportunities for recreation and sightseeing. Outstanding shopping, 9 beautiful golf courses, fine dining, water parks, zoos, and a magnificent theater that often features great musicals and of course the natural beauty of sun and sand on Tenerife's gorgeous beaches are all attractions you will find there.
Automotive Billing With Auto Classifieds Software (10)
It is easily maintainable with the admin interface that usually comes along with such auto classifieds software. Usually no coding for such software is required for customization .For example, an auto classifieds software may be easily customized to setup an automated online showroom of the vehicle inventory and can be easily maintained from any web browser .Customization can be specific to inventory, that is, the auto classifieds software can be specifically customized to automob iles, motorcycles, RVs or anything with a model make and year.