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)
Most people that they should write a business plan only if they plan to apply for a business loan or require funding from venture capital funds etc. Others feel that writing a business plan is a waste of time as it takes a lot of effort to tell you what you already have figured out in your head.
Coleman Sleeping Bag - 4 Essential Factors For Choosing The Perfect Sleeping Bag (2)
Topics: camping, hiking, tent, vacation, picnic, outing, coleman sleeping bag, sleeping bag, coleman A must-have camping mate is the Coleman sleeping bag, which is great for the seasoned, occasional or beginner camper.
Devon - The Most Amazing Camping Site In The UK (3)
Topics: camping, hiking, tent, vacation, picnic, outing, Devon, camping sites in UK, camping ground British are very fond of camping and rate it highly for time passing needs. Ask any UK national about their favorite place for camping and invariably most of them will single out Devon any day.
Fees Associated With Mutual Funds (4)
Operating expenses include those 12b-1 fees mentioned earlier, as well as the management fees for the fund. These amounts are subtracted from the fund's return, and come out of the total made by the fund before any money is distributed to investors.
Recognizing The Fact That Your Blog Is Low Quality (5)
You want your blog to flow from everything from the graphics you choose to the advertisers on your page and the different color scheme that can be found on the page.
Camp Cooking Recipes - The Fun Activity On A Camping Expedition (6)
- Fill a plastic bag or place on a plate some graham crackers that you have crushed. - Toast some marshmallows the way you usually do. - Dip these marshmallows into the melted chocolate and then roll them into the graham crackers.
Your Camping To Do Checklist (7)
Topics: Bass Pro Shops coupon, Mountain Gear coupon codes, Altrec Outdoors key code It's your turn to organize your school camping this year; the previous one was successful as expected. There were a few glitches but very manageable and not even one noticed the slightest plight.
Camping Supplies - 3 Best Places To Buy Camping Supplies In The UK (8)
3) Outdoor Megastore is also a smart choice for those heading for the outdoors for a fun-filled vacation that is memorable for the right reasons; with a wide variety of camping supplies UK shoppers may need, this one-of-a-kind (biggest in its category too) store stocks products from diverse manufacturers and thus, has a varied product line.
Cold Weather Camping Tent - Feel Snug As A Bug In A Rug (9)
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)
Want to know why? Let's start with the basics. Customer Service Shopping online makes you feel number one, well, it may sound too good to be true but try it.
Newer Articles Highlighter:
Decorating Your Home With Flowers (1)
Flowers that would go well with this would spray roses, lavender, peonies, freesias and gardenias in subtle pastel shades such as pale pink, peach and lavender. The Casual Easy Living style focuses furniture made from natural woods, light pine or bleached oak.
What Will Be The Consequences If I'm Not Current On My Business Loan Payments? (2)
The most serious situation, however, is if you have constantly neglected to pay off your loan and your loan debt has grown to an excessive amount of money. In this situation the lending company will then seize your house as a form of collateral that will pay off the huge amount of debt that you have accumulated.
What Are Money Market Accounts? (3)
With credit unions, your money is insured by the National Credit Union Administration (NCUA), another federal agency that protects consumers from loss. Like a regular savings account, the money that you invest in a money market account earns interest.
Affordable Disney Vacation - Discounts On Vacation Packages (4)
Why not make that anticipated Walt Disney World vacation happen right away? 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.
Consolidate Debt Loans To Put Over Debts (5)
A prudent debtor can shop around for consolidators who will pass along some of the savings. Debt consolidation is often advisable in theory when someone is paying credit card debt.
Don't Ever Get Lost Again - Get A GPS System For Your Car (6)
A lot of the navigation systems talk to you, which means you don't have to worry about looking down and reading something all the time. These GPS systems work with satellites and work like anywhere on the planet to give you peace of mind wherever you are.
Do Not Neglect Your Marketing Plan (7)
Not only will it be informative to readers but it will help your website be discovered amid the millions of others on the World Wide Web. Don't forget about link or banner exchanges either.
Blogs As A Social Bookmarking Platforms (8)
This gives you a chance to share the link with each and every subscriber, and every time you publish, you increase the chances of someone simply submitting your content to a social bookmarking site or network.
Brummies Beat The Winter Blues! (9)
The island is home to many beautiful resorts, including the Playas de las Americas and Los Cristianos. In fact, recent legislation was passed to ensure that any future resort construction must either be of five-star status or offer resort luxuries like golf courses or banquet facilities.
Automotive Billing With Auto Classifieds Software (10)
For example, the offline standalone application can edit and draft the auto classifieds software even when there is not connectivity. This is in contrast to the online version, which provides dynamic content to the visitor according the required product.