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)
3. Deal with problem areas A good business plan will force you to do a complete SWOT (Strengths, Weakness, Opportunity, Threat) analysis of your business idea. Once you do so, a lot of underlying realities will come to light, some of which you may have not thought of.
Coleman Sleeping Bag - 4 Essential Factors For Choosing The Perfect Sleeping Bag (2)
For instance, a lightweight sleeping bag won't prove adequate protection against the chill of outdoor camping in Winter as unsuitable as a heavy-weight, feather-filled one will be in sweaty August!
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)
Remember, even with no-load funds, there are still certain charges involved. Mutual funds aren't usually set up for charity purposes, so the fund has to make money, too! With Class A shares, you will typically be charged load charges up front.
Recognizing The Fact That Your Blog Is Low Quality (5)
Start a list of some good ideas that you can blog about and focus on them. Network your blog and get your name and what you do out there by sending a link to your new blog to all of your friends.
Camp Cooking Recipes - The Fun Activity On A Camping Expedition (6)
Let us share with you some great camp cooking recipes that are a step-up on the traditional desserts at the campfire. - Pour some chocolate syrup or put a chocolate bar broken up into pieces, in a cup you can make yourself, out of aluminium foil.
Your Camping To Do Checklist (7)
Check the weather as accurately as you can. This will give you useful information to come up with contingency plans and what necessary things to bring. Don't fret, there is always that perfect time of the year to go camping!
Camping Supplies - 3 Best Places To Buy Camping Supplies In The UK (8)
Visit his website www.Camping-Guru.com and download his FREE Camping Report and learn some amazing Camping tips and tricks for FREE. Learn how to have the perfect vacation on a shoe-string budget.
Cold Weather Camping Tent - Feel Snug As A Bug In A Rug (9)
With these done, setting out on a winter expedition that includes camping on high-altitude will be challenging, unforgettable and safe fun in colder climes! Abhishek is a Camping freak!
Need To Shop For Your Skateboarding Gear? (10)
It's the most convenient and easiest way to shop around whether you're looking or buying! 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)
Whatever your style of home - flowers are the accents that make it come alive! Jonathon Boundy is the webmaster for inbloom flowers online - an internet marketer of flowers and promoter of the popular website www.inbloom.com
What Will Be The Consequences If I'm Not Current On My Business Loan Payments? (2)
Remember that taking out a business loan is a huge responsibility and should only be done if your success is almost certain. Court helps people to learn how to consolidate private student loans.
What Are Money Market Accounts? (3)
In essence, they are paying you interest on the money they have already paid you in interest. Interest rates paid by money market accounts will vary from bank to bank.
Affordable Disney Vacation - Discounts On Vacation Packages (4)
Ian Wilkie is a published expert author of many Affordable Disney Vacation information articles and owner of - www.myaffordabledisneyvacation.com your one-stop online resource for all your Affordable Walt Disney World Resort Vacation info.
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)
I am sure you have heard of the new automotive navigation systems? I'm quite certain just about everyone has by now. Are you ahead of the masses? Does your own car, truck, or SUV have one of those car navigation systems?
Do Not Neglect Your Marketing Plan (7)
Promoting other businesses that are not in direct competition with you through your website can result in added traffic from their customers when they in turn promote yours. Along similar lines are the potential benefits possible when you create an affiliation with another business, sometimes called a joint venture.
Blogs As A Social Bookmarking Platforms (8)
Providing high quality content is an important component of your blog; without good articles and content, your readers will simply move elsewhere. A blog can be used as a platform for your social bookmarking efforts since each and every link to an article can be shared independently.
Brummies Beat The Winter Blues! (9)
Another factor influencing people to take a winter holiday is that 2008 could be a poor year for the British economy, and some might be taking a holiday before tightening their belts should a downturn or recession occur.
Automotive Billing With Auto Classifieds Software (10)
Of course, no business is fully complete without marketing the products to reach the consumers. Even that, today, has become a thing to relax about for the dealers .Server side scripting mainly helps dealers to generate dynamic content as and when required by the visitors or consumers.