Real Estate Realestate Louisville KY Kentucky 502-777-9027 Homes For Sale Houses for sale in Valley Station PRP Pleasure Ridge Park Shively Taylorsville Lake Area Spencer County KY Auburndale Fairdale Iroquois Park Buechel Highview Okolona Fern Creek Hikes Point

Saving for the Down Payment

Saving funds for a down payment should be part of an overall program to get your finances in order prior to shopping for a home, this is really important. This includes gathering up financial records including your bank statements, examining your spending habits, and setting a budget you can live with. Remember too, that the down payment is not the only up-front expense. An allowance for closing costs should also be included in your savings budget. Your home owners insurance is one example!

How much is required of you?
The down payment is usually a percentage of the overall purchase price of the home, and varies depending on the lender, the type of financing and amount of money being lent to you and what type of loan program you may choose. In the past, the typical down payment was 20%, but today, lenders have been willing to offer conventional financing with as little as 3% down and some may even offer $0 down. U.S. Government financing programs, offered by the Dept. of Veterans Affairs (VA) or the Federal Housing Administration (FHA), also require minimal down payments and may vary. Check with your lender to see what is required of you and the different options you may have to choose from. Sometimes you may not have to pay anything down at all. Make sure you get a TRUTH AND LENDING STATEMENT from your bank.

Private mortgage insurance? Why do I have to have it?
If your down payment is less than 20% of the purchase price, lenders will require you to carry PMI, or private mortgage insurance. This insurance protects the lender in case of loan default, and usually involves an up-front payment at closing, as well as a monthly premium. Ask your lender if other loan programs are available so you don’t have to have the insurance. However, once you have paid off 20% of the loan, you can request the policy to be cancelled. Some lenders cancel the premium automatically, while others require you to make a request in writing. Check with your lender on the guidelines on canceling the insurance. Some lenders have other ways to have the insurance removed instead of paying the 20%. Check what their guidelines are.

Gifts
If you are having trouble saving enough money, many lenders will allow you to use gift funds for the down payment--as well as for related closing costs and prepayments. The gift may come from family, friends or other sources, but the lenders usually require a "gift letter" stating the gift doesn't have to be repaid. Without this letter, the lender will not let you use someone else’s money. Some lenders will also require you to pay at least a portion of the down payment with your own funds. If you plan to use gift money to purchase your house, ask your lender about their policies regarding gifts before you count on funds coming from other sources.

Good Faith Deposit
Buyers are usually required to give a good faith deposit to the seller when they make an offer. If the offer is accepted, the earnest money is then credited towards the down payment or closing costs. The amount varies widely depending on the seller and local custom, but be prepared from the onset to have funds saved for this purpose.

Don't forget closing costs
In addition to the down payment; you will also need to save for additional fees associated with the loan. Known as closing costs, these charges cover items such as title insurance, processing fees, broker fees, loan origination fees, the survey, attorney's fees, credit application, etc. When you submit your loan application, lenders are required to give you with a good faith estimate of your closing costs. Make sure you get one, it’s really important to know about all fees involved before purchasing a home.

Some buyers are surprised and overwhelmed by the amount of the closing costs, which can easily run into thousands of dollars. Remember that closing costs can be negotiated with the seller. (Make sure and put all offers in writing.) For example, you may agree to pay the full asking price in exchange for the seller paying all the allowable closing costs. *Also ask the lender how much the seller can pay in closing cost. Some lenders will allow only a percentage or part of closing costs to be paid by the seller. All lenders vary on this issue due to lender guidelines.

Email: Chris@ChrisSchlager.com

"My Dedication Makes Your Dreams A Reality!"

For information regarding residential homes, land or farm listings, and current real estate market conditions in the South End, Valley Station, PRP, (Pleasure Ridge Park), Shively, Auburndale, Fairdale, Iroquois Park, Buechel, Highview, Okolona, Fern Creek, Hikes Point, Bullitt County, Hillview and Spencer County, Taylorsville Lake area, Mt. Washington Kentucky, (Ky) state, I can also help you negotiate with *For Sale by Owner-FSBO's to get you the best deals on the residential market.

*Keep in mind that with For Sale by Owners-FSBOs homes, Kentucky State law does not require seller disclosures forms to be used. They are definitely considered "Buyers Beware Properties."

W. Tom Huber Realtors, LLC
3400 Historic Drive
Louisville, KY 40299
Office: (502) 551-6386
Direct Line to Chris: (502) 777-9027