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Down Payment and Closing Costs
What the Heck are these things?Down Payments
A down payment is usually required when purchasing a home. Down payments can be as low as 3.5% of the sales price of the home, depending on the type of loan and you credit score. The more you are able to put down on a home the more you will be able to afford and be able to keep your monthly payments low.
Most homebuyers save in order to make their down payment. This is the safest process. There are other solutions that can help you cover these costs. Gifts can be received from relatives to help you pay for a down payment. Also it is possible to withdrawal savings from an IRA without any penalties to be used for a down payment.
Closing Costs
Closing costs are items needed to secure the mortgage, properly transfer the title and process the real estate transaction. Some of the fees are points, taxes, title insurance, financing costs, filing fees, escrow and others. Some of these items are negotiable and you should discuss this with your lender in order to get the best deal. Closing costs usually range 2-5% of the sales price. You will receive a GOOD FAITH ESTIMATE (HUD-1) from your lender before the closing so you will know how much you will need to bring.
About PMI
Private Mortgage Insurance (PMI) helps to protect the lender if your situation changes and you are unable to make your payments. It is generally only required when your down payments is less than 20%. Federal law requires that PMI is canceled once the value of your home has reach a certain percentage above the balance of your mortgage.
A down payment is usually required when purchasing a home. Down payments can be as low as 3.5% of the sales price of the home, depending on the type of loan and you credit score. The more you are able to put down on a home the more you will be able to afford and be able to keep your monthly payments low.
Most homebuyers save in order to make their down payment. This is the safest process. There are other solutions that can help you cover these costs. Gifts can be received from relatives to help you pay for a down payment. Also it is possible to withdrawal savings from an IRA without any penalties to be used for a down payment.
Closing Costs
Closing costs are items needed to secure the mortgage, properly transfer the title and process the real estate transaction. Some of the fees are points, taxes, title insurance, financing costs, filing fees, escrow and others. Some of these items are negotiable and you should discuss this with your lender in order to get the best deal. Closing costs usually range 2-5% of the sales price. You will receive a GOOD FAITH ESTIMATE (HUD-1) from your lender before the closing so you will know how much you will need to bring.
About PMI
Private Mortgage Insurance (PMI) helps to protect the lender if your situation changes and you are unable to make your payments. It is generally only required when your down payments is less than 20%. Federal law requires that PMI is canceled once the value of your home has reach a certain percentage above the balance of your mortgage.
If you need any more information on this topic or buying or selling a home, contact us. We are here to help.
Pamela Edwards, realtor email me (972)715-0152 Ebby Halliday Realtors, Inc
Pamela Edwards, realtor email me (972)715-0152 Ebby Halliday Realtors, Inc