Home Mortgage Loan Readiness
As you considering buying a house and need a Home Mortgage Loan? If so, the first thing to do is ensure that you are financially ready and in the best position to purchase a home. This means you must determine how much money you will need at closing. There are two costs associated with a home purchase:
Although there are some programs in CT that will allow for 100% financing, they have strict qualifying parameters and not all buyers will be eligible. You should speak with a Mortgage Loan Originator to see what you may qualify for. FHA and Conventional loans both have different minimum amount down requirements.
Generally, FHA has a minimum of 3.5% down required. Whereas Conventional has a 3% down program as well as their more popular 5% down program. In either of these loan types your credit score, income, and loan size come in to consideration.
Something else to consider is that your down-payment can be gifted funds. This simply means that a family member can give you the funds required to meet the minimum down-payment. Wherever the funds come from you will need make sure that they can be sourced and seasoned for at least 2 months.
Closing costs include all your settlement charges associated with the loan. These include fees for underwriting, attorney, title and recording fees. Buyers are also required to pay a year of homeowner’s insurance in advance as well as 6-8 months of property tax reserves. (This is almost always the costliest part of your settlement charges.)
On average, most loans will have associated closing costs of as much as 3-5% of the loan value. Like the down payment, some sellers will agree to “seller concessions” which can be used to pay for the closing costs. But not all sellers will agree to this, so buyers need to be prepared to have money set aside for these expenses.
Once you have a clear understanding of how much money you will need to set aside, you can begin to prioritize saving to become a homeowner! Determine how much you can save each pay period. Be diligent and cut back spending where you are able.
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