• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
Gatz Homestead Realty

Gatz Homestead Realty

Canadian County Living and Real Estate

  • Real Estate
    • Buying A Home
    • Selling Your Home/Land
    • Mortgage Calculator
  • Communities
    • El Reno, Oklahoma
    • Mustang, Oklahoma
    • Yukon, Oklahoma
  • Listings
    • Featured
    • Featured Open Houses
    • Sold/Pending
  • Estate Sales
  • Up Coming Estate Sales
  • Resources
    • FREE Market Analysis
    • Perfect Home Finder
    • Current Mortgage Rates
    • Relocation
    • Schools
    • Weather
  • Events
  • Resturants & Shopping
  • Lifestyle & Outdoors
  • Contact Us
    • Reviews

Your Savings and Down Payment

Your First Step Toward Buying a Home

When preparing to buy a home, the first thing many homebuyers do is look at the real estate ads in newspapers, magazines and listings on the Internet. Some potential buyers read how-to articles like this one. The next thing you should do – before you call on an ad, before you talk to a REALTOR®, before you shop for interest rates – is look at your savings.

Why?

Because determining how much money you have available for down payment and closing costs affects almost every aspect of buying a home – including how you write your purchase offer, the loan programs you qualify for, and shopping for interest rates.

Mortgage Programs

If you only have enough available for a minimum down payment, your choices of loan program will be limited to only a few types of mortgages. If someone is giving you a gift for all or part of the down payment, your options are also limited. If you have enough for the down payment, but need the lender or seller to cover all or part of your closing costs, this further limits your options. If you borrow all or a portion of the down payment from your 401K or retirement plan, different loan programs have different rules on how you qualify.

Of course, if you have enough for a large down payment, then you have lots of choices.

Your loan choices include such varied programs as conventional fixed rate loans, adjustable rate mortgages, buydowns, VA, FHA, graduated payment mortgages and all the varieties of each.

Shopping for Rates

A very important reason you need to have at least some idea of your down payment is for shopping for interest rates. Some loan programs charge a slightly higher interest rate for minimal down payments. Plus, the interest rates for different loan programs are not the same. For example, conventional, VA, and FHA all offer fixed rate loans. However, the rates vary from one program to another.

If you shop lenders by phone, the loan officer will be able to tell you which programs fit and quote your rates accordingly. However, if you are shopping on the Internet, you have to develop some idea of your loan program on your own.

Writing Your Offer

Another reason you need to have a clue about your down payment is because it affects how you write your offer to purchase a home. Not only are you required to put your down payment information in the offer, but also different loan programs have different rules that also affect how you write your offer. This is especially important when dealing with FHA and VA loans.

If you are asking the seller to pay all or part of your closing costs, you have to be certain your loan program allows what you are asking. For smaller down payments, lenders allow the seller to pay less closing costs than for larger down payments. Some loan programs will allow a seller to pay certain types of costs, but not others.

Finally, your down payment also affects your ability to qualify for a loan. When you make a small down payment, lenders are fairly strict about having you conform to their underwriting guidelines. For larger down payments, they will tend to make allowances or exceptions to the rules.

Conclusion

As you can see, the down payment affects every choice you make when you buy a home. Although you should look at ads, familiarize yourself with neighborhoods, learn about prices, and read as much as you can – when you get ready to take action – the first thing you should do is figure out how much money you have available for the purchase.

Primary Sidebar

  • Email
  • Facebook
  • Instagram
  • LinkedIn
  • Pinterest
  • Snapchat
  • YouTube

Newsletter

Never miss a thing in Canadian County. Let me keep you in the loop. Get fun, upcoming events delieverd into your inbox.

Home Search

Mortgage Payments

Footer

Kamara Gatz
REALTOR

Connect with me on:

  • Facebook
  • Instagram
  • LinkedIn
  • Pinterest
  • Snapchat
  • YouTube

Contact Kamara

Copyright © 2023 · Agent Focused Pro by Winning Agent · Log in

Gatz Homestead Realty, LLC

Kamara Gatz License Broker/Owner#156913

 

Privacy Policy

Copyright © 2020 MLSOK, Inc.

All rights reserved. Certain information contained herein is derived from information which is the licensed property of, and copyrighted by, MLSOK, Inc This information is believed to be accurate but is not guaranteed. Subject to verification by all parties. The listing information being provided is for consumers personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. This data is copyrighted and may not be transmitted, retransmitted, copied, framed, repurposed, or altered in any way for any other site, individual and/or purpose without the express written permission of MLSOK, Inc.