Mortgage Updates

You will need funds for down payment and for closing costs.

Buyers typically tell me they have so much ($5,000 - 50,000) to put down.  My question follows... Is that what you plan to invest in your purchase, or is that only for down payment... meaning that you will have additional funds for closing costs. 

Therefore... what you really to let your lender know is how much do you have to invest. That will along with your income and debt determine how much house you can buy.

Let's seperate the two; down payment and closing costs.

1. Down payment refers to the required investment amount for the loan program used for your purchase.  Examples:

VA - No down payment for Veteran's with 100% entitlement.

USDA - Zero down payment in qualifying areas

FHA- 3.5% down payment

Conventional - 5% minimum down payment

2. Closing costs are charges for services related to the closing of your real estate transaction.  They include but are not limited to;

Lender fees; Origination fee (typically 1% of the loan amount) Admin fees; appraisal fees; inspection fees; credit report fees.

Mortgage Insurance; some pre paid some financed

Title policy issuance fees charged by title companies to insure the chain of title for the buyer (CLTA) and for the lender (ALTA).

Escrow fees charged by the company acting as the neutral third party in the transaction... commonly referred to as an Escrow Company.

Fire or home owners insurance as well as flood insurance if it is determined that the property is in a flood plain.

Recording fees paid to the local County recorder's office.  These fees are charged per page of your loan document.

Drawing Fees, Notary and over night delivery fees also part of the escrow transaction.

Your lender should be able to give you a summary of what to expect for total costs including both re curring and non-recurring closing costs. For a full definition of what re-curring and non recurring closing costs are ... please visit my web site... by clicking here...

A knowledgable lender will know how to help you with some of these fees through grants if you are a first time home buyer or as a repeat buyer you meet certain income limitations for your county.  For more information on CalHFA downpayment assistance see previous blog or visit my web site by clicking here. 

It is really amazing that first time home buyers can still buy a home for as little as a 1/2 % down payment!

If you have a specific question or wish to have me provide you options for your California home purchase please e amil me by clicking here.