How to buy a home with NO MONEY DOWN

BUY A HOME WITH NO MONEY DOWN??   WOW!  That sounds like a great thing right!  Buy a home, get into it and have no money tied up at all!  There are some great programs available right now, but you do need to have a little bit of “skin” in the game to get to the closing table and sign for that new home. Here are some of the steps along the way to get your zero down and see what it really takes out of your pocket.

 

Puyallup Home mortgage preapprovalThe Pre-approval Process 

The first step you will want to do is getting pre-approved with a lender that you can meet face to face and works with many of the down payment programs. The pre-approval process will require your income, asset and credit information and make sure that everything meets the guidelines.  The down payment programs do have different guidelines than  standard mortgage and it usually comes down to income caps and DTI (debt to income) caps that are lower than other programs.  Ask your lender for details.

When you are pre-approved with your lender and ready to start looking for your new home with your Realtor, you need to be prepared for a couple of steps in the process.  There are multiple down payment programs available such as Washington State Housing finance assistance where they provide the down payment of 3%-4% towards conventional or FHA loans and there is also the USDA loan program that is another great program geared toward rural areas around Washington State. You would be surprised where the homes are located that qualify for the USDA program. Our US Military Veterans also qualify for a special zero down loan available through the Veterans department.  The VA does not make the loans in any way, but they guarantee the loan for the Veteran. Please see our section on VA loans for more information.   Bruce McLaughlin is certified for both the Washington State Bond loans and the USDA program and he can tell you about many of the other programs available in your area.Puyallup Orting USDA home loans

 

 

The Earnest Money

Once you find a home and you have our offer (with a Purchase and Sale contract) submitted you will need to be ready to give your Real Estate agent an Earnest Money deposit that would be held at Escrow. This money is used to hold the home for you while you get your loan finished and the home inspection completed and the amounts can vary from $500 up to $10,000 or more depending on the sales price of the home.  Typically for people in the First Time Home Buyer market the Earnest Money is $500-$1500.  If for any reason you don’t want to buy the home due to a bad inspection or if you are turned down for home loan,  the earnest money is returned to you. There are times that the earnest money is not returned to the buyer when these issues come up, and that would be if you wrote in the offer of the home that the earnest money was non-refundable or to make your offer look better. Typically any Realtor will tell you not to make this type of offer.  If you get all done with the mortgage process, you are ready to close and you just decide to not buy the home, you would forfeit your earnest money to the seller.

The Closing Cost

Within the contract your Real estate agent will negotiate your closing cost that can be paid for by the seller if you don’t have the funds saved to pay those on your own.  Compared to a credit card or auto loan, home loans have closing fees associated with the transaction due to so many moving pieces that are involved with the transaction. These fees include, title insurance, escrow fee, appraisal fee, underwriting fee, recording fee (with the County) and finally your Prepaids monies for your new Impound account for property taxes and home owners insurance.   This amount will vary based on your property taxes and home owners insurance, but the total of all these fees can be 3%-4%.

The Home Inspection 

Next you will want to get the property inspected from a qualified home inspector and a qualified Real Estate agent will have a couple different people that he has worked with to refer you to.   The price for a Home Inspection should range from $300-$500 and with certain programs this money could be refunded to you at closing.  A home inspection is not always required, but some programs do require a home inspection.Puyallup Home Inspection

After the inspection is completed the next step will be your loan officer moving forward on your loan and ordering the appraisal on the home to make sure the value comes in at the sales price.  If it comes in lower than the sales price, your agent will work with you to talk to the seller to lower the sales price to match the appraisal. If neither side can come to an agreement and the buyer decides to walk away, then the buyer would owe for the appraisal cost to the lender typically $500-$600 depending on the loan program and type of property.

The Loan Closing

Your lender  will get everything lined up with processing and underwriting of your file and get it prepared for closing at the Escrow office that your agent setup. The lender will get a final breakdown of all the fees and send you a “Closing Disclosure” 3 days before the loan signing and this will show you any final monies that you may owe at closing, or if you prepared with your lender how much is coming back to you at closing. The maximum that you can receive at closing is your earnest money plus the Home Inspection and the appraisal if you paid for that in advance.

Please call or email me with any questions

Bruce McLaughlin Home Mortgage

 

Your Home Mortgage expert

Bruce McLaughlin

NMLS 70081

Eagle Home Mortgage Puyallup WA

BruceMcLaughlin@eaglehm.com

All page content by Bruce McLaughlin Eagle Home Mortgage 1029 East Main Puyallup WA 98372 NMLS 70081 253-651-5755 Contact me directly for any questions