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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.

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COLONIAL REALTY INC.
1007 Skyway Hwy.
Atchison, KS 66002
Phone (913) 367-4464
Email: colonial@coloniallistings.com

Testimonials Page

"Sharon was very helpful and persistent in selling my home. Sharon and Bob Hanf did an amazing job keeping me in the loop of what was happening with my property and stayed in contact even if there was nothing to report. I really appreciated the dedication and consideration I consistently received throughout my entire experience. I would highly recommend Sharon or Bob or any of the realtors at Colonial Realty over any other realtors for certain. #honest #forthcoming #diligent #persistent #trustworthy #followthrough" 4/4/2017 bretthuskamp
We would just like to take this opportunity to Thank Bob Hanif for helping us find our dream home here in Atchison. He was so helpful and kind and went above and beyond for us which is really refreshing these days. We would highly recommend him if you are looking for an Excellent Realtor and an all around honest Professional with a great work ethic that genuinely cares about what you are looking for and won't stop until you find the home or property that is amazing! 10/2/2016 The Banister Family
We bought and sold our first home through Colonial. We currently have our 2nd home we purchased through colonial. When the time comes, I am sure our 3rd home will be through colonial. We couldn't be happier. Thank you Sharon. 6/30/2016 Alice
Very knowledgeable and understanding to my needs. No pressure and made good on all he promised quickly responded to all questions. was more than willing to work around my schedule and my needs for appointment times. 08/23/2016 SAGE6060
What a wonderful experience buying a house! In a very short period, Bob showed us multiple homes and went above and beyond in providing honest and genuine input for a completely professional experience. Best realtor experience I've had!! 07/18/2016 peggystarr9
Kyle helped me sell my home August of last year. He was very professional and easy-going. He made the process a lot easier for me to understand. There was even an issue a day of closing, at no fault of his own, but he was able to solve the problem and close the house on time. I highly recommend him as an agent. Thanks again. 07/11/2016 RiswR1991
Our experience with Kyle was one we will always greatly appreciate. He went above and beyond to sell our home, and spent so much time helping us to buy the right home that fit our needs. We are certain that Kyle will be the next top agent in Atchison and other surrounding areas. Thanks Kyle!! Your the best!! 07/06/2016 csickler2
Kyle was my agent in closing two real estate purchases in the last year and was very efficient and professional. He guided me through the process each time, gave me tips, kept me appraised on the progress of the sale, answered any questions I had and was present at the closing. I would recommend him highly! 06/29/2016 mwalters1022
I would recommend Sharon Locke to anyone looking to buy or sell in Atchison. Sharon was our seller's agent on a recent transaction and she made the process very easy and successful. I appreciated her insight regarding staging our home and her knowledge of how to market the property at its best. Atchison is a difficult market for sellers, but we had over a dozen showings. After only 13 days on the market, we accepted a very good offer. I credit her expertise with making that happen. Throughout the process, Sharon fielded our many questions and helped guide us to closing. We appreciated her professionalism and attention to detail; nothing escaped her attention. From receiving an offer to closing day, she looked out for our interests and ensured that we had everything in order so we could close on another property the following day. In sum, I'm glad that we trusted Sharon with our real estate transaction. 05/25/2016 bobchilders9
She got me $2000 more in negotiations than I was going to settle for....I was anxious to sell and be rid of the property and she suggested I hang in and negotiate for a little more--and it turned out to be good advice. 04/08/2016 scraven14
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