1. Down Payment And Closing Costs On Home Purchase * Many first time home buyers are very concerned about how much money they would need to save in order to be qualified to be able to purchase their new home.
* Believe it or not, many people who dream of buying a home someday are still under the impression that they need a minimum of 20% down payment plus closing costs
* That is not the case
2. What If The Seller Of The Property Does Not Give Sellers Concessions Towards Buyers Closing Costs?
* There are instances where sellers will not give you a sellers concession towards a buyers closing costs.
-- In the event this is the case and homebuyers do not have the extra funds to come up with closing costs for home purchase, talk to the lender
- See if the borrowers can qualify for a lenders credit towards closing costs
Most lenders can give borrowers a lenders credit towards closing costs for a slightly higher mortgage interest rate.
3. Down Payment And Closing Costs On Home Purchase Depends On Loan Program
* The minimum down payment and closing costs on home purchase needs to be shown on bank account for borrowers to get a mortgage approval and get a clear to close. Sellers concessions cannot be used towards down payment on home purchase.
- However, unless a home buyers purchases new construction home from a builder, there are certain states like the state of Illinois where property taxes are paid in arrears
- On states like Illinois where property taxes are paid in arrears, home buyers will get a tax proration
- All property taxes are paid in arrears in Illinois and the seller owes home buyers the prior year’s property taxes
- Illinois home buyers can use tax proration credits towards their down payment on home purchase
- For example, say Illinois home buyers purchasing a $100,000 home and have a FHA insured mortgage loan for $96,500
- The Home Buyer need to show $3,500
- Say closing costs of $3,000 is covered by the sellers concession and this buyer has a $3,000 tax proration
- The $3,000 tax proration can be used to offset the $3,500 down payment and the only amount needed to bring to closing is $500.00
- There are many cases where buyers do not have to bring anything to the closing table due to the tax prorations
- There are many instances where home buyers get cashback at closing
Mortgage Borrowers who have any questions Down Payment And Closing Costs On Home Purchase can contact us at Gustan Cho Associates Mortgage Group at 262-716-8151 or text us for faster response. Or email us at gcho@gustancho.com.
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