Back to Table of Contents

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.

Back to Table of Contents
Nick Duzich
Hirschi Realtors
3631 Maplewood Ave., Ste. 1
Wichita Falls, TX 76308
Cell: 940-224-1224
Fax: 940-691-1213
Email:
NDuzich@HirschiRealtors.com
agent photo

Testimonials Page

We had such a great experience with Nick Duzich! We were very picky about finding the perfect house and he went above and beyond to make sure we found "The One" Thank you Nick for all your hard work. David & Lindsey Cadaoas, Wichita Falls, TX
Nick was most instrumental in selling my house. For every possible roadblock he was very resourcefull in helping me find a low cost and efficient way to overcome the difficulties. I would recommend Nick as an excellent agent to anyone wanting high quality services. I am greatful for all he did in selling my house Nancy Terry
Nick Duzich was very aggressive when it came to selling our house. We were in the process of being transferred to Corpus Christi and our family was split up. He knew this was a difficult time for us. Nick went above and beyond to make sure to market the house. We had lots of showings and he made sure it was advertised everywhere. It was non stop interest. We had to be on our toes with all the requests and showings. Nick did an amazing job and we were in contract within 3 weeks. Nick was always there for us and went above and beyond to help in any way he could. He is very professional and trustworthy. Nick treated our house with respect. He was very helpful and very easy to communicate with. Talking to him is like talking to a friend. You feel like you have known him for years. I would recommend Nick to anyone who is looking for a realtor who will come into your home and sit down with you and listen. He is definitely there for his clients and he will treat you like family. This was the easiest transition in all my house buying years.  The Wallanders, Wichita Falls, Texas
Nick was very intuitive to our needs. He made sure since we were moving from 6 hours away to get us in a neighborhood that would best fit with our needs. Nick is so easy to communicate with. His way of being friendly helped us communicate better with him. We would recommend him to anyone shopping for a home! Melissa Colclasure
We loved our experience with Nick and Hirschi. We love our new home and wouldn't have been able to go through everything as smoothly as we did with out him. He was friendly and easy to deal with. He is very personal and paid attention to the details we required in searching for our new home. He is a people person and cuts to the point, we trusted his opinion about how to handle the purchase. Thanks Nick! Brandi H.
View All