Dated: September 2 2016

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Hey All,

Thank you for tuning in to my Mortgage secrets blog. To review or get a quick recap on Part I - Types of Loans, please click here.

If a buyer has a job, small down payment, and a reasonable credit score, then they can get a mortgage.But, how much will it cost for a buyer to get into a home? Let's start with breaking this down into 3 categories: 1. Down Payment, 2. Closing Costs, and 3. Pre-paid Expenses. 

1. Down Payment - The down payment is the difference between a home's purchase price and the amount of the mortgage against the property, and must be paid upfront before the home purchase can close (defined by the lending broker Lending Tree). Part I of my mortgage secrets blog goes over what the minimum down payment you will need to pay for which type of loan you get. For the most part, the minimum down payment ranges from 0% to 5% of the sales price.

2. Closing Costs - Closing costs are the fees associated with the services rendered in accommodating the closing. Those costs include the title, lender, etc. The average cost for these services is around 2-3% of the sales price.

3. Pre-paid Expenses - Pre-paid expenses cover interest, insurance, and pro-rations for taxes. The average cost for these expenses is about 1-2% of the sales price.

Overall: The cost of getting into a house can be anywhere from 3-8.5% of the sales price (see above figures to get that number). Depending on the loan you get and the lender you use, it is possible to get the seller to contribute to your closing costs up to 3% of the sales price. Thus, if a buyer uses a VA or USDA Loan and can get the seller to contribute to the closing costs, it is possible for the buyer to move into their home for FREE ($0.00). Make sure you consult with your Realtor and Lender to see if this is an available option for you.

Jacob Hyde, Realtor & Attorney
  Team Price Inc, Broker
  7320 N Mo-Pac Ste 305 Austin TX 78731
  512-992-8591 (mobile) | 512-213-0213 ext 281 (office)
  888-643-9502 (fax) | (website) me on Facebook)

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