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What are the general guidelines to purchasing a house? How much down? How much in bank account? etc


 

  • December 09 2012 - Benicia
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Answers (4)

FHA 3.5%
Conventional 2%, 3%, 5% or more
VA $0
USDA $0
With Down Payment Assistance $0 - $1000
(Cash reserves, it depends on the program)

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Ron Jensrud
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  • December 10 2012
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Profile picture for SoCal Engr
The answers to your questions cover a broad spectrum, and are greatly influenced by your personal goals and "comfort level" with financial stress.

The down payment can be as little as 0% (with VA or some other specialized loan programs), 3.5% with other programs, or as high as you are comfortable with (although 20% is a number that gets tossed around).

Personally, I've always tried to put 20%-or-more down. This gives you some equity in the house at the time of purchase, and may be helpful in today's market if you have to sell and the house has lost some value. It also tends to force you into a more conservative financial plan for the house purchase - which I am an advocate of.

As for "bank account", you want enough to "feel comfortable" after the purchase. For me, it is 6-12 months of total expenses in cash reserves. Others seem to be willing to work with smaller cushions, but that financial lifestyle is too stressful for me.

The real question is "what is your financial plan, and where does a house purchase fit into that plan?" My opinion is that too many people start with "let's buy a house" and then try to feed that monster after-the-fact. There are more things in life than house ownership. In the end, you want to own a house, not have the house own you.
  • December 09 2012
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Profile picture for Ofe Polack
Your best bet will be to talk to at least two mortgage brokers who can first explain the system to you and secondly get you pre-approved.  In the event that you are not quite ready, the mortgage broker can guide you as to what needs to be done to obtain the best possible loan.  The best of luck!  
  • December 09 2012
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Profile picture for Outer Banks N C
I can tell you have not gone and sat down with a loan officer or mortgage broker, and really that is step #1 and you should. It's free and you will learn a lot by asking questions.

A down payment is dependent on the type of loan you get. FHA requires a min of 3.5%, conventional ranges between 10-20% normally and a VA can be zero down. Speak to the lenders and ask what you could qualify for and what the money down needed would be. Take the information they give you to a Realtor who can then look in the price range they tell you and see what is available to purchase. Good luck!

Tim
  • December 09 2012
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