Owning a house is a personal goal for everyone, and we’re all trying to turn that dream into reality. If you are looking for homes on sales in the San Ramon Area, I have good news for you. As an expert San Ramon realtor myself, I have tips and tricks to share that you won’t find elsewhere.
Owning a house comes with a comfortable lifestyle and a feeling of satisfaction as you sit on your couch and sip a drink while watching TV. But there are some practical questions and thinking points which are as confusing as they are important. Before you plan or even think about buying a house, how much do you need in the bank?
How you can grab a deal paying only 7%
How can you buy your dream house with just 7% as down payment? Let me explain. Think about the loan you are getting. Based on the terms of that, your down payment can be as little as 3.5% of the total price of the property you are looking at, such as in the case of a VA loan. This is why you need to be on top of the schemes and offers out, and think about how to make the most of them.
Another 3.5% of the price can be estimated as the closing cost, which when added to the down payment comes about a total of 7%. You should keep in mind that much of this also depends on the market conditions, and lucky for you property can be grabbed at relatively low prices right now! At the moment the market is quite slow and buyers are few, now might be when you can grab a good deal.
Some other expenses and prepaid requirements may come up which will add another 3% to your down payment value, bringing it up to about 10%.
The 20% down payment is a myth!
You always hear that as a buyer you require to pay 20% of the total value of the real estate as down payment. That can be discouraging, because who has that kind of money lying around? It would take years of planning and saving, and probably some investments too, right? Well, wrong.
You don’t always need a 20% down payment to seal the deal on your dream house. As I explained earlier, depending on the schemes and mortgages you are using you may be able to get away with putting down just 7% of the price.
So what’s all this talk about 20% down payment? The 20% down payment structure shrinks the mortgage size, which is obvious; but it also helps you avoid the cost of mortgage insurance which increases the monthly mortgage that you have to pay.
So technically, paying 20% helps you save up on the interest you pay over the period of time that it takes you to complete the mortgage payment.
Should you always put down 20%?
Absolutely not; depending on your monthly income and the size of your bank savings, you can decide what the right down payment is for you that fits your budget. This doesn’t have to be 20%, it can be as low as 7%.
The thing to keep in mind is that the down payment will affect the mortgage payment structure. Another important thing that can significantly reduce the interest you pay on your home loan is your credit score.
Why Credit Score matters
If you nurture a good credit score, your buying capacity increases despite a lower monthly income. This means that you qualify for a bigger loan amount, which translates into you buying better property. If your credit score is tarnished due to some reason, you may find it harder to get approval for bigger loans.
Moreover you can get a loan at lower interest rates with a sparkling credit score. This is great because the interest is what adds up and really skyrockets the amount you actually pay to get a house.
For making the most of this, it is important that you monitor your credit score closely; avoid getting a new car when you’re planning on buying property and pay your credit card bills before the due date.
With the condition of the market, a lot of tenants aren’t paying rent in full. Ensure that your arrangement with your landlord- if you are paying rent in parts- is not going to affect your credit score. Your rent history is an important part of your credit score, and it shouldn’t be the one thing that keeps you from qualifying for a loan.
Finally, feel confident that you can buy a new house in the time to come, and share this confidence with your friends and colleagues!
The right real estate agent can crack hard deals for you and help you out with honest insights. If you need any kind of advice or help making this important move, reach out to me and I’ll respond to you at the earliest.
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Contact: +1 (530) 760-8305