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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.

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Testimonials

5/18/2016 Aloha Lance! Thank you all for your “local kine” support of the Big Island Chocolate Festival this year. It was really very successful and your support helped us keep the ball rolling as we brought tickets in. I will let you know how much was raised for the schools, but wanted you to see this online news story that mentions your sponsorship. Hawaii 24/7 has quite a large readership. Thanks again! http://www.hawaii247.com/2016/05/15/big-island-chocolate-festival-names-top-confections/ Julie Ziemelis-Owner Ziemelis Communications Integrated Communications Expert-PR
2/29/2016 In 15+ years of Hawaii Mortgage Company dealing with thousands of realtors, it is very rare when you come upon agents who really care and love what they do and want to make the transaction as wonderful as possible for all parties involved. Lance and Kimi go above and beyond for their clients and the mortgage professionals (like us!) who they are working with. In a world full of mortgage regulations, Lance and Kimi make sure to keep everyone on track of the timelines to ensure closing on time, which benefits both the sellers and buyers. We are lucky to work with them and look forward to many more transactions together in the future! Maura K. Shannon Manager / Mortgage Loan Originator NMLS #339190 Hawaii Mortgage Company NMLS #232582 443 Portlock Road Honolulu, Hawaii 96825 Tel: 808-988-6622 Fax: 808-988-7722 Maura K. Shannon
1/18/2016 I recently referred a client to Lance and he was spectacular. I refer a lot of agents outside of my market and Lance has by far been the most impressive I've ever had the pleasure to recommend. He has his thumb on the market and he is a master communicator. He is extremely good with follow up and he is one step ahead; just as you are thinking you want to reach out to check in with him, you'll find an email with an update answering the questions you hadn't even asked yet. He is everything you'd expect in a high performing professional and more. Plus his great personality makes him fun to work with. I'm truly impressed beyond all expectations. Jana S. Realtor Seattle WA.
10/14/2015 Lance Owens is the one of the best realtors in Kona. He has done a couple of my real estate purchases and is always above board on expectations and knows the Kona market as well as anyone. He has helped tremendously in getting the right deal at the right price. He is always available and very generous with his time, a gift when you are as busy as he is. Lance is trustworthy to handle your biggest investment. Bop P. Tampa, Florida
10/7/2015 I have personally known Lance for over 20 years... Even before he became a realtor! Lance is not your typical realtor. His ethics, integrity and work ethic are second to none. He and his partner Kimi are dedicated to work hard on your behalf... Not just out to get a commission! I would recommend Lance if you really want to get the best offer on your property and I would definitely use him again as my real estate agent!!! You will not be disappointed! I give Lance & Kimi 10 stars! Vicki Y. Honolulu, HI
Lance gives 100% always...we were lucky and grateful to be able to work with him several times! We liked the fact that he is honest, trustworthy, & always looking out for the best interests of his clients. At times the buying or selling process of a home can be a headache. Lance always has a demeanor that seems to make any situation positive. He exceeded our expectations and along the way gained our friendship. We would recommend Lance to our family and friends any day!!! Thanks ---Lance!!! :) C&D L H.O.V.E. HI
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