Home Buying in Euless>Question Details

Vee, Renter in Euless, TX

I am a first time home buyer, I would like to know how much should I save up before I start looking for a home?

Asked by Vee, Euless, TX Tue May 17, 2011

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12
Great question. The best thing to do is call a lender and begin the preapproval process. It really depnds if you want to put 5% down or 20% down.....this depends on your financial plan, not just how much money you have. The lenders we use look at your entire financial goals and help you achieve them.

I would be glad to pass their names on to you if that would be helpful for you.

Warmest Regards,

Pam Yoakum
with the Blaser Yoakum Team
Keller Williams
pamy@kw.com
http://www.BlaserYoakumTeam.com
214.929.5535
0 votes Thank Flag Link Thu Mar 29, 2012
20% down and earn at least 3x more than monthly mortgage payment ... otherwise I wouldn't advise anyone buying a home.
0 votes Thank Flag Link Thu Mar 29, 2012
I would suggest contacting a reputable mortgage company of your choice , it may be through your personal bank or credit union or a referral from a family member of friend who has various mortgage programs available (FHA, FHA203k, VA, Conventional) to see what you would qualify for based on your income, debt to income ratio, credit score and things of that nature.

Your mortgage consultant will then notify you as to what specific mortgage programs fit your particular situation, need/wants and what price range would be comfortable for you. At that point I believe you have a great starting point as to how much money you would need for down payment, closing and other contigencies such as home inspections, termite and closing cost.
Once you receive your prequalification documents, then you can sit down and figure out your the specifics of the home you would like.
0 votes Thank Flag Link Thu May 19, 2011
Before you run off to somebody to get their answer, create your own expectations:
First, sit down and look at your finances. How much do you bring in? How much currently flows out?
Banks won't want you to commit to spending more than about 40-43% total on all your debts. So, if you have a car, a student loan, and credit cards, take the total and whatever is left over out of 40% of your gross income is available for housing.
Let's say you make $28/hour and you have a $300 car payment, a $100 student loan payment and $75 a month to pay minimums on your credit cards. The $28/hr equates to $4,667 a month gross income. The bank won't like you to spend more than around $2,000 a month for all debt. So, the $475 a month for other debts leaves you with $1,525 a month you can spend on housing.

At today's 5% mortgage interest rate this calculates out to about a $280k mortgage but you need to reduce that for taxes and insurance. The bank wants you to pay each month about 1/12 of your annual property taxes and insurance. A good rule of thumb is to take the sale price and multiply by 0.75% or to multiply your monthly available income times 130. For $1,525 x 130 you should be able to get about $203k. A $200k sale price x 0.75% is $1,522. (Yes, tax rates and insurance will vary - so this is just a rule of thumb.)

Second, see how much you have for down payment and closing costs. You'll need a minimum of 3-1/2% of the sale price for FHA-guaranteed loans or about 5% for conventional loans - in cash in the bank. And you'll need another 2-4% for closing costs. Some of that can be paid by the seller or can come from somewhere else. On $200k, you'll need $7,000 in the bank (3.5%). Plus, you'll need some money for closing costs, say, $4-6,000, but some of that could be paid by the seller or a gift.

Lastly, not necessarily using these numbers but rather your own budget, ask a loan officer if you qualify for a home priced around $200,000 (or whatever your budget shows). Not only will he confirm your numbers from your budget, but he will also check your credit scores and history to see if anything will prevent you from getting the loan. You might have some unexpected things to take care of, like old bills you didn't know about. And your score might be lower than expected because of the surprises, which means it will take a few weeks or months to clear up the credit issues.

If you have some serious derogatory information, like foreclosure, bankruptcy and so on, you may wind up in the penalty box for a couple of years. Just keep pluggin' away at paying your bills on time, and the score will come up. Time cures all wounds.
Web Reference: http://www.Mortgages-TX.com
0 votes Thank Flag Link Thu May 19, 2011
There are lots of good anwers already given you, and all are basically correct. A lot depends on credit score, income, etc. Other than down payment, you have to consider closing costs, pre-paids and reserves after closing, normally 2 months of PITI. If you have credit scores of 680+, we have a 5% Down, NO PMI conventional loan, our lender fees are reduced, and you get to skip your first 3 months mortgage payments. All of this combined will give you a "Net" cost of purchasing a home that is less than an FHA loan with 3.50% down, AND, your monthly mortgage payment will be less than by doing an FHA loan with it's mortgage insurance. I believe it's such a great program, my daugher is buying her first home (closing tomorrow) and it's the program she chose. The Seller can pay 3% of sales price towards your closing costs/pre-paids, and all funds, including down payment can be gifted to you by a relative. Check around, compare all your options with other lenders to this one, and if you feel you meet the guidelines, give me a call. I think you will find no other banks or bokers can match it. I don't know what price range you are looking in, but the maximum loan amount is $417,000.

Bill Merritt
972-447-6544
0 votes Thank Flag Link Tue May 17, 2011
Hi Vee
One of the best things you can do is get with a lender and a good agent that can help assist you in the entire home buying process. You can read books, talk to friends, but you actually need to sit down with someone who works in the market day after day.

We have a team of 4 full time agents and a marketing person and an administrator. We work hard to help you find a great property within you budget.

So to truly answer your question, call David with Prospect Mortgage at 817.328.1307--office number and get the processs started.

Also to get great buyer service call Rick, he is a great buyer's agent that will work hard to find you just the right house. Rick's cell is 817.455.8304

Warmest Regards
Pam with the BlaserYoakum Team
214.929.5535
http://www.BlaserYoakum.com
Web Reference: http://www.BlaserYoakum.com
0 votes Thank Flag Link Tue May 17, 2011
Hello Vee,

Thad depends on the type of program you want or need. I would get with a local lender or mortgage broker who will work with you and give you the information you need. You also need to know where your credit stands as that will have the biggest effect on qualification. You can also get an idea of what you qualify for. In your case you do want a minimum of 5% saved and although not always required you want to have at least 60 days reserves after your purchase closes.

Please note that just because you can qualify for X amount does not mean you should buy in that range. It is no fun being house poor. So take the time to set up your team and start with a trusted lender. From there you can get the information you need to ensure a smooth transaction with no surprises.

Good luck on your home purchase.

Don Groff
REALTOR | Mortgage Broker | Consultant
Keller Williams Realty | 360 Lending Group
o.512.669.5599 m.512.633.4157
listings@dongroff.com
0 votes Thank Flag Link Tue May 17, 2011
Hi Vee! Everyone's situation is a little different. Depending on the loan type you qualify for and the area you are looking in you could need anywhere from about $1,000 on up to 10% or more of the sales price of the price range you are looking at purchasing. Obviously the more the better. Your credit score, debt to income ratio and down payment all play into your loan approval.

I would be happy to do a no obligation consulation with you either in person or over the phone. Please contact me if you would like to look into this further.

Thank you!!

Ricky Coles
Integrity First Home Loans
1221 W Campbell Rd, Suite 115
Richardson, TX 75080
972-948-2630 Direct
972-918-0909 Fax
IntegrityFirstHL.com
NMLS License #209438
0 votes Thank Flag Link Tue May 17, 2011
Your first step should be to meet with a local and trusted mortgage broker, they can prequailify you at no cost, they will look at your credit plus your financials and let you know what mortgages that you may quailify for and what the cost of each may be, they can quote you what down payment is needed and what teh closing costs will be, they can also tell you how much of it you can get the seller to pay for.

http://www.trulia.com/blog/scott_godzyk/2010/10/where_do_i_i…

Please see my blog for more tips and advice when getting a mortgage
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Tue May 17, 2011
Hi Vee,
A minimum of 5% of the amount you're wanting to spend is best. Obviously the more the better. But you could achieve the goal of a home purchase with that.
While looking at homes, you could/should continue to save more money too.
You should get with a good Lender to determine the amount that you can and want to spend.
Best of luck!
0 votes Thank Flag Link Tue May 17, 2011
I would talk with a lender to get an idea of how much you can spend. Then I would suggest 10% to cover the 3.5% FHA down payment, closing costs if necessary and a reserve for emergencies and any immediate things you want/need to do once you get the house.
You are on the right track. Good luck.
0 votes Thank Flag Link Tue May 17, 2011
The more the better, but part of it depends on how much you are looking to spend. I would say that you want to save about 5% minimum before starting to look. If you went with a VA loan and had the seller cover the closing costs, then that will give you about a 1.5% cushion for misc things when you move in.
0 votes Thank Flag Link Tue May 17, 2011
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