Home Buying in San Jose>Question Details

Cat_phi, Renter in 95112

how much cash should we have to buy a home with a VA loan pre-approved for 400k?

Asked by Cat_phi, 95112 Sat Sep 8, 2012

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VA is 100% financing so you do not need a down payment. Closing costs can run about 2% of the purchase price at that price level. But you can get the seller or lender to pay some or all of your closing costs. So in summary you do not need much cash. BUT...do not go into buying a home of that size with out somewhat of a cash reserve cushion in the bank. This may not be a lender requirement, but make it your own requirement. There will be costs being an owner you do not have as a renter such as plumbing issues, landscaping, roofs, HVAC and lots of other repairs. Also, you want a reserve in case of job loss or illness.
Web Reference: http://www.socalvaloans.com
0 votes Thank Flag Link Mon Sep 10, 2012
Cat: I have just closed a $425k purchase where the borrower came in with zero funds.
I was able to set their interest rate at 4.125% and pay 10k of their closing costs.
I can do that for you, as well.

0 votes Thank Flag Link Mon Sep 10, 2012
I am assuming you are doing 100% VA loan. I would recommend on at least 3% of purchase price. It will also depend on where you buy the property. In Santa Clara County, norm is for the seller to pay for Escrow and Tile fees (You still pay for lender's policy). However, in Alameda county, buyer pays those costs. One more thing to look into is if you have any service related disability. That can reduce or in many cases eliminate your funding fee, which is big part of your closing costs.

You should request your Realtor to provide you with estimated Buyer's Costs. In addition, your lender should have given you estimated costs for the loan. If not, demand this from your lender.

As you can see from my comments above, there are many factors that will determine how much you will need. You, as a consumer, need to look at all costs and if you do not understand or are confused about some of those costs, ask questions. There is no such thing as a stupid question. This is a major investment. If your lender or Realtor do not answer the questions or brush off your concerns, then you need a new lender or a Realtor. Both your Realtor and your lender should be sitting down with you and explaining these for you.

Good Luck
0 votes Thank Flag Link Sat Sep 8, 2012
If you are already preapproval as your lender for a good faith estimate (GFE) of what your closing costs will be. Even with 100% VA financing, you will need some cash. Your inspections will need to be paid up front. If you have more cash, the better. The more money you put toward your down payment, the more instant equity you will have in the home after closing. In today's competitive market you will be bidding against buyers with cash and conventional higher down payment loans. Sellers seem to prefer those types of offers when selecting in this multiple offer market.
0 votes Thank Flag Link Sat Sep 8, 2012
You should talk with you lender on what they are going to require.

Usually VA is zero down and the 3% up front cost may be built into the loan. You need your VA Certificate of Eligability. If the home has issue which need repair you should have funds for that as in today's market the seller is most often passing that over to the Buyer. Also, plan on about $1000 for inspections. It could be less, but a good number.
Web Reference: http://www.terrivellios.com
0 votes Thank Flag Link Sat Sep 8, 2012
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