How much asset is required for pre-approval??

Asked by Ryan Her, 48335 Thu Jan 21, 2010

1) I do have 5% down payment a little more. How much more do I need in my account for pre-approval?
2) Do I need closing cost in GFE in my account to be pre-approved?
3) Do I need to provide source of the closing cost?? Just in case I need to come up with that last 1k somehow or something :)

Basically, I want to get pre-approval as soon as possible in order to start searching and making offers. However, I am not sure if I have enough for down payment closing cost some reserve. I am sure with the next two months' income I will be able to pay for closing, etc... though.

Thanks guys

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Tean Wong’s answer
Tean Wong, Agent, Boston, MA
Fri Jan 22, 2010
With FHA you can put 3.5% down and there can be a closing cost assistant as well. To get pre-approved you need to talk to a mortgage broker and he will get some of your info, like SSN, your income, etc. If you need to be pre-approved soon, you need to talk to mortgage broker now and the process take only a few minutes. Good luck.
1 vote
, ,
Sat Jan 23, 2010
Hi, Ryan Her

There's a lot of variables involved in determining closing costs. Property taxes is a major one, esepcially in today's market where homes are selling well below the value their taxes where originally based on and still remain.

That said: For FHA, your closing costs are typically 6-8% of the home's negotiated sell's price. This is separate and apart from your 3.5% down payment.
0 votes
Mary DeWitt, Agent, Empire, MI
Sat Jan 23, 2010
SHOP around for a mortgage person first! Talk to credit unions, mortgage brokers, banks! They are all different and the interest rate apples to apples! They should tell you what is the best way to go. Things could change depending on the house you find too! You have to start somewhere. The mortgage person needs to educate you. By the way by the time you close on a house it will easily be 2 months from know given you haven't started yet....When you make an offer the date you close is something that you can negociate. If your mortgage person can't explain things...find someone who can.
0 votes
, ,
Fri Jan 22, 2010
Hi Ryan,

If you're going to an FHA loan, you'll be fine with 5% for your pre-approval.
0 votes
Gerard Dunn, Agent, Chevy Chase, MD
Fri Jan 22, 2010
If you have 5% for a down payment and decent credit - you are ready to go.

Talk to a lender. They generally don't bite!

They will guide you through the process - without any pressure.

Good luck!
0 votes
, ,
Fri Jan 22, 2010
Hi Ryan
FHA mortgage guidelines allow you to put down as little as 3.5%. These funds can come from your own savings, they can be gifted from a blood relative, and in some cases there are grants such as the MSHDA down payment assistance program to help you out with that.

In addition to the down payment, you'll need money set aside for closing costs (probably anywhere from $1500-$3000 or so) and about a year or so worth of taxes and insurance (to fund your escrow account and re-imburse the seller for taxes that have been pre-paid for you). Again, this money can come from your own funds or a gift, and the seller can even contribute up to 6% of the purchase price towards your closing cost and escrows.

Be aware that pretty much any new funds showing up in your bank account must be sourced, meaning you need to document where they came from. It's easy enough to document payroll deposits if you have automatic deposit as most folks do. But if you have any other deposits that show up be prepared to show where they came from.

On a side note, FHA just yesterday released a letter saying,among other things, that they will now require at least a 580 credit score to qualify for the 3.5% down program, and also that they will be reducing the allowable seller contributions from 6% to 3%. This is not kicking in immediately, but it sounds like it could start as soon as February.

With that being said, you should definitely speak to a local, reputable lender as soon as possible to find out what you qualify for and so you can set up a game plan. If I can be of assistance to you please don't hesitate to call me at 313-622-7383 or drop me an email. I work in the Farmington area and have an office in Livonia and would love to help you out.

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