Denver Home Buying Basics- Down Payment
So, you are getting ready to buy a home.
You have a pretty good idea what price range you need to look in, but what about the down payment? How much will you need to be prepared to put down and what should you put down?
The standard in buying a house is between 5% and 10% down payment. For example, if you were looking to buy a $100,000 house with 5% down, which would be $5,000, the remaining $95,000 would be financed with a mortgage company. Let's say you have owned that house for one year and the property appreciates in value by 10%, making it's value at $110,000. What that means is that you have gained $10,000 on your initial investment of $5,000. That is considered high-leverage and is a great return on borrowed money.
However, with any investment, especially real estate, profits can go up and down. Going with this same example of a $100,000 house and a 10% down payment, if the value of the house goes down in that first year by $10,000, you now own a house worth $90,000, meaning you have lost 100% of your investment. Just remember, that if value does go down, there are several factors that can just as easily bring it right back up. If you are low on downpayment money or want to keep as much cash in your pocket as you can you may do a FHA loan that requires only 3.5% down payment and we can ask the seller to pay your closing cost so you can get into a home for less money, Contact us for details 303-955-4220
The more you put down, the less money will be financed in your mortgage, meaning your monthly payment will be lowered. If you can put more down, the better.
Remember, if your down payment is minimal, the choice of loan programs will be limited. In addition, if you are using a gift as your down payment, there are other limitations, and if you need the lender or seller to help cover some or all of the closing costs, there will be even further limitations. Finally, if you plan on using money from your 401-K or retirement plan, there will be different loan programs and rules.
In addition, be sure you account for all your expenses. Whether you buy a new or used home, there will be expenses once you move in. For new homes, there are appliances, draperies, and for used homes, there are usually repairs. When deciding the amount to use toward a down payment, just keep in mind that you should have a little tucked away for those other expenses.
If you aren't sure about which direction to go, you can always take some time to meet with a loan officer or financial consultant to determine how much of a down payment is best for your specific situation.
When you are buying a home, conducting a rundown of property items could make all the difference in the world. Although not all things will require costly repairs, some might, which is why it's important to be prepared. check out these items to ensure they are in proper working order:
- Look for settlement cracks on the wall, floor, or ceiling. Every home, at one time or another, will get a settlement crack, so if you find a few, there's no need to panic. However, if you notice major cracks, this could be a sign of structural problems. Mark down the location of where you find cracks and make sure they are pointed out to the inspector to determine the degree of damage. If they are small cracks, they can easily be filled with plaster and repainted.
- Look for any leaks. If you notice any water damage marks on the walls, floors, or ceilings, this could simply be from a bathtub or toilet that might have overflowed, or, it could be serious and be due to a leaky roof or poor plumbing. Also, check the tile in the bathrooms and kitchen for any indication of behind the wall leaks, such as mildew or loose tiles.
- Open and close all the doors and windows. Listen for squeaks or sticking. In most cases, this is simply a matter of spraying some lubricant such as WD-40, but it could also be another indicator of settlement.
- If there is an outside deck, check for rotted wood, which could be a sign of termites or it might just be old wood needing to be replaced.
- Check all of the electrical outlets. You can simply take a working nightlight with you to plug in. This will tell you if any of the outlets are not working properly.
- Check the garage doors, if applicable. Make sure they run smoothly on the track and that the openers are in good working order.
- Look for pests such as termites or ants. The best place to look is around the foundation, wiring, pipes, and doors or windows.
- Look at the grading of the yard, both front and back, to ensure that run-off water flows away from the house.
- Look at the gutters to ensure they are properly installed and that water flows out adequately.
- Check the driveway to look for crumbling concrete, pockmarks, or holes that would need to be fixed.
- Have the roof looked at by a professional. Make sure the turbans are installed correctly to eliminate any leakage and that no portions of the roof need to be fixed or replaced.
- Carefully check out the heating and cooling systems. These can be high dollar expenses so it's important that they are running properly. Often, these items are covered under a warranty so if there is a problem, see if you have warrant coverage.
- If there are any fireplaces or wood-burning stoves, make sure that the chimneys are clear of debris and that the flues are working properly.
- Caulking and weather stripping are important as well. Improper coverage will cause air leaks into the home, raising utility bills and causing unwanted drafts.
The good thing is that everything can be fixed. The bad part is that some items are costly, which is why it's so important to ensure you keep operating systems of the home in good working order.
At Kenna Real Estate we are Trained to help you find a home that you wont call a "Money Pit" We are trained in the latest construction methods and materials to help ensure your home purchase is a sound .investment
If you are buying a house, a good inspector should inspect and find all of these items.
We are home buying and selling Experts. Call us any time with any Question 303-955-4220
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Denver CO Luxury Foreclosure REALTORS® - Opportunities by Brian Burke is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 United States License."Denver Luxury Foreclosures - Opportunities" By Brian Burke.