The purchase of a home usually entails saving for two up-front costs. The down payment which is a percentage of the total purchase price of the house.
In addition to a down payment, funds are needed to cover closing costs. Closing costs include all fees required to execute the sales transaction, such as attorney fees, title insurance, appraisals and tax escrows. Most home buyers will need at around $3,000.00 for closing costs. In some instances the seller or lender may be willing to help with these costs.
Most programs today do not require any reserves at all. Reserves are funds over and above the down payment and closing costs.
Today, first time borrowers in Illinois can purchase a home with as little as $1,000.00 down with the assistance of an IHDA grant. Some 401(k) plans allow employees to borrow against the plan. Proceeds from borrowing against one's own retirement funds can be used toward a down payment. Veterans of the armed forces can use their VA benefits and buy a home with no down payment at all. There are also FHA programs that require as little as 3.5% down plus closing costs for purchasers that do not qualify for the previously mentioned programs.
Since the down payment required depends on the purchase price, a home buyer should meet with a mortgage lending professional to determine how large a mortgage can be obtained.
More than half of all first time home buyers receive gift funds from relatives in order to help with their down payments.
For more information or to get pre-approved for your home search call:
Cherry Creek Mortgage Company
40W310 Lafox Road, Suite C1
St. Charles, IL 60175
Chris "CK" Kravetz
Broker, GRI, Realtor