When buying a home in the Nashville area, one of the first things many buyers do is start looking at Nashville area real estate listings online, in real estate newspaper ads and in RE magazines. Some buyers also read articles like this one in order to gather as much information as possible.
If you are a buyer, one of the first things you should do, before you even talk to a REALTOR® or shop for interest rates, is take a good look at your savings and the money you have available for your downpayment and closing costs.
How much money you have available for your down payment and closing costs affects almost every aspect of buying a home in the Nashville area, including the following:
- How you write your purchase offer
- The different loan programs you qualify for
- Shopping for interest rates
Downpayment & Mortgage Programs
How much downpayment you have available or don't have, affects your options.
- If you only have enough available for a minimum down payment as savings, your choices of loan programs will be limited to only a few types of mortgages.
- If another party is giving you a gift for all or part of the down payment, your options are also limited.
- If you have enough for the down payment, but need the lender or seller to cover all or part of your closing costs, this further limits your options.
- If you borrow all or a portion of the down payment from your 401K or retirement plan, different loan programs have different rules on how you qualify as well.
However, if you have saved enough for a large down payment, then you have lots of choices, which includes such varied programs as: conventional fixed rate loans, adjustable rate mortgages, buydowns, VA, FHA, graduated payment mortgages and all the varieties of each.
Shopping for Rates
Also, if you are planning on buying a home in the Nashville area, one very important reason to have at least some idea of your down payment is for shopping for interest rates.
Some loan programs charge a slightly higher interest rate for minimal down payments - and the interest rates for different loan programs are not the same. Conventional, VA and FHA all offer fixed rate loans, but the rates vary from one program to another.
If you plan to shop lenders by phone, the loan officer will be able to tell you which programs fit and quote you rates accordingly. However, if you are shopping on the Internet, you will need to develop some idea of your loan program on your own.
Your Downpayment & Writing Your Offer
Another reason you need to have an idea about your down payment is that it affects how you write your offer to purchase a home in the Nashville area.
Not only will you be required to put your down payment information in the offer, but different loan programs have different rules that also affect how you write your offer. This is especially important when dealing with FHA and VA loans.
Asking the Seller to Pay All or Part of Your Closing Costs
If you are asking the seller to pay all or part of your closing costs, you have to ensure that your loan program allows what you are asking. For smaller down payments, lenders allow the seller to pay less closing costs than for larger down payments. some loan programs allow a seller to pay certain types of costs, but not others.
Your Downpayment & Qualifying for A Loan
Last but not least, your downpayment affects your ability to qualify for a loan. When you make a small down payment, lenders are more strict about having you conform to their underwriting guidelines. Lenders are more likely to make allowances or exceptions to the rules with larger down payments.
Give us a call today and we will put you in touch with one of our highly-qualified, preferred lenders! 615.438.4941
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As you can see, your downpayment and the money you have available for it basically affects every choice you make when buying a home in the Nashville area.
Home Buyer Tips & Related Articles
- Avoiding Financial Stress
- Build a Plan of Action and Get Ready
- Finding the Right Seller
- Pre-Qualifed vs Pre-approved
- Hot, Normal, and Cold Markets
- Importance of Inspection
- Your Credit Score Matters
- Buying a Foreclosure
- Why Hire a Buyer's Agent?
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