MortgageFeliz

I would like to contact you to see how to get a home loan for $250,000, what the monthly payments would be and if a 25 year term is available. Would they give me 100%, who pays the appraisal and the other expenses?

At this moment, it is very difficult to borrow 100% of the funds that you need to purchase a home, Not so long ago, you could have taken a loan for 80% of the home's value and then another for 20% of its value. This would have provided you with all of the funds you needed without taking out Private Mortgage Insurance (PMI).  Now, only a few lenders, mainly banks and credit unions will make loans if you have a low downpayment. Most require a full 20% downpayment or at the very least, 10% down and Private Mortgage Insurance (PMI).

As for expenses, you will be ultimately responsible for these types of closing costs. Previously, many of these could be rolled into the loan amount for closing, but the current market requires their payment. Typical lengths for loans are 15 or 30 years, with 30 years being the more common. Using one of the calculators from this page shows that for a 30 year loan at 7% per annum interest rate, the monthly payment would be around $1,665. You may need to add PMI or homeowners insurance or property taxes to that payment. If you paid 20% as a downpayment, you would then have a loan of $200,000 and a monthly payment of $1,331.

How much money do I need to buy a home?

It all depends on the house you want to buy and the money you have available.  If you don’t have a lot of money, there are government programs that can help first-time buyers.  Many financial institutions also have a variety of loans that are tailor made to the different needs of each individual.  Some of these loans have less rigorous qualification requirements, while others require little or no money down.  In many cases, the money needed for closing costs can be incorporated into the total amount of the loan.  The best thing you can do is ask for a pre-approval on a loan.  This way, you’ll know exactly what your price range is and how much money you’re going to need.  But for your protection, make sure you get this approval in writing.

My wife and I have enough money to put down 20% on a $200,000 home. Should we put down the largest or smallest down payment possible?

It depends on how much extra cash you both have.  Generally, first-time buyers are squeezed for funds.  If they can get together a 5 percent cash down payment, they consider themselves lucky.  But since you two have more cash available, there are two ways to look at it.  Some experts feel that you should purchase your home with the smallest down payment possible.  This will leave you with money for emergencies, decorating or any renovation work you may wish to have done.  Or you can invest the money.  The other option is to put down a large down payment in order to cut down the size of your monthly payments and avoid the cost of private mortgage insurance.  The more dollars you put down, the less interest you’ll pay on your home. 

I don’t have enough money for the down payment and closing costs together. Can I use money from my credit card to complete the money that’s needed?

Take into account that money from credit cards, is borrowed money.  If you take out $8,000, $10,000, or whatever money you need from your credit card, it will be an additional debt to pay off and may keep you from qualifying for a loan.  Before you use your cards, be aware that there are government programs that offer down payment loans with a much lower interest rate than that of credit cards, and these programs are typically not an obstacle when it comes time to apply for a loan. Not having enough money for the down payment shouldn’t keep you from buying a house.  Now there are loans with low down payments, including some that require nothing down.  Contact a qualified lender and get information on the options available to you.

I often see ads for houses that ask for only a $2,000 or 3,000 down payment and in some cases, even NOTHING down. Is this true or is it just a trap?

It is not a trap.  These are offers made by lenders, but these offers are not for everyone.  You must qualify for the loan that the lender is offering. Remember too that in many cases, the smaller the down payment, the bigger your monthly payment and the greater the likelihood that you will be required to purchase mortgage insurance.  Now, if what you’re interested in is a loan with a low down payment, the best thing you can do is go to a lender and let them pre-qualify you for a loan based on what you can put down.  Today, there are a variety of loans with low down payments and many with less stringent qualification requirements.