You will need money to purchase your home

I know what you are thinking right now.  You are saying, “I have a zero down payment loan with 100% financing.  Why do I need to save money?”  Well, even if your loan is financed 100% by the bank, you may have closing costs, inspections, and reports.

More importantly, you will need to put down an earnest money deposit to open escrow, which is typically $1,000 or sometimes even more.  This gives the sellers “good faith” that you will perform as agreed.  I would suggest saving up at least $2,000 for a zero-down loan, and you will need to save even more if you have a loan with 3.5% down, 10% down, or 20% down.

Want to know another good reason to start saving your money?  With some loans, the lender will want to have assurance that you can pay your mortgage every month.  They may require that you have 2 months of cash reserves on hand.  That means you must have at least 2 months’ worth of your total housing payment in your savings account at the bank.  No, you cannot simply borrow money from your parents and put it into your bank account.  The lender will need you to show that the funds are “seasoned”.  In other words, the funds must have been in your bank account for at least several months.

Read more in our book, "Buy Your First Home", http://tinyurl.com/dy2wjx4.