You will need money to purchase your home

Real Estate Broker/Owner with MBA Broker Consultants CalBRE Broker #00983670

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",

Posted by

Regina P. Brown
Broker, Realtor®, M.B.A., e-Pro, GREEN
California DRE # 00983670


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Comments (8)

Tom Arstingstall, General Contractor, Dry Rot, Water Damage Sacramento, El Dorado County - (916) 765-5366
Dry Rot and Water Damage Mobile - 916-765-5366 - Placerville, CA
General Contractor, Dry Rot and Water Damage

Well it doesn't sound like a lot of money is needed to by a home Regina.

Aug 26, 2014 05:11 PM
Brian Brady
San Diego VA Home Loans/858-777-9751 - San Diego, CA

....and, things break.

Aug 26, 2014 05:31 PM
Chris Griffith
Downing-Frye Realty, Bonita Springs, FL - Bonita Springs, FL
Bonita Springs Listing Agent

So many people don't prepare for home ownership thinking they will never own or have the opportunity.  When that surprise opportunity does arrive it pays to be ready or even somewhat ready.

Aug 26, 2014 07:43 PM
Susan Haughton
Long and Foster REALTORS (703) 470-4545 - Alexandria, VA
Susan & Mindy Team...Honesty. Integrity. Results.

Just getting through inspections, appraisals, etc. to see if the house is what one expects can be pricey for some people. 

Aug 26, 2014 09:28 PM
Than Maynard
Coldwell Banker Heart of Oklahoma - Purcell, OK
Broker - Licensed to List & Sell - 405-990-8862

Better to start saving now and be ahead of the game. If you can't save enough money for your down payment of closing costs, what makes you think you can save enough for repairs, etc after you buy the home?

Aug 26, 2014 11:16 PM
John Meussner
Mason-McDuffie Mortgage, Conventional Loans, Jumbo Loans, FHA, 203(k), USDA, VA, - Walnut Creek, CA
#MortgageMadeEasy Walnut Creek, CA 484-680-4852

Nothing scarier for a lender than a $0 down payment, $0 toward closing cost loan.  Surefire way to foreclosure as soon as a hot water heater breaks or roof needs repairs if a borrower has no reserves.

Aug 27, 2014 02:28 AM
Anna Banana Kruchten CRS, CRB, Phoenix Broker
HomeSmart Real Estate BR030809000 - Phoenix, AZ

Regina I remember a lot of the zero down scams - which is just a bad way to think about buying a home. Buyers need  a reasonable cash amount and reserves. Nice ebook!   I had a 1st timer ebook  a few years ago when all that were buying were first timers in our down market.  It worked great as I'm sure your book will as well.

Aug 27, 2014 03:34 AM
Regina P. Brown
MBA Broker Consultants - Carlsbad, CA
M.B.A., Broker, Instructor

To my AR friends, thank you for dropping by and adding valuable inputs to my blog.

Anna, it's nice to hear that you also had a 1st timer ebook.  Thank you for the kind words and encouragement.

Aug 27, 2014 12:24 PM