New Here with questions

Hello all!! This is my very first post but I have been "stalking" these boards for a while now gathering information and such. I have a few questions about home buying. When purchasing a home is it true the bank wants three months worth of payments? Is this included in closing costs or would that be on top of closing costs? Do they take it or do they need to make sure you have it? I hope I am making sense lol but there is a home DH and I really want to make an offer on.... we cannot afford much as we are just starting out but it is definitely in our price range and not a short sale or foreclosure which is a major plus for us. We do not want to make any mistakes in budgeting and need to make sure we have money left in our account in case of emergencies and also the place would need new carpets and kitchen cabinets asap all else could be done over time.

New Here with questions

We closed on 10/6/10 and our first mortgage payment was due 12/1/10, so in my experience, no, you don't have to pay 3 months up front (at least not when using Bethpage credit union)

Have you spoken to a bank or mortgage broker to see what you would be approved for and to make sure that the house you like is definitely within your limits?

Re: New Here with questions

Different lenders have different guidelines, but many do require that you have certain amount of money in reserves. The lender does not collect it-it wants to see that you have it deposited in a bank account. The theory behind it is that if you lose your job in the future or the home needs an unexpected repair, that there is some assurance that you can make your monthly mortgage loan payment.

You should definitely speak with a mortgage loan professional to see what you can qualify for prior to seeing homes. Many realtors will not want to spend time with you or show you homes unless you are pre-approved or at least have a pre-qualification letter from a lender.

Good luck.

Re: New Here with questions

I second Robert's advice to consult with a good mortgage professional - please let me know if you need any recommendations, or if I can help you with your search at all.

You are not obligated to use the lender through which you get preapproved, so there's no downside to doing it. Not only will you have a better idea of what you can afford -- and it's key to think in terms of monthly payments, not price (so factor in taxes, mortgage insurance, interest rate, etc.) -- but you will also get more information about the mortgage process in general and what types of loan products are out there and what would best suit your needs. It's hard to generalize with mortgage loan info because buyer's individual financial circumstances really come into play.

Also, closing costs are typically 4% to 6% of the purchase price, and can vary by lender, but also depend on factors such as what type of loan you get and the timing of when you close. If closing costs are a concern, you always have the option of rolling them into your loan amount (you can roll in up to 6% with an FHA loan, and 3% to 6% with a conventional, depending on how much you are putting down). So you definitely want to ask a mortgage lender about that issue, too!

Don't hesitate to contact me if I can be of assistance!

Re: New Here with questions

my morgatage lender requried proof of 3 months of morgagte payments in reserves. I did not have pay it up front just show i have it. we were able to use my 401K has the reserve for 3 months worth of payments.