Many of my clients are millennial first time home buyers. Here are some of the most frequently asked questions I get asked.
Q: Do I need 20% down to purchase my first home?
A: No, you don’t. However, 20 percent is the target number. If you cannot put 20 percent down, don’t sweat it. According to Inside Mortgage Finance, 1.9 million borrowers put less than 20 percent down in 2015.
If you put less than 20 percent down, the lender will require you get mortgage insurance. This will add to your monthly mortgage payments.
If you have any questions about getting prequalified, contact Holly Hino-Agustin (NMLS#: 325967) at hhino@sandalwoodhl.com. Holly is the Vice President of Sandalwood HomeLoans. She will take care of all your lending needs.
Q: What are gift funds?
A: According to Fannie Mae, gift funds can be defined as, “A borrower of a mortgage loan secured by a principal residence or second home may use funds received as a personal gift from an acceptable donor. Gift funds may fund all or part of the down payment, closing costs, or financial reserves subject to the minimum borrower contribution requirements below. Gifts are not allowed on an investment property.”
Many of my millennial Buyers have received gift funds from their parents. All of them have strong credit and incomes, but they often lack the down payment because they are paying back their student loans. Without gift funds, these clients would not have been able to purchase their first home.
Q: How do you get paid?
A: This is one of the most misunderstood things in real estate. When a Seller wants to list his/her property, the Seller will meet with a Listing Agent. During this time, the Seller will set the commission rate and the commission split. The industry standard is 6 percent and it’s usually split in half between the Listing Agent and Buyer Agent. Only when the house sells, both Listing Agent and Buyer Agent gets paid a commission.
If you are a Buyer, it doesn’t cost you a single penny to retain a Buyer Agent!
-RO
Source: Fannie Mae and Inside Mortgage Finance.
Disclaimer: This is a personal blog. Ryan Oda (#RS-75450) is a licensed real estate salesperson with Benn Pacific Group, Inc (#RB-19423). The opinions expressed here represent my own and not those of Benn Pacific Group, Inc., its agents, and or its affiliates. My thoughts and opinions can change over time. This blog is intended to provide a semi-permanent snapshot of a selection of various thoughts and opinions that may not be the same, or even similar, to those I may hold today.
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