Today on va wednesday, we're going to be talking about
No money down
So a client actually suggested I did this video because there's a myth and there's a misconception and a lot of people fall for this
so
There's lots of advertisements for va loans, right zero down zero down for heroes. No money down and that's accurate for the mortgage
Va does not require a down payment
On the mortgage. Okay. Now if you've used it before and you have other stuff going on in other va loans
Yes, you may have to pay down payment. But if this is your first use
Va does not require a down payment. That's where the zero down the no money
all those catchy headlines come from but it's led to a
Misconception and the misconception is a lot of people believe if they do a va loan that it's no money down no matter what
And that's just because they don't understand the process. I mean
Why would anyone understand the mortgage process and buying a house unless they were doing it or worked in that industry?
So today I want to talk to you about closing costs. Yes closing costs
So whenever you're buying a house, there's going to be closing costs money that it costs to close the home
So with va we don't charge a lender fee. We don't charge origination
However, there's many lenders that do there's a couple big lenders that charge one percent origination up front
At closing is what I should say, but they charge one percent origination. So what does that mean? What's one percent origination?
Well, if you're buying a four hundred thousand dollar house that lender is charging you four thousand dollars to do the loan
Yeah, yeah, and then you're like, okay
Well, I can come up with the four grand. What else do I need to pay for?
title and escrow property taxes homeowners insurance, um an appraisal homeowner's inspection pest
Maybe you pay for it. Maybe the seller pays for it depends on the state you're in all these different costs are
Occurring when you're buying a house, okay
So you want to be really careful that you recognize that? Hey look on the mortgage. It's zero down
But unless you're negotiating with the seller to pay all the closing costs
You're going to be bringing money to the table
Okay
You're going to be bringing money to the table
So what I do with first-time homebuyers is I always want an application like usually I start with a conversation
If you guys want to work with myself or my team, please start by scheduling a phone call we get so many emails
That it's hit a point where like I feel terrible. I
Wake up at three o'clock in the morning because I know I haven't responded to people from a week ago who are asking scenario questions
I really need you guys to get on the calendar because then we can do it over the phone
It takes 10 minutes versus reading the email going back and forth 50 times
Talking is so much more efficient than email. So
I always like by a quick conversation to figure out where someone is like should we do an app or do they have some stuff?
To do first and if it looks like they're in a position to do an application
I always say look fill out my online app. We'll go through it. We're going to ask for documents
You know, we're really going to go through it aggressively
but what we're also going to do is by having the
Application i'm able to pull in all the local estimates for fees in the areas that you guys are looking in
And it varies state by state it varies county by county in some places you pay the transfer taxes in some places
The seller does you know?
There's a lot to it and then I go through the loan summary and I say hey look this is what closing costs look like
Now you may be like shoot. I don't have that much money. That's normal. Okay
Um, I find that
The bulk of our clients don't have a ton of money to pay towards closing costs
Most of america doesn't have that much money saved like that's what the statistics are. It's expensive living
Day-to-day, so it's tough for people to save money when their rent is more or the same as a mortgage payment
Okay
But what you need to know is you need to know what you're asking for when you write the offer
Because if you write an offer on a house and you're not asking the seller to pay closing costs and you don't have the money
To pay the closing costs. How's that going to work?
Right and in some cases the lender can increase your rate and give you a lender credit
But in some cases they can't you know, if they're if it's 100 200 000 alone
There's a limit to how much we could increase your rate. I mean you could go from
2.75 to 5 percent trying to get money don't do that
Know what you need up front so that when you're negotiating for a house you ask for it
So i'll tell people like okay, you know, here's how much money you need
This is how much money you have in your bank account?
I never think anyone should wipe out their savings and all their money
That is a terrible idea when you move into a house, there's going to be stuff that needs to be fixed
Maybe you need a new washing machine. Maybe you need a new dryer
So it's really important to make sure that you get into a financial position
You can afford so might you lose your dream home because you don't have money for closing costs. Yeah
Yeah, you might totally because the seller may say guess what i'm not going to give them all that money, right?
Because at closing we're collecting a year of homeowners insurance. You may not be able to pay for that
The seller may not want to pay for it either. So you really need to know up front
Okay
So i'm buying a four hundred thousand dollar house
Closing costs with taxes and insurance and all this stuff is looking like it's gonna be nine thousand dollars
I need to ask the seller to pay two and a half percent towards closing costs
And you need to make sure your realtor knows this
Okay, there's certain areas of the country where there's zero chance of you getting closing costs
so in that case
You're going to need to sit down and save and save and save
Even though you've got that zero down loan because you're going to need to pay for your closing
But what I see more often than not is sellers understand this and you just need to get the right seller
So that you can work this situation so that you can go in truly with zero down
now one important thing to note
Whenever you're buying a house
You're gonna have to deposit what's known as earnest money and earnest money is like a show of good faith
So for instance, what I see a lot of is a thousand dollar deposit
So what that means is that in your contract, even if you get the seller paying your closing costs
They're often going to want to see that you have some money at title and escrow
And that's because by accepting your contract they're taking the house off the market
So that you can close on it that does affect them. So if everything goes to heck they're gonna want some sort of financial. Um,
Benefit and that's what that thousand dollars could act as do. I see a sellers get that money a lot
No, I really don't and that money could go towards your closing costs now if you end up in the perfect situation
Where you're doing zero down
And the seller's paying for everything you can get that earnest money deposit back. You can never get more than that
so that's important to know because sometimes people are like oh if I get a seller credit for 30 grand
Then I can get 20 000 back. Right? No that's incentive to buy
You can't get money back more than you put in at the table. So I hope this has been helpful
The key thing is is that make sure the lender you're talking to
Is talking to you about closing costs because there's some lenders that don't even have the conversation with you
They just tell the realtor he needs money towards closing costs, but you don't understand why your contracts are not being accepted
So you're having to write more which is normal in this market be prepared to write 30 offers. It's hot
It's the market doesn't matter how much you're putting down who you are
What your credit score is be prepared to write a lot of offers. Um
You want to have this conversation because you want to be able to actively understand like okay i'm asking the seller for ten thousand
So maybe I shouldn't also ask them to drop their price twenty thousand
So keep that stuff in mind make sure the lines of communication are open with both your lender and your realtor
I am licensed in 44 states if you're interested in chatting with me or my team
Please fill out the calendar just pick a time for my calendar
I do not discriminate you pick a time
I or someone on my team will call you and we will try to see if we can help you out
Get you a great rate and walk through those closing costs so that you're not ambushed by them
Thank you for watching and I hope you guys are having a good week
