When preparing to buy a home in Miami, one of the first things that homebuyers consider is looking at homes for sale listings on the Internet, newspapers, and magazines. Most people have a price range already in mind that is considered affordable. However, before you call in an ad, shop for interest rates, or talk to a Realtor®, one of the first things you must consider is the amount you have available for down payment and closing costs. These factors affect several aspects when buying a home and it is important that you take a look at your savings before taking the next step.
Understanding Mortgage Programs
One of the main reasons why your savings affect how you buy a home is because if you only have enough available to make the minimum down payment then you will only have limited choices when it comes to loan programs and the types of mortgages that you will qualify for. If you have enough for the down payment and need the lender to cover part or all of the closing costs, your options are also significantly limited. In the event that someone is giving you a gift for part or all of the down payment, you have limited options as well. For those who borrow a portion or all of the down payment from your retirement plan or 401(k), then how you qualified depends on different rules for each loan program.
On the other hand, if you have a large down payment then you have variety of loan choices to choose from. Some examples include adjustable rate mortgages, conventional fixed-rate loans, VA, FHA, buydowns, graduated payment mortgages, among others. If you are taking a look at your savings right now and feel confident that you can make a large down payment, then you have the freedom to shop around for more options.
Your Savings Affect Interest Rates
When shopping around for interest rates, you will find that some loan programs charge a higher interest rate when you can only make the minimal down payment. In addition rates vary depending on the loan program. For example, VA, FHA, and conventional loans all offer fixed rates. If you are shopping around on the Internet, then you can get an idea of which loan programs you can offer the best interest rate based on your savings. You can also shop lenders by phone and a loan officer will be able to tell you which programs are good fit for you and quote rates as well.
Your Savings Affects the Offer
Different loan programs have different rules when it comes to how you write your offer. Since the down payment is included in the offer, the amount will determine certain closing costs. For smaller down payments, the seller is allowed by the lender to pay less closing costs and for larger down payments. In addition, smaller down payments usually require that you conform to stricter guidelines. For larger down payments there are usually exceptions or the lender is allowed to make allowances to the rules.
Before searching for homes for sale in Miami, consider the down payment since it affects every choice you make when you buy a home. To get a good idea what you can afford, it is good idea to speak with a reputable Realtor® or agent in your area to find out what you can qualify for. Contact us and we will show you how it is easy to buy homes for sale in Miami.