Does downpayment mean the amount needed to present on the closing date?

1 Answer

Relevance
  • 5 years ago
    Favorite Answer

    There are two type of funds needed in order to close a sale transaction, in the purchase of a house

    These funds would need to be placed with the closing agent prior to the closing date, so all the funds would be accounted for and to make sure there are no shortages that would prevent the sales transaction from closing.

    You would be issued a HUD-1 closing document indicating the amount you would need to place with the

    closing escrow officer or title company. This document would list item by item where your funds would be going.

    The closing date is really a misnomer. the closing date really do not happen until after the title deed has been transferred to the new buyers name. This might be the next day, or the same day depending on the time you sign he closing documents.

    You would only sign the necessary forms for your mortgage loan on what everyone is considered the closing date. There are other forms you would sign, but closing will take place when the title company record the

    property deed in your name as the buyer.

    The title company would file the necessary deeds at the reorder's office, which would essentially close the

    transaction.

    #1. Down payment

    The down payment of a house would depend on the mortgage loan program you are approved for. There are many and varied programs available to you than just the conventional mortgage loan.

    You would be issued a HUD-1 form or closing statement that would indicate your closing cost and down payment you would be required to place with your closing escrow officer or title company as well as the date you would have to place these funds with the closing escrow officer.

    #1. Conventional mortgage loan

    Normally 5%-10% down payment.

    A. 20% down

    If you want to avoid Private Mortgage Insurance (PMI)

    #2.FHA mortgage loan

    Normally 3.5% down

    There is a monthly fee akin to PMI that you would be required to pay for the life of the mortgage loan or until you refinance the mortgage loan to a conventional mortgage loan.

    #3. VA mortgage loan

    There is no down payment

    You must have been in the United States military active duty, veteran, or retired.

    There is a monthly fee akin to PMI that you would be required to pay for the life of the mortgage loan or until you refinance the mortgage loan to a conventional mortgage loan.

    #4. USDA mortgage

    There is no down payment required

    Normally to be approved for this mortgage loan the property you are purchasing must be a farm or rural property.

    There is a monthly fee akin to PMI that you would be required to pay for the life of the mortgage loan or until you refinance the mortgage loan to a conventional mortgage loan.

    #2. Closing cost

    There are two types of closing cost

    1. Non recurring closing cost (Paid only because of the real estate sales transaction) (Could be paid by the seller or buyer based on the negotiation between the seller and buyer)

    a. Points and fees in obtaining your mortgage loan (Normally 1% of the mortgage loan amount would equal one point. This would be based on the number of points you would be charged, fees might be origination fee, transfer fee)

    b. Title fees (These fees are normally a set amount explained to you when the title is opened by your real estate agent)(In addition there is a homeowners policy you might decide to purchase, in addition to the title policy required by your mortgage lender)

    c. Escrow fees (The same as the title fees)

    d. Federal, state and county recording fees (These fees are determined by the governmental agencies that charge recording fees and such. Some states and counties might not charge fees)

    2. Recurring closing cost (Normally paid exclusively by the buyer)

    1. County property taxes (Paid semi-annually to the county in which the property is located, normally based on the assessed value of the property as determined by the county assessor's office)

    2. Hazard (Fire) insurance (cost of the policy would depend on the type of insurance policy you purchase.(Paid annually to your insurance carrier)

    3. Flood insurance (Required and paid if you are in a flood zone) (This is only paid if you are located in a flood zone as determined by the flood zone map and annotated on your appraisal)

    It would be near impossible to determine the typical closing cost as you might or might not be required to purchase some of the items. You might also decide to purchase additional hazard insurance as well as title insurance.

    A ball park figure could be between $1500 and $2500.

    I hope this has been of some benefit to you, good luck.

    "FIGHT ON”

Still have questions? Get your answers by asking now.