How a Down Payment on a New Home Makes a Molehill Out of a Mountain!

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Believe me, your down payment on a new home affects nearly everything you can think of in the buying process - the loan programs you're able to qualify for, the size of the interest rate, the amount of closing costs, etc.

The basic rule is this: the more you have to put down on a down payment for a home, the more options you have!

This rule is true because, like all lenders, mortgage lenders dislike risk. They're in the business of making money by lending money. So, the more money you put down, the lower the risk, and the more lenders like your deal.

And, that's not all. If you have enough cash for a large down payment, then more choices open up to you! You can choose conventional fixed rate loans, adjustable rate mortgages, VA, FHA, graduated payment mortgages and all the variations of each of these programs.

By the way, when you combine a good-to-excellent credit score with a large down payment, you'll definitely get positive attention from loan officers!

Acceptable Sources for Down Payment Monies

In general, lenders want to see adequate funds available for a period of at least sixty (60) days in your account. The usual methods of proof of these funds are either a Verification of Deposit form or two months' worth of your most recent bank account statements.

So, if you're person who keeps money "under the mattress" or somewhere in your home, this isn't acceptable. It has to be deposited in an account (bank or investment) for at least two months (preferably longer).

In technical terms, this is called "seasoning." And the reason behind it is this: First, by having money in an account, it shows you have to ability and discipline to save money and, thus, are a good risk from the lender's point of view. Second, it demonstrates that the money is likely yours and not a personal loan from a family member or a friend. Lastly, and obviously, it shows you have enough money on hand for a down payment.

In general, here are sources you can use for a down payment:

• Checking account• Savings account
• 401k account
• IRA account (have to meet specific guidelines)
• Money market account
• Stocks
• Bonds
• Mutual funds
• Certificates of deposit and other liquid assets.
• Sale of an asset, etc.

Frankly, in this New Age of Frugality, the safest method is to simply save the money for a down payment. This teaches you financial discipline which is good for all aspects of your life, and it means you don't have to rob other assets to pay the down payment.

I'd be happy to discuss and suggest many different ways of obtaining down payment money. Contact me today.

Greenville/Upstate SC Market Statistics Update

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Thinking of buying, selling or moving up into something better in the greater Greenville/Upstate SC area?  The number one thing you need is to understand what is happening in the real estate market.  You can log onto some of the national websites out there to get a general idea of what is going on in this region but if you want specific information about your own neck of the woods, trust your agent to provide you accurate facts and figures.

Here in Greenville, we have three main areas of news to report for the first three quarters of the year 2011.  How are we doing in terms of inventory, days on market and home sales?  Here are some market stats that reflect where we have been, where we stand and where we are headed in the months to come.

Inventory

With a 16% decline as compared to the previous year’s inventory, the existing homes on the market are less than what they were last year at the same time.  This translates to fewer properties to choose from as a buyer but it also means that if you are a seller you have a greater chance of selling your home given the fewer number of other homes prospective buyers are vying for.

Days on Market

The single best indicator of how long a home will take to come off the market is the average Days On Market.  The longer a home is on the market, the harder it will be to sell and the lower the price will need to be in order to continue attracting viable buyers. In our area, our average DOM is up 9.7% from the same time last year, with it taking about 113 days to sell a home nowadays versus 103 days average DOM in 2010.

Home Sales

The number of homes sold in our area in September 20011 was 545 – a 16% decline from the year prior. Looking at the entire market year to date, from January to September we were down 3.1% this year versus last year.  The most noteworthy consideration here is that last year there were additional factors contributing to home sales, like the stimulus or the first-time homebuyer tax credit incentive.  With the absence of those two key factors this year, a mere 3.1% drop from last year’s numbers is fairly good news that indicates that the market has stabilized.

Overall, at 4,492 homes sold this year in the period between January and September we are not too much off from last year’s 5,100 homes sold at the same point in the year.

In general we are experiencing a fairly stable market and the promise of better days and stronger appreciation are soon to come.  To have a detailed comparative market analysis conducted on your home to learn its exact value in the market, contact us for customized assistance toward achieving that and all your real estate goals.