A serious question deserves a serious answer

Dated: November 21 2020

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Prospective buyers often ask me how much money they should have in the bank in order to buy a home. That’s a hard question to answer without first getting a bit of context. A person could buy a studio-apartment sized condo for $350,000, and one could use an FHA mortgage requiring only a 3.5% ($12,250) down payment—but many condos won’t qualify for an FHA loan. Besides, if the buyer has served in the US Armed Forces, they could use a VA loan that allows for a zero-dollar down payment. Also, the questioner doesn’t usually mean “what is the minimum I need to buy any property at all;” they really mean “what do I need to get a place I would like.” Answering that question requires an understanding of what they’re looking for.

Other aspects of your life also play important roles in your readiness to buy. It matters whether you have been in the same job (or the same kind of job) for over two years. Of course, your FICO scores can affect both whether you qualify for a mortgage and how much the mortgage will cost. So, the way I can provide a truly useful answer to the question about how much money is needed to buy is to simply begin the conversation and first steps as though you are actually buying now. This isn’t any kind of sales trick—it’s a direct result of taking the question seriously. Once the initial steps reveal how ready you are, you can decide what you want to do next.

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DAVID DUNLAP

As a residential real estate executive with an extensive background in corporate marketing, I am able to apply unusually strong skills in marketing communications, e-marketing, strategic planning and ....

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