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.
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