How to Get Down Payment for Nomad

The following is a video of the live webinar presentation with Jassen Bowman from February 28, 2017 on How to Get Down Payment for Nomad.

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You'll typically need your Down Payment at the time of Closing, but the Lender will likely need to know the source of your Down Payment.

Your Earnest Money will apply toward your Down Payment (plus any closing costs you might have for your loan). For example, if you needed $15,000 for Down Payment and you put up $3,000 for Earnest Money, the $3,000 would apply toward the $15,000 so you would need $12,000 more for Closing plus any additional closings costs.

This is the time to start thinking about where you might get your Down Payment from and how much you have to work with.

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Down PaymentFinancingFirst Meeting: FinancingUltimate Nomad ChecklistWeek 1

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Once you have your contract accepted there are some common expenses you might need to pay while you're under contract and at Closing to buy the property.

Here are some examples and some really rough estimates of what they might cost:

  • Home inspection (paid to Home Inspector you hire if you decide to hire one) - about $250 for interior only condo to $375-$500 for single family home, more for multi-family properties
  • Radon test (paid to the person who does your radon test which may be your Home Inspector) - $100 to $200
  • Sewer scope (paid to the Sewer Scope company) - $200 if there is a sewer cleanout or more if they need to go in through a toilet
  • Meth test (paid to Industrial Hygienist) - $1,000 and up if you decide you want to test for meth.
  • Mold test (paid to Industrial Hygienist) - $300 and up if you decide you want to test for mold.
  • Appraisal (paid to the appraiser usually via your Lender) - usually about $500 to $800, can be much more if there is a rush fee, multiple trips or multi-family property
  • Closing Services Fee (paid to Title Insurance Company for preparing and presenting all the paperwork for Closing) - usually about $300 and is negotiated in the contract as to who pays (Buyer or Seller or split 50/50)
  • Loan Closing Fee (paid to Title Insurance Company for presenting your specific loan paperwork to you at Closing to get the loan) - typically about $350 (and not negotiated in Contract; it is a Buyer cost if they're getting a loan)
  • Owner's Title Policy (paid to Title Insurance Company and typically required by lender to get the loan) - varies based on purchase price and time since last refinance but you can estimate about $1,200 for $300K property without a new loan in past 5 years. It is negotiated in Contract but it is common to negotiate to get the Seller to pay for this.
  • Lender's Title Policy (paid to Title Insurance Company to insure the Lender for your loan) - typically about $400 to $500 depending on purchase price and this one is not negotiated in Contract and is always a Buyer expense.
  • HOA Transfer Fee (paid to the HOA) - Who pays it is negotiated in the Contract. It ranges from $0 to $500 or more depending on the HOA. It is common to see about $250ish.
  • HOA Status Letter Fee (paid to the HOA) - Who pays it is negotiated in the Contract. It ranges from $0 to $250 or more. It is common to see it about $150ish.
  • HOA Capital (paid to the HOA) - The amount varies depending on the HOA, but it is a Buyer expense all the time. Buyer may get it back when they sell. It is common that it can be about one or two months of HOA dues but can vary widely from that.
  • Condo Questionnaire (paid to HOA) - Usually if you're buying a condo and the lender requires it for the loan. It can vary a lot, so we'd need to call the HOA to find out the amount.

Some of these expenses are optional but strongly recommended like Inspection. Some of these expenses are optional and rarely done like meth tests. Some are negotiated in the Contract between Buyer and Seller like who pays the $300 or so Closing Services Fee or Owner's Title Policy. Some are required if you're getting a loan. Some you can ask the Lender to increase your interest rate (which will raise your monthly payment slightly) but give you a credit you can use to pay some of these up-front expenses; this allows you finance some of them over time. Sometimes, you can negotiate to get the Seller to pay some of them as Seller Concessions when you submit your offer.

Discuss these with James to talk about it especially before writing your offer if you're trying to minimize your out of pocket and buy a home with little or nothing down.

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Down PaymentFinancingFirst Meeting: FinancingUltimate Nomad ChecklistWeek 1

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Complete the "Pre-Showings: Down Payment" checklist:

https://LearnToBeRich.com/down-payment/

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ASAPDown PaymentPre-ShowingsPre-Showings: Down PaymentUltimate Nomad ChecklistWeek 2

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Watch the recording of the live presentation of "How to Get Down Payment for Nomad" available on:

https://LearnToBeRich.com/how-to-get-down-payment-for-nomad/

Mark this task as complete once you've watched it.

ASAPClassesDown PaymentFinancingNomad BasicsPre-Showings: Down PaymentUltimate Nomad ChecklistWeek 2

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Ask your Lender to give you estimates on how much your Down Payment and Closing Costs will be with the loan you plan to use and the home price you're likely to look for. Make adjustments if needed to your plan.

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Down PaymentFinancingPre-Showings: Down PaymentUltimate Nomad ChecklistWeek 2

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Make sure that you know the source of your Down Payment and Closing Costs.

You will need at least the Earnest Money when you make your offer. You will need the Down Payment and Closing Costs for closing.

Discuss the timing with your Real Estate Broker and/or Lender if you have any concerns.

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ASAPDown PaymentFinancingPre-Showings: Down PaymentUltimate Nomad ChecklistWeek 2

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Sometimes if you have extra cash for down payment it might make sense to increase down payment.

We often consider this as an alternative to to paying up-front PMI or buying down the interest rate. If we're putting less than 20% down, one way to lower our monthly payment is to put more down to get rid of PMI instead of paying the PMI up-front.

Mark this task as complete when you've talked to your Lender about using a larger down payment and decided whether you will or not.

Analyzing DealsCash FlowContract Deadline: Loan Objection DeadlineDown PaymentFinancingInterest RateNet Operating IncomeOptionalUltimate Nomad ChecklistWeek 10

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Verify with the Title Insurance Company whether they will accept a cashier's check for closing or if you will be required to wire funds for closing.

IMPORTANT NOTE: If you are wiring money to the Title Insurance Company for Closing you should always get wiring instructions straight from them by calling them. Do NOT rely on emailed wiring instructions without verifying them by calling the Title Insurance Company or in person.

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Closing: Prepare For ClosingContract Deadline: Closing DateDown PaymentUltimate Nomad ChecklistWeek 12

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Some clients want to read, word-for-word, every document at Closing. If this is you, let us know as soon as possible and we can try to request a copy of the entire closing document package so you can read them in advance of Closing.

Then, at Closing, you can quickly compare them to the ones you've read to make sure they're the same ones and sign them.

Only about 1 in 50 clients do this so it is relatively uncommon.

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Closing: Prepare For ClosingContract Deadline: Closing DateDown PaymentUltimate Nomad ChecklistWeek 12

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Your Real Estate Broker should coordinate with your Lender and the Title Insurance Company to find out how much you'll need to bring to Closing.

Great Lenders will do this for their clients as well. Some don't.

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Closing: Prepare For ClosingContract Deadline: Closing DateDown PaymentUltimate Nomad ChecklistWeek 12

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Your Real Estate Broker should coordinate with you, the Seller, Seller's Real Estate Broker and Title Insurance Company to schedule a time for Closing.

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Closing: Prepare For ClosingContract Deadline: Closing DateDown PaymentUltimate Nomad ChecklistWeek 12

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Your Real Estate Broker should schedule a final walkthrough of the property just prior to Closing.

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Closing: Prepare For ClosingContract Deadline: Closing DateDown PaymentUltimate Nomad ChecklistWeek 12

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Your Real Estate Broker should review your Settlement Statement to check to make sure it matches the terms of your "Contract to Buy and Sell Real Estate" that was agreed to and, additionally, verify the pro-rations.

Your Real Estate Broker will not know the terms and agreed to expenses of your loan so you'll want to review those numbers with your Lender.

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Closing: Prepare For ClosingContract Deadline: Closing DateDown PaymentUltimate Nomad ChecklistWeek 12

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Your Real Estate Broker will not know the terms and agreed to expenses of your loan so you'll want to review those numbers with your Lender.

This is usually done a few days prior to Closing in an ideal world with a great Lender. Often, it happens the day before or even the day of Closing. Some less-than-great Lenders never do it unless you insist they go over it with you.

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Closing: Prepare For ClosingContract Deadline: Closing DateDown PaymentUltimate Nomad ChecklistWeek 12

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If you have a tenant in the property and you're buying the property with a lease in place, your Real Estate Broker should provide you with an "Assignment of Leases" that assign the rights of the current Landlord to you at Closing.

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Closing: Prepare For ClosingContract Deadline: Closing DateDown PaymentUltimate Nomad ChecklistWeek 12

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Bring the following with you to Closing:

  • 2 forms of photo ID
  • Your checkbook - sometimes there will be a last minute adjustment to the closing numbers resulting in a small shortage that the Title Insurance Company will accept a personal check for
  • Your funds required for Closing (usually a certified check)

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Closing: Closing FinancingClosing: Closing Real EstateContract Deadline: Closing DateDown PaymentUltimate Nomad ChecklistWeek 13

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Attend the Closing.

Be sure to bring certified funds, two forms of ID and your checkbook.

Mark this task complete after Closing.

Closing: Closing FinancingClosing: Closing Real EstateContract Deadline: Closing DateDown PaymentUltimate Nomad ChecklistWeek 13

Previous Recordings

The following is a video of the live Power Point presentation I gave to Nomads in Fort Collins on August 4, 2016 on How to Get Down Payment for Nomad.

Improvements

The following are improvements I plan to make to this page based on some of my Standard Process Improvement Questions.

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