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The Real Tea
The Real Tea
Getting DOWN with Down Payments! ft. Ivette Amidan
Want to learn more about loans and down payment opportunities? The Mortgage Diva, Ivette Amidan, is here to spill all the tea!
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Want more Ivette? Find her here:
https://www.fairwayindependentmc.com/Ivette-Amidan
Instagram: @ivetteamidan
Facebook: @LVmortgageDiva
Welcome to The Real Tea podcast! We're Jillian and Catherine Hyde, Vegas dwellers and real estate sellers. Want the real tea on realty? Let us pour you a cup. Learn all about the ins and outs of Las Vegas and how to set yourself up for financial success. Thanks for tuning in. Let's sip some tea. Welcome back, and thanks for tuning in. Today we're joined again by Yvette Ahmed on the mortgage diva and the queen of deals in heels. Yvette, thank you for joining us as we get down with down payments. So let's talk what is a down payment what necessarily does that mean? I feel like a lot of people don't expect such a thing as a down payment. So tell us about it.
Ivette Amidan :Well, that's actually a good question. Um, I just feel that it's not that people don't doesn't expect a down payment. Sometimes they have a and they don't know the difference between immediate closing costs and down payment because when I do explain to down payment, and then I go into closing costs or like what? Wait, there's closing costs. What is that? So they think that down payment, and then everything is together and it's not right. So how much would you need for a down payment? How is that calculated? Well, it depends on the type of loan. And conventional is usually 5%. down but the most popular is 20%. down because it eliminates mortgage insurance, it's private mortgage insurance. So that well, that takes away anywhere from 150 to like $300 off your payment.
Catherine Hyde :Absolutely. It's. So when you purchase a home, there is downpayment and that's the amount of cash that you put towards the transaction. So I don't
Jillian Hyde :pay them basically guarantees Yes, like I'm purchasing the home. It's deposit, right?
Catherine Hyde :Yes, it's part of the purchase price that you pay out of your pocket. It's your skin in the game, if you're buying $100,000 worth of property and you're getting an FHA mortgage That's three and a half percent or 30 $500. You put in 30 $500, the bank puts in the other 96,500. So it's your skin in the game. closing costs are the expenses to get that loan. So it's everything else that's associated, your inspections, your appraisal, your insurance, so on and so forth. Right. It's like when you buy a car, you don't just buy the sticker tag, there's Texas and then there's registration fees. And there's other things that you spend in addition to what that car costs. So the down payment is your skin in the game. closing costs are the expenses to get that house. Now, what you're talking about mortgage insurance, it's when you're what's included in your payment. If you put in any loan, less than 20% down, you are a higher risk to the bank because you don't have as much skin in the game as if you had put a large down payments so to protect it banks to protect themselves against the risk of a for low downpayment borrower from defaulting, they have an insurance policy, and that's called private mortgage insurance. And it's significant. So for example, on a house that's $400,000, your payment would be, and I'm estimating, you're gonna have to correct it. I'm going to say it's gonna be close to 20 $800 or so with 5%. Down. Yes. Okay. And out of those 2800 $300 are strictly profit margin Shaklee. That's, that's it. So if you put 20% down, you don't have that $300 in your payment would be 2500. Exactly. Exactly.
Jillian Hyde :And so obviously, all these numbers depend on situation. So what are like the guidelines used for conventional financing?
Catherine Hyde :Well, the guidelines, so conventional, if if you have a 700 and under usually your credit score, I usually don't recommend conventional. And because, like you said, like Catherine said, it's a little bit of hierarchy. Because then your mortgage insurance is through the roof and your interest rate is higher. So conventional loans are, you know, are kind of picky when it comes to credit score. So I always recommend a 700 and higher for a conventional loan. Now, is it possible to get a conventional loan with under 700? Yes, it is, but you're going to have your expenses are going to be higher. And with a conventional loan, not only is it are good for everybody thinks that conventional loans are not for first time homebuyers, and they're, you know, and they're wrong. But conventional loans have actually come out with first time homebuyer programs that allows as little as 3% down. That's, that's huge. Yeah. Wow. So you do have to be a first time homebuyer, right? If you're not then you go up to 5% down and conventional loans also are good for second homes and investment properties.
Jillian Hyde :Nice. So I'm a first time homebuyer I'm scared, what do I need to just basically be good for a loan? How do I prepare myself to purchase a home?
Catherine Hyde :Well, this is what we would discuss there and the buyer consultation, I would figure out what your concerns are, what your assets are, how much money do you have in the bank, what you're comfortable with, you know, you may have 10,000 in the bank, but you'd rather not spend it or maybe you are only willing to allocate a certain amount of cash to this endeavor. So we identify all of your concerns. And then Yvette has a variety of programs because like she said, conventional is not the only way. Conventional is definitely the smartest if you're able to do 20% down because then the numbers really play to your favor. But if you're just starting out or your credit is less than 700. There are other options.
Ivette Amidan :Yes, such as FHA and FHA has like a bad reputation but it's really not if they chase are really good loans. They start you off with as little as three and a half percent. You can have a six four 580 and you will still come in with your minimum payment of three and a half percent down payment. So that's huge, right? your mortgage insurance stays the same, whether you have a 586 or 680, it stays the same. So FHA loans are actually really good, especially for those who are first time homebuyers are and don't have that much savings. FHA is a really good loans.
Jillian Hyde :Okay, so basically, it's all about strategy. If it applies to you. They're the experts, they will find a program for you that works. So now let's talk about military families. There is such a thing as a VA loan. What does that entail? How could that benefit someone?
Catherine Hyde :Well, VA financing affords you see zero percent down payment. So we're just talking about conventional 20% down FHA three and a half. Veterans have the option of not putting anything down. And that's the things for your service. However, there are still closing costs for a VA loan. So there are still expenses associated. So that's something that you would would make sure you qualify for your VA, we would make sure how much you qualify for, depending on your on your discharge level, there are incentives for an individual that may have retired at a higher level of service than another or achieved certain things. So So it varies from one person to the other. We want to know exactly what's available to you. The interest rate is dictated by that as well. And then again, we identify your goals. If you want to really buy a house with zero out of your pocket, it comes down to negotiation. As agents, we wouldn't negotiate on your behalf to make sure that the expenses are covered by a seller credit ideally, that way it's zero out of your pocket, but what are the requirements for that other than obviously qualifying for
Ivette Amidan :VA well before I get into that Do want to say that Catherine, you're a hell of a negotiator. I've seen your negotiating skills and let me tell you, you're a beast. So just want everybody to know that that if you want to like a good agent that will just negotiate your closing costs. And Catherine is one. That is me. Let me
Catherine Hyde :go. We're very busy. Yeah, this is real time podcast.
Amelia Ross :Exactly. That's my fault.
Jillian Hyde :We're all in it.
Catherine Hyde :We are we're working every day. So yeah, if it's something that for some reason, you don't end up negotiating, obviously, that will come out of your pocket and it wouldn't have to be cash.
Unknown Speaker :The
Catherine Hyde :What else do we have for VA? Do we have any more notes the phone through me?
Ivette Amidan :Sorry. So v A's are actually one of my favorite loans because they're such good loans, especially for our military families that we're really, really thankful for. Like Katherine says zero down payment and you pay no more mortgage insurance. So it does depend, you know, by each client and the different circumstances. But all of the all of the VA loans are just amazing. And one of the things that I love about the a is that it gives you a lot of leniency when it comes to credit score and your debt to income ratio. So your debt to income ratio usually for normal loans are 45. For VA, I mean, I've done VA that 78% really Yes.
Catherine Hyde :So, so what she means by debt to income ratio is if we make $3,000 gross a month, there's the financing guidelines say that only so much of that income can be used for your housing expense, and then that plus your other expenses, your car payment, your groceries, etc, can only use a certain percentage of that income. So those ratios shift depending on the loan program. And that's what she's talking about. So there's some flexibility for VA. There's a
Ivette Amidan :huge flexibility for VA buyers. That's why I've done it as 70%. LTV with the regular loans with the banks like to see is 45%. with certain certain circumstances, they go up to 50. But that's it. And with the A, I've done it up to 70%. LTV. Yeah, I mean that information sorry. So I love I love the lows. I love the flexibility that military buyers and their families have and I would love to help military families. Yeah, that's definitely
Jillian Hyde :fulfilling and great because their service to our country can even be like measured in any way they do so much. So basically, the only cash you need for home payment technically, is the down payment and the closing cost and that is something both of you would analyze prior to even making an offer correct?
Catherine Hyde :Absolutely. During the consultation is something we would identify as the recap I would like to say because the this this episode is about downpayment is you as a first time homebuyer or somebody who might have a few credit blemishes, we're not quite at 700. Mark, you have FHA available to you with three and a half percent down. And your FICO score could be as low as 640. Right? Yes. And then if your FICO score your credit score is 700. and above, then of course, you have conventional financing, which could be as little as 3%. Down correct. And to save yourself the most money 20% down is ideal. But usually people do that under second home, it's when you've achieved a little bit of wealth. And now this is something we were talking about last week. If you're purchasing a second home, let's say I own a house now, and I bought it as an FHA and I want to purchase my upgrade home. My family has grown and I want to upgrade Can I then go To a conventional 5% down, yes, you can. Okay, and what if I want to buy an investment property or a second home?
Ivette Amidan :What a second home as far as like out of
Catherine Hyde :like if I want to buy one in Lake Tahoe?
Ivette Amidan :Yes. So if you want to buy a second home downpayment for a second homes or as little as 10% jump,
Catherine Hyde :great. And for investments, I know that 25% down will be available with conventional.
Ivette Amidan :Yes, that is for multifamily. For just a single family residence. It's 15%.
Catherine Hyde :Also if I want to buy a rental 15% Yes, that's a great one last thing FHA can be used if you do want to buy multifamily. The catch is that you must live in one of the units.
Ivette Amidan :Yes, that is correct. You must live in one of the units because FHA is for owner occupied.
Jillian Hyde :Cool, okay. And so if you're like me in super confused by all these numbers, you can definitely contact Yvette and or Catherine both of their social And anything, websites are all linked in the video description. So go there. And obviously these ladies have been in the game for quite some time. So you don't need to be scared about catching a good deal more veterans. Honestly, but, ladies, thank you for getting down for down payments. I hope that cleared things up for you. Basically, it's just a game is all about strategy. And you contact the experts and they help you out they fix. Absolutely they make teamwork makes the dream work. This is our team. So thank you. Yeah, thank you ladies for joining. Thank you. Till next time. Bye. Thank you for listening to today's podcast. Want more real tea hit subscribe and leave us a review. Check out Hyde Real Estate dot com for more real estate opportunities and as always, stay thirsty