100% LOAN _ 0% DOWN PAYMENT USING AN FHA LOAN 2024

What if I could show you a way to buy a $300,000 home with only $1,000? I mean your primary home that you would live in, your total cash to close at signing, including your down payment, all your closing costs, and including all funding of all your escrow accounts, a total of $1,000. Would that be interesting to you? If so, let's kick off this rodeo right now. Hi folks. I'm Kevin Fagan. I'm the Mortgage Patriot here in Central Texas above San Antonio, nestled in the hill country serving proud Texans all across our state and of course homeowners all across the country. So today I'm very excited because we're going to talk about a very important topic. It's down payment because most of the time FICO scores are good enough or I can get them to a point where they're good enough. And then income, if they have a job at all and they're combining income, certainly they typically have enough for a start at home or a first home. So really the element that causes most problems is the down payment element because a lot of times you have to come out of pocket for $10,000, $15,000, $20,000 at the least, certainly for a $300,000 property. But in our video, we're going to talk about a way to buy a $300,000 home. And with the down payment and total closing costs and total escrow accounts to fund, we're going to get that number down to $1,000. How are we going to do that? We're going to combine about three strategies, but the base of our strategy, the loan product is going to be an FHA loan, which virtually everyone could qualify for. So stay tuned and let's get into it right now. So as we start, if you can hit the like and subscribe button below, that really helps me. And it helps you. My goal is to bring videos about a one a week, a very informative, actionable content so that you can rely on me as a, as a trusted financing source is someone that can help you, whether you're an investor or there's the homeowner, whether you're purchasing or just refinancing, there'll be a lot of good content and there already is. So look in the library of my YouTube videos already. But the goal is to continue to build that library and just bring good content to you going forward that can help you either make money as an investor or save money as a homeowner trying to refinance or purchase. So we're starting this strategy off with the notion of cash to close. Cash to close is the actual number that you're going to have to write a check for or wire money to the title company for the purchase of a home. And that cash to close includes three major components. What are those components? Number one is down payment. Number two is the actual cost, the hard costs of actually doing the financing or the transaction. And then lastly, the escrow funding. We're going to get breakdown all those three right away. So let's talk about down payment. So unless you're buying a home with cash or you're a veteran that enjoys a 100% VA loan or you live in the rural areas and you are allowed a USDA loan, most people aren't on either of those two, you're going to have to come out of pocket for a down payment with your financing. And what does that mean? That means the down payment is the percentage that you come out of pocket for relative to your purchase price. A conventional loan setting can get as low as 5%. In some cases you can actually get down to 3% if your median income is below the median income for that area. For today's discussion, we're going to talk about the FHA loan, which is very popular entry loan. Usually first time homebuyers or second time homebuyers use the advantages of FHA loan. The big advantage is a low down payment. So FHA allows you to do 3.5% down. So let's take our $300,000 example that we're going to be talking about all through this video. On a $300,000 house, you're allowed to put down only 3.5% using an FHA loan. 3.5% of $300,000 is $10,500. So the down payment is the first component of the cash to close concept that we've talked about. The second component is the actual real cost, the total cost of actually doing the transaction. So it doesn't matter what type of loan you're doing, conventional FHA, VA, USDA, they all have costs associated with it. And what are those costs? Let's talk about those now. And there's plenty of them. Trust me. There are underwriting costs, appraisal costs, processing fees, title costs, and then recording costs and maybe surveys and inspection costs. The costs come out of the woodwork. When you get, when you go to close, they're going to give you a closing statement. And it looks like a laundry list of just a half a dozen to a dozen different charges that you're going to receive. Those add up to quite a bit. So that's also the big component of cash to close is the actual true cost of doing a loan. So how much will all those costs approximate? Well, the answer is going to be different in every state, but let me just give you the state of Texas anyway. On a $300,000 home purchase, fees are going to be across all those ones that I mentioned, underwriting, processing, appraisal, survey, inspection, title work, recording, and so forth. That's going to approximate about $5,000 to $6,000. So it's not cheap. So where do we stand now on cash to close? We talked about the down payment being $10,500 and we talked about closing costs being five to six, let's call them six. So we're up to $16,500 just on the first two components of the cash to close concept. Let's talk about the last one. The last one is escrows. What is that? And this is the one that everybody forgets. When you buy a home, you're responsible for property taxes and property insurance, right? You can pay those separately outside the mortgage, but that's rare, but you're allowed to do that. But most of the time you make a payment to the mortgage company. It just doesn't just include your mortgage payment, which is your principal and interest. It also includes property taxes and property insurance. So those two components, the property tax and property insurance go into a called an escrow account where your servicer, your mortgage company is holding as an aside to, at the end of the year, pay property taxes and then fund the new 12 month commitment to your insurance. So, but at closing you have to pre fund those two components a little bit. So you have to pre fund your insurance, a full 12 month payment at closing. So let's say it costs you a hundred dollars a month for property insurance. So now you're going to pay an additional $1,200 at closing to fund the first year of your property insurance. Also your property tax. Let's say your taxes are $300 a month. You have to fund the escrow to the tune of about four months. So let's say that's another $1,200 of escrows for property taxes. So 1,200 and 1,200, that's another $2,400 of cash to close. So now we're at 16,500 plus 2,400 that gets you to $18,900. So your cash to close and on a $300,000 house in Texas is going to be around $19,000 in our, in our example, $18,900. So how on earth are we going to get this down to a thousand dollars? I'm going to show you that right now. We get down to that thousand dollar figure by combining two different strategies and they are down payment assistance and seller concessions. Down payment assistance. I've done a video on this before. You might check that out. It's, it's pretty helpful, I think it, but we talk about down payment assistance programs are different all across the country because they have national programs, they have state programs, they have county and they have city programs and they all vary. But the one I'm referring to now is a specific program. It's a national program. And what is it going to do? It's going to allow you to get a loan on that three and a half percent down FHA product. So in other words, you get an FHA loan for three and your, the down payment on FHA loan is three and a half percent. But rather than pay that 10 and a half thousand dollars, you're going to get a second lien loan for that $10,500. This down payment assistance program is going to give you a loan for that three and a half percent. So what does that look like? Well, it's, it's a small loan because it's only 10 and a half thousand dollars and it's spread over that entire 30 year period. So your payment is, and today's rates is going to be about $80 is all. So $80 adds to your mortgage payment, but now you've come to the table with zero down payment, 96.5% FHA loan and a three and a half percent second lien down payment assistance loan. So now we've shown you how to cover the down payment component of cash to close by using a down payment assistance loan. It's a second lien position and doesn't add much to your payment. But now you come out that entire $10,500 in our example has been eliminated. So now we have to put our focus on the total cost of the loan and the escrow costs, which in our example are $8,400. How do we get rid of that or virtually get rid of that? And the answer is seller concessions. What are seller concessions? Seller concessions are closing costs that the selling party has agreed that they will cover instead of you. What does that even mean? Why would they do that? Because in most environments, and we're in an environment now where the housing market is not, most of the houses aren't flying off the shelf. Yes, in some places they are, but at least in the state of Texas is a relatively balanced market. So on a normal home, the seller would rather help you cover closing costs to sell their home than reduce his price. So let's say again, that that house is for sale for $300,000 and you want to buy it, but rather than go to the seller and say, Hey, I'll buy this from you for $290,000 and take $10,000 off the seller would rather say, I'll sell it to you for 300. Let's keep that number at 300 and I'll give you $7,400 of seller concessions to cover your closing costs. So in this example, the seller is actually getting a better deal than selling it to you for $290,000 because effectively they're selling it to you for $292,600. Where did I get that math? Because that is $300,000 minus the closing costs he's going to concede to you or the concessions he's going to give to you of $7,400. That leaves a true cost, a true net to the selling party of $292,600. And just so you know, this is a very normal transaction. I'd say I do quite a bit of transactions and most of the time, I'd say probably 90% of the time in this environment that I've seen in this year, you're seeing seller concessions and they are sometimes very substantial. You can see them all the way as low as a thousand dollars, all the way up to maybe $15,000 of seller concessions. So our example here with $7,400 is not out of the realm at all. So now let's look at what we've done. We've covered your down payment of three and a half percent with a second lien position from a down payment assistance program. So the 10 and a half thousand dollars has been eliminated and we had $8,400 of seller of true costs and escrow costs that we needed to cover. Well, we covered 7,400 of those from a seller concession idea that I just presented to you. So what does that leave us with? Of course, a thousand dollars to close. So there's your cash to close of a thousand dollars where you're literally only writing a check for a thousand dollars on a cash to close total that would have been close to $19,000. So this happens all the time. I can help you structure this and help you negotiate this, but it starts with an FHA loan and attaching a down payment assistance loan to that. And then also adding that last component of seller concessions. So I hope this was helpful. You look at my phone number there. Give me a call at the 2 1 0 3 1 7 6 5 1 4 number. And again, like, and subscribe if you would, please give me a shout. I'd love to talk to you and I'm Kevin Fagan, the mortgage Patriot on your side. Bye-bye.