How Much Money Do I Need To Put Down To Buy Investment Property in Minnesota?
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In the good old days, actually just a couple years ago, it was easy to purchase investments with little or no money down. But with people over leveraging and going into foreclosure, the banks, the states, and the nation batten down the hatches on more creative lending-solutions. |
Now, it is much more difficult. It is tougher to find stated income loans, option ARMS have gone away and the criteria to borrow has gone up.
Don't get discouraged - however, you can still get a good-loan if you qualify. But the loans of today will typically need at least 5% down. There are still zero down mortgages available, however, they are fewer and farther between now and often have terms that make the loan unattractive.
Many people, as first-time investors, confused the down-payment with earnest money or closing costs. Remember it this way, earnest money is a check that those with your offer to show how "earnest" you are in making the purchase. It is still your money and you can use it towards the down payment or towards closing costs, whenever you choose.
Closing costs are the costs associated with making a purchase. Your lender will give you a Good-Faith Estimate (GFE) listing all these costs. There are filing fees with the county and state, there are fees for underwriting, fees for closing company and a title company, etc. etc. etc. Then there is the down payment. This is the amount determined by the loan you select.
If your loan requires 5% down, then 5% of the purchase price is your down payment and will be required on the day of close. Since you have already written your earnest money check, you may choose to put that money towards your down payment. You could also put it towards your closing costs. Or, as many people choose to do, roll your closing costs into your loan. The choices are yours and a good lender will help you with what's right for you.
