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Can I Buy a House with No Money Down in Indiana?

Buying a house, with no money down, almost sounds too good to be true. Well, it is possible if you qualify for the mortgage. And, if you cannot, you can still buy a home with a very low down payment and negotiate to have your closing costs paid for by the seller.

Either way, there are ways to get into a home with less money than you may think. So, how do you buy a house with a lower or no down payment? The first key is to find a good Realtor and a mortgage lender that has the loan products available.

Not all mortgage lenders are equal. Some have different loan types that can help you get the best possible deal available. In addition, having a good Realtor who understands the loan process and what type of home qualifies will save you time and money.

So, buying a home in Indianapolis with a low down payment, or anywhere in Indiana, isn’t as challenging as you might think.

Let’s take a look at different loans and the down payment requirements and see if you can find one that will work for you.

Buying a Home in Indiana, No Down Payment VA Mortgage

A VA loan is reserved for Veterans that have served in the military. With a VA loan, you do not have to have a down payment to buy a house. You are still responsible for your closing costs which could be negotiated with the seller. There is still a minimum out of pocket expense. For instance, when you write an offer, there is normally some type of monetary consideration given as a deposit that ensures you will go through with the purchase of the home. Keep in mind in order for the home to pass a VA appraisal, the house must be in good condition, so no fixer uppers on a VA purchase.

USDA Loans

What is a USDA loan? A USDA loan historically was a loan that was specifically used for homes bought in an agricultural area. This no or low down payment loan is backed by the United States Department of Agriculture. Today, this mortgage is still primarily for rural locations but you might be surprised to see additional areas where this loan can be used. There is a map that outlines the available areas for USDA Loans throughout the United States.

Not only are USDA loans 100% financing, but they are also more forgiving for homebuyers just starting out that may have a little more debt than income. However, you do not have to be a first-time homebuyer to qualify for a USDA loan. This type of loan is available to a first time or a seasoned buyer.

USDA loans do have some qualifications that the buyer must meet. For instance, your income cannot exceed a certain amount per year. Income guidelines for USDA loans go by region. Getting a USDA loan in the Indianapolis area is possible. Knowing the USDA map will make your search much easier to identify. This is where your Realtor and lender can help. They will be able to provide you the information for loan qualifications.

USDA loans also have restrictions on the condition of the home that you purchase. The idea is to be able to buy a home that is safe and sound. Just like VA loans, USDA loans require the home to be safe, sound and overall in good condition. So, the appraisal does matter. For example, if a home was built prior to 1978, lead-based paint could be an issue. Look for no chipped or peeling paint in homes built prior to 1978.

Credit Unions

Some credit unions such as Navy Federal Credit Union offer members low down or zero down payments. Most borrowers do not think of looking at a local credit union for home loans. You may be surprised to find their terms, qualifications, and down payments are competitive or even more forgiving than larger lending institutions. So, check your local credit unions for competitive loans.

State Bond Money (Indiana Down Payment Assistance)

States such as Indiana offer bond money to help buyers with down payment assistance and interest rates. There are “windows” of availability for bond money, which means those funds are reserved and when they are gone, they are gone. Bond money is usually restricted to buyers with limited income. However, verify because how much money you can make is contingent on where you live. Usually larger cities such as Indianapolis allow for buyers to make a little more money than people who reside in smaller communities.

Buying a Home with a Low Down Payment in Indiana

Buying a home in Indianapolis, or anywhere in Indiana, with a low down payment is actually fairly easy to do. There are several mortgage options available that will allow a buyer to purchase a condo or single family home with ease.

FHA Loan

Most people think of an FHA loan as a first time home buyer loan. However, this type of loan is available to any buyer if the home and, of course, the buyer qualifies. FHA is probably one of the best loan products for buyers with a little more debt and lower credit score.

Purchasing a condo with an FHA mortgage may be a little more challenging as not all condo buildings are FHA approved. However, if the home you are looking at is not a fixer upper then passing an appraisal shouldn’t be too difficult.

FHA loans require the buyer to have a 3.5% down payment based on the purchase price of the house. The down payment can actually be a gift. There are guidelines that define where that gift can come from but a family member or employer is on the list of acceptable givers.

Conventional Loans

You can now get 3% down payment conventional loan. The best part about this type of loan is the condition of the home. Unlike an FHA, VA, or USDA loan, conventional appraisals are a little more lenient regarding the condition of the home. For instance, if the home in the near future will require a new heating and cooling system, chances are it will pass a conventional appraisal.

Conventional loans may require a higher credit score or additional cash reserves in your bank account. However, it is worth exploring. The difference between a conventional loan, VA, and FHA are the fees for the loan. A conventional loan can be cheaper for the buyer than an FHA or VA loan.

Piggy Back Mortgage

This is a great term that most buyers won’t forget. And why would you want to? Piggyback loans are just what they sound like. You basically have one larger conventional mortgage to finance the majority of your home purchase and a second (piggyback mortgage) that helps you out with your down payment.

Piggyback mortgages are making a comeback in today’s financing and are worth running the numbers to see if this type of financing makes sense. There are a couple of benefits and one is paying no private mortgage insurance (PMI). PMI is normally charged and paid monthly if you do not have a 20% equity position. PMI is not tax deductible and can be expensive.

Buying a home in Indiana with no money down or having a low down payment is obtainable if you know where to look. Talking with Realtor about your options can help you make an educated decision that will benefit you for years to come.

Top 5 St. Patrick’s Day Events in Indianapolis 2019

Nothing welcomes the arrival of Spring like St. Patrick’s Day in Indianapolis. The shamrocks, the parades, the beer, and the celebration of everything Irish makes this an annual event that no one wants to miss. So, if you live in and around Indianapolis, where do you go to party it up in your monochromatic green apparel? Here’s a list of the top 5 things to do in Indy and where to find them:

1. 23^rd Annual Hoosier Lottery Greening of the Canal

Downtown Indy turns Green on St. Patrick’s Day. Well, at least the canal does! Bring the green seas of the Eire home with a dyeing of the local waters. Following in the tradition of the dyeing of the Chicago River, this annual event sponsored by the Hoosier Lottery is a must-see for locals and visitors alike. See performances by The Indianapolis 500 Gordon Pipers and other local musicians as well as an appearance by Mayor Hogsett. March 14^th at 5 PM. Ohio Street between West Street and Senate.

2. 39^th Annual Indianapolis St. Patrick’s Day Parade & Tent Party

This annual celebration of Irish heritage is a sight to see in downtown Indy. The parade itself starts at 11:30 AM but get there early for the tent party which opens to the public at 9 AM. The parade will feature 90 units including floats, balloons, marching bands, Pipe & Drums, Irish dancers, mascots, schools, and VIPs. Be prepared to have a fun-filled afternoon! Event on March 15^th from 9 AM to 3 PM. Parade begins at 11:30 AM. Located in downtown Indianapolis on North Street between Meridian Street and Pennsylvania Street.

3. 28^th Annual Shamrock Run & Walk

Get your feet to do a jig as your run through downtown Indy dressed to the nines in your Irish gear. Starting at 10 AM on March 16^th, this 4 mile run & walk sponsored by the Athletic Club Foundation benefits amateur sports organizations in Central Indiana and the Indy Firefighters Emerald Society. Once you’ve completed the race, keep the celebrations going with live music, food and a beer garden on Mass Ave. Go to www.shamrockrunwalk.com to register. March 16^th at 10 AM. 748 Mass. Ave. Indianapolis Fire Fighters Local Union 416.

4. 2019 Georgia Street Blarney Bash

The biggest outdoor St. Patrick’s Day party in Indianapolis is back! From Meridian Street to Pennsylvania Street, enjoy countless entertainments including green beer, full bars, 32 oz Lucky Long Island Iced Teas, DJs, live bands, and big screen TVs showing sports all night. Food will be available from Box Burger Food Truck. Clayton Anderson will be headlining the show so don’t miss this event. Pre-sale tickets are $10, and regular admission is $15 at the door. March 16^th from 2 PM to 10 PM at Kilroy’s Bar and Grill.

5. 2019 Indianapolis St. Patrick’s Day Bar Crawl

If drinking green beer is more your style, don’t miss this bar crawl hosted by Social Scene. Party with a diverse group of young professionals who will make their way to spots like Taps & Dolls, Patron Saint, The Pub, Blu Indy and more! Register early to get gift cards, drink specials, a St. Pat’s shot glass medallion and easy access to the participating venues. Don’t forget to drink responsibly. First time Lyft users can use the code BeSocial for up to $5 in rides. March 16^th from 10 AM to 6 PM. Check in location TBA. See Facebook event page hosted by Social Scene for more info.

Indianapolis is the place to be for St. Patrick’s Day. If you want to enjoy the spirits of the holiday, take an Uber or Lyft and be safe Indy!

An Irish Blessing for You.

“May joy and peace surround you,
contentment latch your door,
and happiness be with you now
and bless you evermore!

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What are Seller’s Closing Costs in Indiana?

If you are thinking about selling your home in Indiana, knowing how much the selling closing costs are will not only help you plan financially but also give you a strategy for pricing your home as well.

In Indiana, the typical seller closing costs are made of up of fees not only associated with directly selling your home such as real estate fees but will also include items for the transfer of ownership such as the title insurance, and even deed preparation.

Below is a list of the average seller’s closing costs and who pays them in Indiana. Keep in mind, in certain regions of the state, some fees are usually customary expenses but can also be negotiated between the buyer and seller. This estimation of expenses is to give you a good working knowledge of what can be expected when you sell your home.

Keep in mind, if you have a mortgage, an equity line of credit or a second mortgage, these are considered liens and must be paid off at closing.

Title Insurance in Indiana

There are two types of title policies in Indiana for real estate transactions. The first is known as the owner’s title policy and the second is the lender’s policy.

Owner’s Title Policy

The owner’s policy is a one-time issued policy and is good for as long as the buyer owns the property. The amount covered is directly correlated to the sales price. The owner’s policy is the only policy that covers the buyer against future claims such as forgery, mistakes in record examinations or undisclosed heirs. This is a one-time premium and is collected from the seller at closing. Although this title policy is not required in a real estate transaction, it is highly recommended.

Who pays for the owner’s title policy in Indiana? Although this can be a negotiated item, the cost of the owner’s title policy is normally paid by the seller. This may be considered a customary seller expense for a region. For instance, in Indianapolis, the owner’s title policy is normally paid for by the seller. However, if you live outside the Indianapolis area, ask your Realtor if this expense is paid for by the seller.

How much is the owner’s title policy in Indiana? The fee or premium is a coverage rate calculated based on the price of your home. For instance, a home that sells for $200,000 should have a title insurance fee around $575.

Lender’s Title Policy/Loan Policy

Just like the name implies, this title policy is required only if the buyer is obtaining a mortgage. The mortgage lender will require a title policy to protect the lender’s interest in the property. The buyer does not benefit from the lender’s title policy should a claim arise.

The lender’s title policy is a fee usually paid for by the buyer and is collected as part of the buyer’s closing costs.

The amount of the loan policy is normally related to how much is being borrowed and does not reflect the purchase price.T

Title Search & Exam Fees for Indiana

Since the seller must deliver to the buyer a clear title at closing, the expenses incurred from the title search and exam are considered the seller’s responsibility.

A detailed title search involves going through historical public records to find outstanding liens, regulations, errors and relevant interests for a particular property. A title search and exam also reviews past deeds, trusts, and wills. The examiner will also try and verify that all prior mortgages and other liens have been paid off.

How much does a seller pay for a title search in Indiana? The cost may vary depending on your location, however, the average fee should run between $175-$200.

Closing Fee

The closing fee is paid to an attorney or title company for closing the real estate transaction. The closing fee is completely negotiable between the buyer and seller. This is where regional customs come into play regarding who pays for what. I have seen this fee paid by 100% by the buyer. I have also seen that expense split between the seller and buyer.

Regardless of who pays it, the closing fee can vary widely between title companies. For instance, a cash transaction could be cheaper than a mortgage funded purchase. I have seen closing fees range between $400-$800.

Closing Protection Letter

A closing protection letter is issued by the title company on behalf of the underwriter. The insured closing letter benefits the buyer’s mortgage lender and basically agrees to compensate the lender should the title company make a mistake at closing.

Who pays for the closing protection letter in Indiana? Since this is a lender requirement, the buyer normally pays this fee cost ranges between $25-$30.

The title company can also issue a closing protection letter to the seller as well. If that happens, then the seller will pay that fee and the price is similar to what the buyer pays $25-$30.

Deed Preparation in Indiana

To prepare a deed means to transfer ownership from the seller to the buyer. The deed is a legal document prepared by an attorney. The seller typically pays for the cost of creating the deed in Indiana. The price can vary depending on the attorney, however, the average fee is $75-$100.

Real Estate Commissions for Sellers in Indiana

Real estate fees are the fees paid to the listing brokerage firm to market, negotiate and co-operate with the brokerage firm who procures the buyer for your home. Your real estate agent doesn’t get to keep all the money. Those fees are not only divided among another firm but within your agent’s firm as well. Co-operation among other brokerage firms to get your home sold is common and typical in Indiana.

Real estate fees are not fixed amounts. The fees are negotiable. Just make sure you are comparing apples to apples in terms of what you are receiving regarding marketing, agent experience and time spent on your home. Sometimes cheaper isn’t always better.

In Indiana, real estate fees to sell your home are paid by the seller. The fees, like all the items mentioned above, are collected at the time of closing and will come from your proceeds.

Home Warranties

Offering a home warranty on the sale of your home is optional. However, the buyer may request one and ask you to pay for it. A typical home warranty can cost between $375-$500 depending on what’s covered and the company you choose. It may not be a bad idea to have a home warranty secured on your home during the listing, especially if your water heater or furnace is older and almost near the end of its useful life.

Otherwise, you may be replacing a water heater right before closing. Sellers in Indiana are required to maintain their home in the condition the buyer saw it at the time the offer was written and accepted.

Seller Closing Costs in Indiana: The Net Sheet

Estimating Seller’s closing costs in Indiana can be done alongside your Realtor. Prior to listing your home for sale, your agent should sit down with you and discuss market conditions, and provide with an estimated sales price. In addition to this information, your agent can prepare a closing cost net sheet showing your expenses and your bottom line.

When you receive an offer, request another net sheet based on the actual figures in front of you. This will allow you to have accurate figures.

The preparation of the new sheet will provide you with a basic idea of what to expect at the closing table.

Get Your INSTANT House Value

Do you have more questions? You can use the instant valuation tool above for a general pricing range based only on public data or schedule a no cost or obligation consultation with Tony. After your phone consultation, Tony can put together a realistic estimate using all the recent comparable homes data (including private MLS data). Click below and schedule a convenient time for Tony to call you.

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Indianapolis-area home builders see best first quarter in 12 years

Area home builders saw more demand for new homes in the first quarter than they have since 2006, according to a report released Thursday by the Builders Association of Greater Indianapolis.

Builders filed 1,698 single-family construction permits in the nine-county area in the first three months of the year, a 30 percent increase over the 1,310 permits they filed during the same period in 2017, BAGI said.

It was the busiest first quarter since 2,712 permits were filed during the first three months of 2006.

Builders filed 723 permits in the area in March, up 18 percent over the 614 permits that were filed in March 2017. It was also the busiest March for permit filings since 2006, when 1,118 were filed.

Area filings have been on the rise in 26 of the last 28 months on a year-over-year basis.

“This Q1 has surpassed our expectations,” BAGI CEO Steve Lains said in written comments. “As the market demand continues to surpass the existing inventory of finished and for-sale new homes, the surge in new home starts is likely due to the anticipation of what are historically considered the strongest selling seasons of spring and summer.”

Lains, however, said the pace might slow as the year goes along.

“Although this first quarter increase was higher than predicted, we are not yet changing our forecasted cumulative growth of 5-10 percent for the year,” he said. “The consensus is that the surge in permits early in the year will be offset by a normalization of volume as the year progresses, like the pattern we saw in 2017.”

Lains said factors that could prevent higher demand include “lack of available labor, material price increases, and land available to rezone at price points below $250,000, the largest consumer market segment in the metro area.”

Marion County saw a 44 percent increase in filings in March, from 106 to 153.

Hamilton County led the area in filings with 293, an increase of 24 percent from the previous March.

Hendricks County saw 69 filings in March, down 20 percent.

Filings dipped by 14 percent in Johnson County, to 64. They rose 43 percent in Boone County, to 60.

Filings were up 23 percent in Hancock County, to 48, and rose from 14 to 18 in Morgan County.

Permits rose from six to 10 in Shelby County and fell from 10 to eight in Madison County.

Source: Indiana Economic Digest

Getting Pre-Approved Should Always Be Your First Step

In many markets across the country, the number of buyers searching for their dream homes greatly outnumbers the number of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. One way to show you are serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage before starting your search.

Even if you are in a market that is not as competitive, understanding your budget will give you the confidence of knowing if your dream home is within your reach.

Freddie Mac lays out the advantages of pre-approval in the ‘My Home’ section of their website:

“It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.”

One of the many advantages of working with a local real estate professional is that many have relationships with lenders who will be able to help you with this process. Once you have selected a lender, you will need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.”

Freddie Mac describes the ‘4 Cs’ that help determine the amount you will be qualified to borrow:

Capacity: Your current and future ability to make your payments
Capital or cash reserves: The money, savings, and investments you have that can be sold quickly for cash
Collateral: The home, or type of home, that you would like to purchase
Credit: Your history of paying bills and other debts on time

Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and it often helps speed up the process once your offer has been accepted.

Bottom Line

Many potential home buyers overestimate the down payment and credit scores needed to qualify for a mortgage today. If you are ready and willing to buy, you may be pleasantly surprised at your ability to do so.

Source: Keeping Current Matters