One thing that is important since your parents are gifting you money for a down payment is that there’s a processs you have to go through to do so (at least in Illinois, it may vary by state). My parents gifted me a small amount of cash for my first home, and we had to go through a “gifting” process. It’s very simple and quick, and there was no charge with my bank.
Basically, they explained it to me that the IRS can come after you for not filing it the proper way. It can flag them if you suddenly have 100k in cash to pay for a home. I had a friend that did not know this, and she ended up having to pay taxes on all of the money that wasn’t accounted for (and you don’t want to end up paying taxes on 100k after you’ve already wrapped up that cash into a mortgage).
I’ve always used credit monitoring to check my credit score to see what I need to do to improve it. I’ve used Credit Karma in the past, which is good for giving you pointers on what you need to do to improve your score (But don’t rely on them for you actual score – they report your score lower than it actually is so you continue to use it)
Is it possible that your parents could help you pay off some of your debt and give you less toward the house? Even though you will have a big down payment, you still want to have the best interest rate possible, which is heavily influenced by your credit score and income. My credit score was right at 739 (1 point away from “excellent” rating), and the difference in a rate for a 739 score and a 740 score was a quarter of a percent – which ends up being quite a bit in the course of 30 years. I ended up completely paying off a card with a $200ish balance, which made my score go up 4 or 5 points, and it helped me out with the better interest rate.
Shop around at different banks. Talk to a credit union now rather than down the road, and see what they will do for established members. The credit union I talked to was the best bet for me, but I could have gotten an even better rate with them if I’d been a member for 6+ months. This will help me out when Fiance and I refinance after our wedding. Smaller banks had the better rates as opposed to chain banks when I was shopping around – but I’m not sure if that’s the case everywhere.
Also, this will be down the road once you actually find a house to buy.. but don’t skip a walkthrough under any circumstance! You have the right to walk through your home one last time the day of or the day before closing – do it, no matter what. I chose not to, because I’d been in the house 3 days before to do measurements. Went to the house after closing, and the basement was flooded. Since I didn’t do a walkthrough, it was all my responsibility. Lesson learned!
As far as closing costs – it all depends on the title company you go through, the bank you go through, and the way property taxes are done in your state. My down payment was $15k, but because of the time of year I was buying the house, the seller had to pay me for property taxes, which came out of my down payment. This ended up covering all of my closing costs, and then some. I think the closing costs were around $1200 before any of that, though. The first bank I went to to get pre-approved for a mortgage was going to charge me almost 3k in closing costs (PNC bank, they had the highest rates of anyone that I checked).
I know this is a lot of info and kinda all over the place, but just figured I’d share the things that I didn’t know before buying my home.