Debunking the Down Myth of 20%
Are you looking to buy a home this spring, but are worried you don't have enough for a 20% down payment? Good news: You can put down less than 20%. In fact, the average down payment for first-time homebuyers in 2017 was 5%, and 10% for repeat buyers, according to the National Association of REALTORS®. And, it's possible to put down even less.
For example, Freddie Mac Home Possible® mortgage products let eligible homebuyers put down as little as 3%.
Putting less than 20% means you'd likely have higher monthly payments and you'll be required to pay private mortgage insurance (PMI). However, if putting 20% down is not an option or will deplete all your savings and leave you with no financial cushion, it's probably not in your best interest.
Many potential buyers are also unaware of the fact that their down payment can come from sources other than personal savings. Some mortgage products let you use gifts from your family or employer. Others let you use grants or loans from not–for–profit or government agencies.
Hundreds of programs provide down payment assistance, with eligibility requirements varying based on your location and generally limited to first–time and/or low– and moderate–income homebuyers. Certain programs specifically benefit veterans, Native Americans, and workers employed in education, health care, law enforcement, and firefighting.
The U.S. Department of Housing and Urban Development (HUD) gives grants to state and local organizations nationwide. These organizations, in turn, use these funds to help homeowners bridge the down payment gap. To find the programs in your area, check out HUD's listing or Down Payment Resource's handy tool. State and local housing finance agencies (HFAs) administer many of these programs. Go to the National Council of State Housing Agencies' web site for a state–by–state listing.
Let's add up what this all means, using the following example:
Before signing on the dotted line, it's important that you understand your finances.
The decision to Buy is a personal one that depends on your financial situation, future plans and lifestyle. If you’re interested on a wealth of information to help you get started visit Precision Realty & Assoc. LL or if you prefer a more personal touch, reach out to a us, CALL 801-809-9866 today. #RealEstateForSale #Homeownership #MortgageRates
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