The down payment is everything
The Down Payment: Everything You Need to Know About Your Down Payment on a New Home
The downpayment is everything. Whether you're just starting to shop for a new home or you've found the perfect house and are crafting your offer, if you're taking out a mortgage to help cover your real estate purchase you've likely given some thought to your down payment. Let"s explore the topic of down payments and share how the amount you put down on your home will affect your mortgage.
How Your Down Payment Affects Your Mortgage
As you know, your mortgage is essentially a large long-term loan that is paid back with interest over a set time period. If you put a large down payment against the purchase, you will not only reduce the amount that you'll need to pay back, but you'll also reduce the lender's risk, and this may allow them to provide you with lower interest rates. Conversely, if you can't place very much down on your home and you're left borrowing as much as you can you may find that your mortgage comes with higher interest rates or that some mortgage lenders refuse your business entirely.
The Gold Standard: 20% of the Purchase Price
For the vast majority of homeowners, it's expected that they will be able to contribute at least 20 percent of the home's purchase price. For example, if you are buying a $200,000 house you'll need to have at least $40,000 available for your down payment. Note that the 20 percent figure isn't a hard requirement; some mortgage lenders will be willing to approve you with less, but you may be subject to private mortgage insurance, higher interest rates and more.
Saving Up Your Down Payment
Depending on your financial situation and the cost of your home you may find that saving up 20 percent of the purchase price to put toward a down payment places a strain on your finances. If you still have a year or more before you're ready to jump into the real estate market, consider putting some money aside each month that can be used for a down payment. If you receive any lump sum payments as a tax return, save this in your down payment fund as well.
Down payment help
Florida is the second most state in the nation only behind Texas that offers over 260 plus programs in assisting first time home buyers, home buyers as well as those with credit below par. Strong consideration and different guidelines to those that served or serving in law enforcement, Firefighter, healthcare, education and those serving in our military. There are programs for surviving spouse of a military member or public protector. Bottom line, there is help out there, and you may qualify for it. There nothing to lose and better to know about these programs before you buy that house you want and not after.
FHA, Home Step plus many other Programs
There are also many Fannie Mae programs that allow you to place as little as 3.5% down and in some few cases 3%. There are also, HUD, Government programs. The is the information home buyers should be aware of and less frightened with when dealing with the home buying process. It can overwhelm and scare capable home buyers away. Work with leaders, and mortgage companies that your Realtor can best advise you to check on. They would know some reliable, and problem-solving lenders best suited to help people not capable of the 20% down payment. VA loans require zero % down. Contact your realtor, hire one. Test them and work with just that agent. You find loyalty brings home buyers the best service.
As you can see, your down payment is one of the most important considerations you'll have to make.
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