All About Down Payments
Information for First Time Home Buyers
An important
aspect of getting a home loan is saving money for your down
payment. You have many choices to make your home more affordable
to you.
Lenders
used to require a down payment of at least 20% of the home's
price. These days, however, many lenders offer flexible home
loan programs allowing you to put very little down -- three
percent or less of the home price. For some buyers it's possible
to buy a home with no down payment at all, or to receive help
from local down payment assistance programs. With the recent
problems with the mortgage industry, 0% down loans are difficult,
although not impossible, to find.
If you
decide to pay make a down payment less than 20 percent, your
lender may require Private Mortgage Insurance (PMI), which
protects the lender in case you cannot repay the mortgage.
Anothe option may be to take out a second loan. For instance
it is possible to put 10% down, take a second loan for 10%
(usually at a higher interest rate) and have a first loan
for the traditional 80%.Talk with your mortgage professional
to find out the right deal for you.
You'll
also need to pay for closing costs, which are costs associated
with initiating a loan. These can include loan origination
fees, discount points, attorney fees, recording fees and pre-paids.
They are generally about 1% for a buyer not including discount
points. Whether or not discount points make sense for you
depends on whether you have the funds to buy points, and how
long you intend on owning the home.
Once you
have you down payment and loan pre-approval, it's simply a
matter of finding the right house. Please call or email
when you're ready to take this next step towards owning your
own home.
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