The first-time homebuyers often have a problem regarding the down payment matter. They’ve some misconceptions about down payments, which may create several obstacles while getting easy mortgage loans.
Here are those facts:
1. You’ll require at least 20% down payment - It may take near about twelve and a half years for you to gather 20% down payment for buying an average priced home. 20% down payment is normally required for a standard conventional loan. But fortunately, today buyers like you, have several other options too. So, being a qualified buyer, you don’t have to save 20% down payment for taking out a loan. You don’t require to stop any more from housing search and remain on the sidelines.
As per the Consumer Protection Financial Bureau, approximately 50% of homebuyers avoid shopping for their home loan. Buyers must search for conventional loans with lower down payment. Federal aided loans like FHA, VA, USDA and other loans like the Fannie Mae and Freddie Mac, are offering low down payment loans to help new homebuyers. These loans also have their different requirements, which a buyer needs to fulfill. But, the criterion is easy and worthy enough to apply for loans with down payments starting from 0% to 3.5%.
2. It’s good to deposit a big down payment - Many lenders would ask homebuyers to put down 20% down payment if possible. However, it’s not at all a good idea, even if you’ve got that much money in your account. While buying a home, you shouldn’t consider only the amount of down payment and the mortgage cost. You should also consider vivid expenses like home repair, moving costs, home warranties, the cost of the home appliance, and more. A buyer may experience a shortage of funds after paying the 20% down payment. That shortage may create problems to meet the other related costs. So, putting 20% down payment may make you “house poor”. What will you do then? Would you deplete your savings account to pay off those extra expenses? That would be very risky for your retirement days. So, homebuyers like you need homeownership counseling, which may help you to view the clear picture about your finances. It‘ll help you to decide and pick the option which is best for you.
3. The sellers will refuse offers with a gift or homeownership program - Sellers have a normal conception that accepting cash offers are good for them. However, buyers who have gifts, grants, or different homeownership programs with them, may also get some extra space to bargain with the seller. They can compete with different buyers in the market on price and seller-paid costs. The buyers have the option to provide peace of mind to the seller. In fact, some homeownership programs also provide coverage to costs like - closing costs and other seller-paid costs. This’ll allow the seller to save his pocket and gain even more from the sale.
4. Down payment programs are worst - Homebuyers are always eager to get their deals as soon as possible. However, the process of getting qualified for a loan is quite similar to the process of using a homebuyers program. Lots of paperwork and effort will be needed for the program. The program itself uses similar kind of information that is used for taking out a mortgage. The buyer needs to start the process early, before searching the home. Buyers must know that the homebuyer programs are offered by most state and local housing agencies. They give approval to the qualified lenders, who can understand the process of incorporating this special finance program into the home loan. They must also ensure that the process must work without any complication or prolongation.
In the real estate world, nothing is perfect for every buyer. Buyers should look out all possible options so that the right financing option can be selected from the whole process.