Myth: You ALWAYS need 20% down-payment to buy a home.
Have you put buying a house on hold because you don't have the that much money to put down? When you're buying a $300,000 home, that means saving $60,000 for a down payment.
Let's face it... that's A LOT OF MONEY TO SAVE! The truth is, nearly 80% of our buyers don't put 20% down.
Did you know that there are low down-payment mortgage options? For example, FHA offers as low as a 3.5% down-payment, which would require you to bring $10,500 to the closing table on the above mentioned scenario! It's still a lot of money, but it seems more feasible for most buyers.
The three most popular mortgage loan types are Conventional, Federal Housing Administration (FHA) and Veterans Affairs (VA).
Two different mortgage options for people who don't have any money saved for a down-payment are VA and VHDA. VA is a for retired and active duty military. VHDA is for anyone who hasn't owned a home in the last 3 years. There are many qualification specifics, so it's a good idea to speak to a lender about your ability to qualify in order to take advantage of these two loan programs.
So, what's the catch?
If your down-payment is lower than 20%, unless you are using a VA loan, your lender may require you to pay private mortgage insurance (PMI). When you put 20% down the bank feels like you have some "skin in the game" and worst case scenario there is enough equity in the property to protect their investment in the case of a foreclosure. However when there isn't enough equity, only putting 5-10% down for example, they require you to pay PMI monthly... think of it like an insurance policy, only it doesn't protect you... it protects them.
If you are ready to take the next step towards becoming a homeowner, contact one of our trusted mortgage loan officers, and get informed on what loan options you have available for you!
As your REALTORS, Shannon, Christen and Tanesha work directly with the mortgage loan officer to ensure you choose the right type of mortgage for you and your transaction is as smooth as possible! Contact us today to learn how we can help you own a home in 2017!