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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