Judith Sutton ABR CRS IDS PMN ASP IAHSP SRES GREEN
Judy@JudithSutton.com 908 803-0472
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The Myth of a 20% Down Payment
Do I really need it?
Most first-time home buyers do not need it.
According to Google Trends, online searches for down payment information show that more buyers are trying to figure out what they really need to save before making a move.
You can always ask the Internet that question, but it is best to turn to a local expert, because here is what a Professional will tell you:
The 20% Down Payment Myth
The idea that you need 20% down to buy a home is one of the biggest mis-conceptions around the homebuying process. And the data debunks the myth.
While there are benefits to putting that much money down, most first-time buyers put down far less.
Here’s why. Unless it’s stated by your lender, you typically don’t have to have a 20% down payment. There is even some loan options designed to help you get into a home with a much smaller upfront cost.
“The amount you need to put down will depend on a variety of factors, including the loan type and your financial goals. If you don’t have a large down payment saved up, there are plenty of options available, and you don’t need to put down the traditional 20% . . . many homebuyers are able to secure a home with as little as 3% or even no down payment at all . . .”
Please keep in mind, even though the down-payment may be lower, the rate for the loan might increase. This is one of the financial factors that need critical thinking about your overall goals, future plans, and your financial position. A professional can help match your unique financial situation to current available products.
Mortgage rates can be categorized by:
Interest Rate Structure- (fixed or adjustable)
Lender Type- (conventional or government-backed)
Your Purpose- (purchase, re-finance, home equity loan)
They can be 30-year-fixed rate mortgages, adjustable-rate mortgages, FHA loans, VA loans or Jumbo Loans. All of these depend on what direction you are going in, and your financial situation. These are generally Conforming Loans.
Here are some examples of loans using less than 20%; FHA loans allow down payments as low as 3.5%, while VA and USDA LOANS offer zero down payment options for qualified applicants, like Veterans.
And those options are just one reason so many first-time buyers are able to buy without a 20% down payment.
So, if buyers aren’t doing 20%, how much do they actually put down? According to the National Association of Realtors (NAR), the median down payment for first-time homebuyers is only 10%. That’s half of what you probably expected.
That means if you’re aiming to save 20% because you think you have to, you may be setting a timeline that’s longer than necessary.
It’s not only that you may be able to buy with less money down than you thought, but there are also options to help you get to your down payment goal even faster.
DOWN PAYMENT ASSISTANCE PROGRAMS
There are a lot of programs designed to help you save for a down payment – and they can make a big difference in how fast you hit your savings target. Unfortunately, buyers don’t realize how many there are, or that they may qualify for help.
Research from Realtor.com indicates that almost 80% of first-time homebuyers qualify for down payment assistance (DPA), but only 13% actually use it.
What does this mean?
There are many homeownership programs available and many offering significant financial support. Just ask a Professional. This remains one of the most essential tools for addressing the affordability issue. All of these programs continue to expand their offerings, serving a broader range of incomes, property types and borrower needs. And again, a Professional in the business of tracking these programs is necessary. Simply Googling the options is not enough.
The average benefit is about $18,000- and you might even be qualified to stack multiple programs- giving you a bigger and quicker way to home ownership.
Please connect with me, your Trusted Advisor, and I will share with you a few avenues to explore, so that you might decrease your timeline to home ownership. Just call me.
So much to learn about! So much to choose! So much to consider!
“…the right relationship means everything…”
By incorporating my personal attention and guidance into the marketing strategy I aim to provide you with
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while ensuring that your property receives the exposure needed and terms of the contract met
to attract buyers from anywhere
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Judy@JudithSutton.com
COLDWELL BANKER...GUIDING PEOPLE HOME SINCE 1906
908 803-0472
"...the right relationship means everything..."
SERVING THE SOMERSET HILLS AREA ONE CLIENT AT A TIME
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since 1983