Understand 20% Isn’t Always the Typical Down Payment

Freddie Mac explains:

“. . . nearly a third of prospective homebuyers think they need a down payment of 20% or more to buy a home. This myth remains one of the largest perceived barriers to achieving homeownership.”

Unless specified by your loan type or lender, it’s typically not required to put 20% down. This means you could be closer to your homebuying dream than you realize. According to the National Association of Realtors (NAR), the median down payment hasn’t been over 20% since 2005. In fact, the median down payment today is only 14%. And it’s even lower for first-time homebuyers at just 6% (see graph below):

Learn About Options That Can Help You Toward Your Goal

If saving for a down payment still feels like a challenge, know that there’s help available. A real estate professional and trusted lender can show you options that could help you get closer to your down payment goal. According to latest Homeownership Program Index from Down Payment Resource, there are over 2,000 homebuyer assistance programs in the U.S., and the majority are intended to help with down payments.

Plus there are even loan types, like FHA loans, with down payments as low as 3.5%, as well as options like VA loans and USDA loans with no down payment requirements for qualified applicants.

To understand your options, be sure to do your homework. If you’re interested in learning more about down payment assistance programs, information is available through sites like Down Payment Resource. Then, partner with a trusted lender to learn what you qualify for on your homebuying journey.

Bottom Line

Remember, a 20% down payment isn’t always required. If you want to purchase a home this year, let’s connect. You’ll also want to make sure you have a trusted lender so you can explore your down payment options.

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If you’re getting ready to buy your first home, you’re likely focused on saving up for everything that purchase involves. One cost that’s likely top of mind is your down payment. But don’t let a common misconception about how much you need to save make the process harder than it could be.

Understand 20% Isn’t Always the Typical Down Payment

Freddie Mac explains:

“. . . nearly a third of prospective homebuyers think they need a down payment of 20% or more to buy a home. This myth remains one of the largest perceived barriers to achieving homeownership.”

Unless specified by your loan type or lender, it’s typically not required to put 20% down. This means you could be closer to your homebuying dream than you realize. According to the National Association of Realtors (NAR), the median down payment hasn’t been over 20% since 2005. In fact, the median down payment today is only 14%. And it’s even lower for first-time homebuyers at just 6% (see graph below):

Learn About Options That Can Help You Toward Your Goal

If saving for a down payment still feels like a challenge, know that there’s help available. A real estate professional and trusted lender can show you options that could help you get closer to your down payment goal. According to latest Homeownership Program Index from Down Payment Resource, there are over 2,000 homebuyer assistance programs in the U.S., and the majority are intended to help with down payments.

Plus there are even loan types, like FHA loans, with down payments as low as 3.5%, as well as options like VA loans and USDA loans with no down payment requirements for qualified applicants.

To understand your options, be sure to do your homework. If you’re interested in learning more about down payment assistance programs, information is available through sites like Down Payment Resource. Then, partner with a trusted lender to learn what you qualify for on your homebuying journey.

Bottom Line

Remember, a 20% down payment isn’t always required. If you want to purchase a home this year, let’s connect. You’ll also want to make sure you have a trusted lender so you can explore your down payment options.

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One of the vital frequent loans you may get to purchase a house is a 30-year mounted charge mortgage. If the considered paying in your dwelling over the course of 30-years appears daunting, listed here are some straightforward methods to shorten that time period which can truly find yourself saving you cash over the lifetime of your mortgage.

Any additional payments to the principal quantity (the unique sum of cash borrowed in a mortgage), helps to chop down the quantity of curiosity that you’ll pay over the lifetime of your mortgage and may also assist to shave years off the mortgage as properly.

If you make ‘additional’ funds towards your mortgage, the secret is to let your lender/financial institution know that you really want the additional funds to go towards your principal stability as they won’t routinely do that for you.

You don’t need to double your mortgage fee to make a giant distinction both!

When you’ve got a 30-year mortgage on a median-priced dwelling ($250,000) with a 5% rate of interest, you’ll be accountable for a $1,342.05 month-to-month principal and curiosity fee. Over the course of the mortgage, should you pay your actual month-to-month fee, you’ll have paid $233,133.89 in curiosity alone!

Paying a Little Additional Can Pay Off Large

1. Pay an extra 1/12^th of your mortgage fee each month

Profit: Within the instance above, including $111.84 to your month-to-month mortgage fee won’t look like lots, however annually you’ll have paid one additional month’s value of funds which can shorten the time period of your mortgage by four years and eight months, all whereas saving you $42,000 in curiosity!

2. Pay an extra $50 per thirty days in the direction of your mortgage

Profit: Fifty {dollars} won’t look like sufficient to make a distinction on the time period of your mortgage, however that small quantity will prevent over $21,000 in curiosity and can take over 2 years off the tip of your mortgage. Twenty-eight years from now, you’ll be glad to repay your mortgage that a lot sooner!

3. Make one-time lump sum funds when you’ll be able to

Profit: If you end up with a bit of more money after a yearly bonus, a tax return, or from funding dividends, paying that cash in the direction of the principal can reduce your prices. This feature, nonetheless, is much less predictable than the additional month-to-month funds.

When you’ve got greater curiosity money owed, like bank cards, think about using any additional funds it’s a must to pay these money owed down earlier than making use of that cash in the direction of your mortgage. Additionally, if you don’t plan on staying in your house for greater than 10 years, paying additional towards your mortgage won’t make sense.

Backside Line

In the event you’re questioning what methods would work greatest so that you can shorten the time period of your mortgage, seek the advice of an area actual property skilled who can reply your questions or join you with somebody who can.

The publish How to Save Thousands of Dollars in Interest on Your Mortgage appeared first on Keeping Current Matters.

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