While searching for your new home, one of the very first questions that most lenders, realtors, and/or sellers will ask you will be the percentage of down payment you will be making for the new home. So why is it even significant? Simply put, the down payment is the amount of cash the buyer will put towards the transaction. A down payment could equate to stronger offer and can give the seller increased confidence that the purchase will go through smoothly. Yup, you guessed it, one-size does NOT fit all, each individual will have their own reservations and comfort levels so one of the very first things to ask yourself in preparing to buy a home is:

• How much of a down payment do you want to put towards the purchase?
• How much are you comfortable with putting down?
• Will you have extra side money/cash for repairs that will come with being a homeowner?
• Will you have extra side money/cash for the typical closing costs that need to be paid when purchasing a home? – have the down payment but not the closing costs?Ask me to see if you qualify for a CalFHA Loan

Don’t know how much you need to save for your down payment? Ask me or email me for some guidance and advice realtorjudyha@gmail.com

There are many loan programs out there with their own down payment requirements. Buyers who tend to have a 20 percent down payment at the time of purchase are exponentially less likely to default on their loan. Because of that, conventional loans with a 20 percent down payment offer some of the most competitive interest rates and benefits in a loan package, assuming you have good fico scores. If you don’t quite have a 20 percent down payment, that is ok too – there are now conventional loans that require as little as a three percent down payment. Although a conventional loan product with less than 20 percent, mortgage insurance will be required.

A popular loan product is the FHA loan which requires a minimum of 3.5 percent down payment. Since there are less stringent qualification requirements and a small amount of cash needed, many first time home buyers gravitate towards this loan option. Similar to the 3 percent down conventional loan, this loan also requires private mortgage insurance and the FHA has an upfront insurance premium plus an annual amount that’s collected monthly.

There are still loan options that exist that offer 100 percent financing with zero cash down. One is almost exclusive to veterans (or those who are in active duty or reserves) called a VA loan and for those that are considering a home in a more rural area, there’s the USDA loan.

There are many different options available that allow for a variety of down payment percentages. The amount is important because it demonstrates a borrower’s ability to repay the amount financed to both the lender and the seller. With interest rates being low, it may be more advantageous to buy now (utilizing a lower down payment loan if you’re ok with the monthly mortgage payment $$ ) rather than waiting several years to save up to hit the next benchmark. If you’re just barely short, it may be better to buckle down, save up, and be patient. Everybody’s scenario is different and the important thing to know is that you have options from zero down up to 20 percent and beyond!

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JUDY HA
Blackrock Investments and Finance, Inc.
direct (951) 963-4023 | cell (626) 731-4485 |fax (626) 529-0850
email  realtorjudyha@gmail.com | web  http://www.realtorjudyha.com
CA DRE: 01884583
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