For many people, there’s nothing more exciting than buying a home! Whether the person is a first-time buyer or perhaps they’ve purchased many homes in the past, it’s something that many people get excited and also a bit nervous about. There are many challenges that face a person when buying a home. It is important to find the right home for their needs, and it is important to get the right type of financing to purchase a home. However, there is also the matter of the down payment that can concern a potential home buyer.
It’s important to understand that most loans, with only a few exceptions, will require a certain amount of money paid up front in order to secure financing for the purchase of a home. What needs to be determined is the amount of money a potential homeowner will need to pay in order to get the financing. This is going to be quite different depending on the type of loan a homeowner is looking at.
For people that qualify for a VA loan, a Navy federal loan or a USDA loan, no money will need to be put down prior to the loan being granted. For people applying for an FHA loan or for those that acquire significant amounts of mortgage insurance, a lower payment, somewhere in the vicinity of 3% to 5% may only be required. Conventional loans, on the other hand, can be a bit more expensive when it comes to a down payment.
Some banks that provide conventional loans can require a potential homeowner to have as much is 20% down in order to secure financing. This can be a considerable amount of money. However, the benefit to having that sort of money down is that it will decrease the amount of money a person is borrowing, thus making their mortgage payments a bit more affordable. 20% down also negates the need for mortgage insurance.
If you’re someone who can’t afford 20% down for a home, you may want to look at other loan options. Some costs can be rolled into the actual loan and there are local programs that can grant potential homeowners, especially a first time home buyer, money to put down in order to purchase a home. In any situation, it’s important to know how much money will be needed upfront when you’re looking at buying a home. If you have any questions contact Tony Raffin.