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.
I hope the following information will be helpful for you, but let me encourage you to contact me. I have a terrific network of financial experts who can help you figure out exactly what you need to know and do.
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.
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.
"Buying a house for the first time couldn't have been easier. You were so helpful and hard-working and would drop anything to make it happen for us! We appreciated all the communication throughout the entire process. Sometimes it’s overlooked but good communication made this so easy."
NATHAN & AMANDA | JULY 2022
"Thank you, David, for doing so much for me. I am already dreaming of decorating my new place. Thank you for being diligent in helping me find the right home, and thanks for answering my questions quickly. I love the way you handled the entire process."
JOANN | JULY 2022
In the last month, I've shown dozens of townhouses to clients looking for their next home. One of my clients will be closing on a new townhome next week! I've got a solid perspective on the current market: what's available, where it is, and how much you can expect to pay.
Maybe this is an option you've been considering. If so, you've probably got questions:
How does an HOA work? What do association fees cover? How does insurance work? How can I know the association is being managed well before I purchase a property? What are the pros and cons?
I would welcome the opportunity to meet with you and provide answers to your questions. More importantly, I'd like to know more about your plans and thoughts so I could help you find the BEST home to meet your needs.
Please give me a call or send an email!
IN THE MEANTIME, HERE ARE SOME BASICS TO SPARK YOUR THINKING...
What Is a Townhouse?
A townhouse is a unit within a multi-unit property. These are usually composed of several floors and may include a garage and a small yard.
Residents often share walls and a roof, and there also may be shared common areas like pools, dog-walking areas, and fitness centers.
You’ll pay a monthly fee to the homeowners association to cover the maintenance.
What Are the Benefits of Owning a Townhouse?
Townhouse residents may have access to amenities such as pools, gyms, and dog-walking areas. If the townhouse comes with a yard, you’ll own the land. Even better, the HOA might include landscaping and pest control.
What Are the Drawbacks?
Because you’re sharing walls and backyard space with other neighbors, there’s naturally less privacy compared to most single-family homes.
Townhouse residents typically must follow the rules set forth by the HOA (Homeowner's Association). For instance, you might need to get permission to do major renovations and follow guidelines about decorating the exterior, and you might not be able to have certain pets. These policies can vary a great deal from one association to the next, so you'll want to be sure you review them before finalizing your purchase.
What Type of Mortgage Financing Is Available?
You can use a conventional loan or government-backed mortgage to buy a townhouse, but your lender will have specific concerns and will need to evaluate the financial health of the homeowners association.
Just because the market it crazy (or maybe intense would be a better word), it doesn't mean it's crazy for you to be buying or selling. For some sellers, there are reasons this might be the perfect time to sell. For many buyers it's important to get it now, because even though prices are high now, they are likely to be even higher down the road, and interest rates are still very favorable. Contact me to talk about your specific situation.
Here are some good tips excerpted from an article on downpaymentresource.com.
These six ideas can help you (finally!) score a home of your own.
1. Get your down payment in order.
...Get your home financing plan together so you can act quickly when the right home becomes available.
2. Get your homebuyer education.
...Data shows that homebuyer education and counseling builds successful long term homeowners.
3. Get pre-approved – and shop your loan.
Get pre-approved by your lender of choice — in a fast market, you need more than just pre-qualification. You need to show that you are actually approved for a home loan.
4. Contact a real estate agent.
Buying a home is one of the biggest financial decisions you’ll ever make. You need to be sure you have a good team on your side.
5. Use technology to keep up with inventory.
Technology is your friend — automate that home search. Talk to your agent about setting up alerts so you know as soon as a listing is online.
6. Pack some flexibility.
If you’re a first-time homebuyer, it may be harder to compete against multiple offers in a fast moving market.
CLICK HERE TO READ THE COMPLETE ARTICLE
When buying or selling a home, it's important to understand the market and gain helpful insights to help you achieve the best results.