#TimeToBuy The Benefits of a 20% Down Payment #MoveUpHomeBuyer

By
Real Estate Agent with Allison James Elite CA. BRE 01501699
https://activerain.com/droplet/5jjf
The Benefits of a 20% Down Payment | MyKCM

If you are in the market to buy a home this year, you may be confused about how much money you need to come up with for your down payment. Many people you talk to will tell you that you need to save 20% or you won’t be able to secure a mortgage.

The truth is that there are many programs available that let you put down as little as 3%. Those who have served our country could qualify for a Veterans Affairs Home Loan (VA) without needing a down payment.

These programs have cut the savings time that many families would need to compile a large down payment from five or more years down to a year or two. This allows them to start building family wealth sooner.

So then, why do so many people believe that they need a 20% down payment to buy a home? There has to be a reason! Today, we want to talk about four reasons why putting 20% down is a good plan, if you can afford it.

1. Your interest rate will be lower.

Putting down a 20% down payment vs. a 3-5% down payment shows your lender/bank that you are more financially stable, thus a good credit risk. The more confident your bank is in your credit score and your ability to pay your loan, the lower the rate they will be willing to give you.

2. You’ll end up paying less for your home.

The bigger your down payment, the lower your loan amount will be for your mortgage. If you are able to pay 20% of the cost of your new home at the start of the transaction, you will only pay interest on the remaining 80%. If you put down a 5% down payment, the extra 15% on your loan will accrue interest and end up costing you more in the long run!

3. Your offer will stand out in a competitive market!

In a market where many buyers are competing for the same home, sellers like to see offers come in with 20% or larger down payments. The seller gains the same confidence that the bank did above. You are seen as a stronger buyer whose financing is more likely to be approved. Therefore, the deal will be more likely to go through!

4. You won’t have to pay Private Mortgage Insurance (PMI)

Simply put, PMI is “an insurance policy that protects the lender if you are unable to pay your mortgage. It’s a monthly fee, rolled into your mortgage payment, that is required for all conforming, conventional loans that have down payments less than 20%.”

As we mentioned earlier, when you put down less than 20% to buy a home, your lender/bank will see your loan as having more risk. PMI helps them recover their investment in you if you are unable to pay your loan. This insurance is not required if you are able to put down 20% or more.

Many times, home sellers looking to move up to a larger or more expensive home are able to take the equity they earn from the sale of their house to put down 20% on their next home.

If you are looking to buy your first home, you will have to weigh the benefits of saving a 20% down payment vs. the time and cost of continuing to rent while you save that amount.

Bottom Line

If your plan for your future includes buying a home and you’re already saving for your down payment, let’s get together to help you decide what down payment size best fits with your long-term plan!

 

 

 

My Los Angeles County Real Estate BLOG   My Ventura County Real Estate BLOG

 Investor Fix & Flip-Bidding Ends SOON!   #ChrisBJohnsonRealtor

 

About Me

My photo
Chris B. Johnson REALTOR® Specializes in Luxury Estates and Home Auctions. Your home is probably the biggest asset you own. This is why you should hire a professional to guide you through all your real estate transactions. My goal is to help 24 to 28 families each year either buy or sell a home. I am NOT interested in Selling 100 or 200 homes a year because I would not be able to give each family the time, attention and energy they deserve. I believe in Quality, NOT Quantity.

What is My Home Worth?

The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. Keeping Current Matters, Inc. does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Keeping Current Matters, Inc. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.

 

RateMyAgent VC 5 Star Rated Realtor ChrisBJohnsonRealtor on YouTube.

https://www.google.com/analytics/web/#home/a69066132w111663562p116541675/

Posted by

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
Home Buying
Location:
California Ventura County
Tags:
firsttimehomebuyers moveuphomebuyers 5starrealtor hyperlocal chrisbjohnsonrealtor topproducer flipandfix realestateinvestor rentalproperties
timetobuythe benefits of a 20 down payment

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Rainmaker
1,024,102
Anthony Acosta - ALLATLANTACONDOS.COM
Harry Norman, REALTORS® - Atlanta, GA
Associate Broker

Good Evening 

Thank you for sharing your information with us Chris B Johnson REALTOR® 

Have a great day.

Wednesday May 8, 2019. 

May 08, 2019 08:08 PM #1
Rainmaker
520,528
Chris B Johnson REALTOR®
Allison James Elite - Moorpark, CA
5 Star Rated REALTOR® Quality, Not Quantity

Overall, the US economy is strong: stock market near record highs, a strong US Dollar, low unemployment, higher jobs reports and the Federal Reserve easing interest rate hikes and their rhetoric and forecast for 2019. Mortgage rates are at 2-year lows, making qualifying for loans more affordable to the consumer, re-fueling the real estate market. Finally, we anticipate the trade war with China will soon have a positive resolution, which should help alleviate overall global concerns.

After an 8-year bull run on real estate values from 2010 to 2018 we are now 12 months removed from the all-time highs of April 2018. Globally, we have seen a decline in overall growth, and cities like London took a dramatic hit in average sales price of approximately 25% from their all-time highs. New York, due to its oversupply of inventory coupled with the overall market stabilization, saw prices drop over 20% from their highs. The positive news for Los Angeles real estate is that it remains strong with low inventory and a minor, healthy correction of 5-10% from its highs. Los Angeles remains both a domestic and international investment hub for real estate. The market has shifted from a Seller’s market to a Buyer’s market and opportunities for long-term gains and value in premier market areas remain strong.

Our advice is to write, write, write OFFERS and see what kind of deal you can find.

May 08, 2019 08:12 PM #2
Rainer
17,608
Property ePortal
PropertyePortal - Arctic Bay, YN
Propertyeportal is a reference property portal wit

I agree witht the long term mortgage over the short term mortgage. Great points here! Thank you.

May 09, 2019 01:01 AM #3
Post a Comment
Spam prevention
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainmaker
520,528

Chris B Johnson REALTOR®

5 Star Rated REALTOR® Quality, Not Quantity
Is it Too Late to Short Sell My Home??
*
*
*
*
Spam prevention

Additional Information