First-Time Homebuyer Myths
I am inspired by an article I read this morning to dispel some common myths and misconceptions first-time buyers hold.
Did you know? You don't need 20% for a downpayment!! There are many loan programs available for purchasers and not just first-time home buyers. You can put 3, 5, 10, 15 20%, or any amount above 3% as your down payment on a conventional loan. Depending on your lender you may not need to put anything down, some credit unions have a 100% loan program for buyers that qualify. If you are a Veteran, you may also qualify for a 100% loan program as well. There is also an FHA loan program with a 3.5% downpayment, this program also has PMI (private mortgage insurance for the life of the loan). PMI is charged anytime you purchase a home with less than 20% of the purchase price and use certain loan programs.
If the mortgage requires PMI, you are stuck with it forever. This simply is not the case. PMI is not forever!! Many buyers plan to wait to buy until they have a 20% downpayment. Depending on the initial mortgage program a homeowner can either cancel the PMI when the principal balance of the mortgage reaches 80% of the current appraised value or they can simply refinance with a mortgage program that doesn't require PMI.
Mortgages that are popular with first-time buyers often allow their relatives or employer to help out with "gift funds". There are several downpayment assistance programs available in Maryland to help buyers with downpayment and closing costs. And, some lenders also have programs for buyers. As #YourRealtorJune for a referral to a lender that can help you with these programs.
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