Chances are, if you're going to buy Piscataway real estate, you're going to need a loan. Traditional lenders prefer a down payment of twenty percent. When you're looking at a $320,000 house, which was the Middlesex county median sales price for January that can be a lot of money to come up with at once. The good news is that there are some options for you, if you can't afford such a large down payment.
The 80/20 Option
Some lenders will offer an 80/20 mortgage option. It means that you take out two loans, one for eighty percent of the Piscataway real estate price, and a higher interest loan for the other twenty percent. Taking out this kind of mortgage means that you won't have to come up with a down payment.
The 100 Percent Option
There are lenders that offer 100 percent mortgages. They're a little harder to get these days because of the recent credit crunch. There's no down payment needed, but the interest rate is higher. Because the lender is at a greater risk of loss from default on this type of loan, you will be required to carry private mortgage insurance (PMI).
Private mortgage insurance is paid as part of your monthly mortgage payment. You're required to pay for it until you've reached twenty percent equity in your house. In some cases, it will be canceled automatically, but check with your lender to be certain it's canceled.
Why Wouldn't I Want A No-Money Down Loan?
A no-money down loan means higher interest rates and higher payments. It's harder to find a lender that offers this type of loan. Generally, the more money you put for a down payment, the higher loan amount the lender will offer. If you don't put any money down on the house, you're likely to get approved for a smaller loan amount. You may have to settle for a house that is less than you wanted.
Yes, there are also programs offered by Middlesex County, the state of New Jersey and others to help First Time Home Buyers just like you with their down payments. The Stimulus Bill is additionaly offering $8,000 Tax Credit for qualifying First Time Home Buyers.
Why Buy Now?
In recent history, there's never been a time as perfect as this to buy Piscataway real estate. With interest rates at the lowest they've been in decades, and the price of houses the lowest they've been in years, you'll be able to get much more for your money.
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Realtor Associate/Keller Williams Realty
Servicing Home Buyers and Sellers in Middlesex County, NJ