Little Known Tips For First Time Home Buyers Including How To Get Your Downpayment

Tony Delisi
Published on March 13, 2016

Little Known Tips For First Time Home Buyers Including How To Get Your Downpayment


ftr_448_imageOver the past several years first-time home buyers may have shied away from entering the housing market due to stagnant wages and debt, but times have changed.

But now, one in five consumers is actively looking to buy his or her first home, and 46% of millennials will be looking in the next one to two years.
If you’re a first-time buyer, there are a few things you can do to make the purchase smoother and easier. For most people, a home is the largest purchase they’ll make, and very few can take on this purchase without a loan. Here are some helpful tips and best practices for first-time buyers:

Save for the down payment

Most mortgage lenders require a cash down payment of 5%, 10%, or 20% of the sale price. Buyers today may find it difficult to save for a large down payment, especially young adults saddled with substantial student loan debt. Traditionally, buyers who were unable to put 20% down had to pay an additional $100 to $200 per month to their mortgage lender for private mortgage insurance (PMI).

Find Out About Gifts & Credits

There are several ways to magnify your down payment. First, you can get a gift from a family member or friend. You can also ask for a credit at closing as part of your offer. Let’s say you are looking at a $200,00 home and that you need 3.5% down. YIKES…where will you get $7,000 down plus closing costs? We can structure your purchase so the sellers give you a $5,000 credit at closing. You can get a gift for a few thousand and use some money you have saved. There may be a grant of as much as $7500 and you will be given a credit for property taxes that will be several thousand dollars. All these things can help you with your downpayment.
The great news is, today many lenders are offering home affordability and down payment assistance programs. We can recommend lenders who accept as little as  3% down without the added cost of PMI.

Factor in home improvement costs and monthly household expenses

If you buy an older and more affordable home, it will probably need repairs and renovations. You don;t need to do everything before you move in. You can pick away over time and spread the cost, but these costs should be factored in at the start of the financing process so buyers are comfortable with their down payment and monthly payment and will have money available to make improvements. For buyers who have not lived on their own or for those who previously rented, the added costs of running a household can be a shock. Monthly costs for utilities, homeowner’s association fees, cable, and Internet, can add up quickly. Factoring these expenses in at the beginning of the mortgage financing process can help borrowers better assess their overall budget and a realistic monthly mortgage payment.

Shop around for a mortgage

We know that the best mortgage experience for buyers occurs when they have open and ongoing communication with their lender. Finding a lender and discussing financial needs and budget should be the very first step a buyer takes in the home-buying process. Ask your Realtor to recommend finance sources that they have worked with successfully in the past.
For most first time buyers, getting the downpayment is the most important factor in moving ahead. That’s why it’s important to find a lender that helps buyers understand what they can afford and share what financing options are available. There may be grants and programs with special help for you – even if you aren’t a first time buyer.

Get The Facts

Perhaps the single most important aspect of purchasing a home is to fully understand the mortgage and the overall home-financing process. Be sure to work with an experienced Realtor who will explain everything you need to know an
d how to get advantages you may not realize are out there.
Want to know more? Contact me. I make it a point to stay on top of changes in mortgages and finance programs. I can help with bruised credit, low downpayment and more. Call Tony Delisi at RE/MAX Unlimited Northwest  847-471-7177.
Little Known Tips For First Time Home Buyers Including How To Get Your Downpayment
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