Which down payment strategy is right for you?

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advice, Buying a home, buying your first home, downpayment, Jacksonville Real Estate, mortgage loan, real estate tips

You’ve most likely heard the rule: Save for a 20-percent down payment before you buy a home. The logic behind saving 20 percent is solid, as it shows that you have the financial discipline and stability to save for a long-term goal. It also helps you get favorable rates from lenders.

But there can actually be financial benefits to putting down a small down payment—as low as three percent—rather than parting with so much cash up front, even if you have the money available.

THE DOWNSIDE

The downsides of a small down payment are pretty well known. You’ll have to pay Private Mortgage Insurance for years, and the lower your down payment, the more you’ll pay. You’ll also be offered a lesser loan amount than borrowers who have a 20-percent down payment, which will eliminate some homes from your search.

THE UPSIDE

The national average for home appreciation is about five percent. The appreciation is independent from your home payment, so whether you put down 20 percent or three percent, the increase in equity is the same. If you’re looking at your home as an investment, putting down a smaller amount can lead to a higher return on investment, while also leaving more of your savings free for home repairs, upgrades, or other investment opportunities.

THE HAPPY MEDIUM

Of course, your home payment options aren’t binary. Most borrowers can find some common ground between the security of a traditional 20 percent and an investment-focused, small down payment. Your trusted real estate professional can provide some answers as you explore your financing options.

Have any questions or are you ready to start your new home search in 2019? Give us a call today!  Kevin and Jennifer Hanley, REALTORS Keller Williams Realty Atlantic Partners Southside 904-515-2479 http://www.HanleyHomeTeam.com

 

 

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Accepting a Gift for a Downpayment

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disclosing the source of your down payment, down payment assistance, down payment gift, down payment help, gift, mortgage loan

Ready to buy your first home? Have a down payment ready to go? Before you apply for that mortgage, here’s something you should know about disclosing the source of your down payment.

Q: Part of my down payment was a gift from my parents. How will this impact my mortgage application?

A: It depends on the type of mortgage you’re applying for.

You should be prepared to explain your gift with documentation. While FHA loans typically will permit a down payment from a family source, your more conventional mortgage will expect at least 5% of the funds to have come from you.

One of the keys to ensuring this process goes smoothly is having documentation to back up your claim. Bank statements showing the source of the money (and when you received it) are a good place to start, along with a letter signed from your generous benefactor declaring the gift.

As a rule, you should be careful of any large deposits to your account (besides your regular pay).

I urge you to talk to a mortgage professional for complete details as they pertain to your specific situation.

Need a referral to a qualified mortgage broker? We’d be glad to share with you the names of people we know and trust. Contact us today for a referral: Kevin and Jennifer Hanley, REALTORS 904-477-5278 Jennifer@HanleyHomeTeam.com