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Mortgage Myths: Here’s Why You Don’t Need a Full 20 Percent Down Payment

September 15, 2016 by Kay Monigold

Mortgage Myths: Here's Why You Don't Need a Full 20 Percent Down Payment If you’re just getting into the real estate market, you may have heard that 20% down is the ideal percentage in order to lower your monthly payments and get your mortgage application approved. However, while 20% is often suggested, many people struggle to come up with this amount of money. If you’re staving off home ownership, here are some reasons you may not need to hold off as you long as you thought.

Minimizing Your Insurance Costs

Putting down 20% of the total purchase price of your home is often suggested, but it doesn’t definitively mean that your application won’t be approved if you don’t. If you have a good credit score and are in good financial standing, putting less than 20% down means you’ll have to pay Private Mortgage Insurance (PMI); however, it can be worth paying the extra funds in order to get into the real estate market sooner and start paying into your most significant investment.

Mortgage Programs For Less Than 20%

It may seem less possible to buy a home if you only have 5 or 7% of the purchase price, but there are many programs in the United States that enable those with limited funds to apply for a mortgage. From the Federal Housing Administration (FHA) to Fannie Mae and Freddie Mac, there are many lenders that can offer you mortgage programs that will work for your situation. While higher rates come in tandem with a lower down payment, there are options out there for those who haven’t saved quite enough.

Why Put Down 20%?

Putting down 20% is not a necessity for mortgage approval or purchasing a home, but it can be a great means of saving money in the long run and reducing your interest rates. If you’re raring to get into the real estate market and don’t want to wait for the bills to stack up, that’s OK, but if you want to hold off and save up additional funds before diving in, this can mean more money and a more solid investment in the future.

20% is often the magic number when it comes to a down payment on a home, but you don’t require this percentage of your home’s price in order to get approved for a mortgage. If you’re currently considering diving into home ownership and would like to know more about the opportunities in your area, contact your local mortgage professional for more information.

Filed Under: Home Mortgage Tips Tagged With: Down Payments, Home Mortgage Tips, Mortgage

The Pros and Cons of Borrowing the Down Payment for Your Next Home

August 31, 2016 by Kay Monigold

The Pros and Cons of Borrowing the Down Payment for Your Next HomeWith the rising cost of real estate, many people feel that now is a good time to buy a home to ensure a good financial future. However, if you haven’t saved up enough money to make a down payment, it’s possible you may be considering whether or not you should borrow the funds. If you’re considering a loan from friends or family, here are some points you may want to think about before asking for a loan.

Getting Out Of The Rental Market

With even the rental market seeing huge increases in its rental rates, buying a home can be an even more beneficial purchase then ever. While your rental check is gone once you’ve paid it each month, payments on your mortgage will become a part of the wealth you’re building and the equity in your home. It’s just important to consider the property taxes and maintenance that go along with purchasing a home beforehand, as these added costs might end up making for a poor investment if they’re too costly.

Saving Money On Insurance

You may have heard many different things about the percentage your down payment should be, but because you will have to pay mortgage default insurance if you put less than 20% down, it can be an added boon to borrow the additional funds needed. While borrowing the money can be great in terms of lowering your monthly payment and making your home less costly in the end, it can also cause financial strain for you since you’ll have to pay back the funds over time.

Testing Your Relationships

It goes without saying that money can often times get between people, and when it comes to borrowing a significant sum of money from family or friends, this can improve your relationship or even cause a rift. While you may be willing to take this risk if you have no concerns about paying those who have lent you money back, if something arises and you’re unable to give back the funds, this can create issues that may be more problematic than renting a little longer.

Many people consider borrowing the money for their down payment in order to come up with the 20%, but it’s important to consider what borrowing this money can mean for your financial future and your personal relationships. If you’re currently looking into a new home, you may want to contact one of our mortgage professionals for more information.

Filed Under: Home Mortgage Tips Tagged With: Down Payments, Home Mortgage Tips, Mortgage

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Our Team

Kay MonigoldKay Monigold
Owner/Mortgage Broker/Residential Mortgage Loan Originator
NMLS#1086176

Ron MartinRon Martin
Residential Mortgage Loan Originator

NMLS#316821

Steven LoweSteven P Lowe, Sr
Residential Mortgage Loan Originator
NMLS #1085638

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