Many Americans have apprehensions in buying a house. One of the reasons that are holding them back is down payment misconceptions. According to home financing experts, this confusion on down payments makes individuals think that it is impossible for them to afford a property.
Some people actually believe that the 20 percent down payment is compulsory. They have this thinking that a 20 percent down payment is an absolute requirement in purchasing a property and without it, it is virtually impossible to get a home financing loan.
This tells us that there is still a lack of knowledge regarding how the home buying process works. These down payment misconceptions are part things that must be reinforced.
Both the borrowers and home loan providers should be proactive in reinforcing the borrower’s knowledge on the home buying process. Lenders need to be more proactive in educating eligible borrowers about the down payment and how it works.
How Does Down Payment Affect Your Monthly Payable?
Understanding how down payment works and how it affects your mortgage will help address these down payment misconceptions.
In the general sense, the borrower’s down payment will directly affect how much an individual pays on a monthly basis to towards their mortgage. It will dictate how much interest will apply on the homebuyer’s mortgage loan.
You can still take a home loan without any down payment. There are also those which allow a down payment as low as 5 percent of the home sales price. The 20 percent down payment is, therefore, the “recommended” percentage.
A 20 percent down “acceptable” so that the interest rate that will apply on your mortgage loan will be low enough. A lower mortgage interest rate means more affordable monthly payments.
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What are Your Options if You Don’t Have That Much Money?
For those who feel that coming up with a 20 percent down payment is an impossible feat, do not give up just yet. There are many other loan programs that require a down payment less than 20 percent. It is possible to ask a lender to give you a loan computation based on a low down. This will help you determine how much money will go towards your mortgage per month.
Another possible solution is to tap on down payment assistance. There are many down payment assistance programs in the market for eligible borrowers.
Most of these assistance programs target first-time homebuyers. Mortgage Movement, for example, came up with a program that does not only allow first-time homebuyers purchase a home without a down, it offers a grant for up to 3 percent of the home’s sales price.
This grant allows the borrower have a 3 percent home equity upon purchase and 67 percent of conventional financing. What’s good is the borrower is not required to pay the grant.
Depending on where you are located, there are many down payments assistance programs you can be eligible for. Portals such as the DPAsearch.com, allows you to connect to expert people who can help you find a good down payment assistance.
Many people do not know where to find the right program and how to be eligible. You have come to the right site. See what assistance programs are offered in your area for free.