Do You Need A 20% Down Payment?

Saving for a home? Let’s explore another strategy.

While it’s great to save up for a large down payment of 20% or more when buying a home, when home prices are on the rise, you never seem to really get that 20% saved.

Why not consider using the increase of home values assist you? Owning a home in an appreciating market can build equity faster than most people can save. For example, a $200,000 home that appreciates by 3% gains $500 per month in equity.Saving Money

So why buy now, even though you don’t have 20% as a down payment?

As the economy heals, rates traditionally increase. Many consumers do not realize that you can purchase a home without having 20% as a down payment investment. While not having 20% invested in your new home, you will have the extra expense of PMI/MI, (mortgage insurance). However, if you wait, where do you feel interest rates will be? There are even opportunities for Down Payment Assistance in some locations that you may qualify for. Your loan officer will educate you on your options and even though you may need to pay PMI/MI, you can still keep your payment to your budget plan.

One of the biggest advantages of buying now, is that you’ll get to purchase your home now and experience the appreciation of the equity in your home. Another thought: You can explore and consider refinancing your home in a year or so to remove that PMI/MI. When your home value puts you at an ownership of 20%, then you can refinance into a mortgage without PMI/MI.

Remember…Paying rent is paying someones mortgage. Chances are that what you are paying in rent now, would be enough for you to buy your own home. And instead of paying into your landlords equity, you could start investing in your own equity.

Enjoying tax advantages. Most homeowners take advantage of income tax savings based on the mortgage interest and real estate taxes they pay each year. Talk to your tax advisor to learn if these tax advantages may also improve your savings.

While many try to avoid PMI/MI, using PMI/MI is just another strategy to assist you in owning your own home, so you don’t really need that 20% as a down payment.

Be sure to explore your individual situation, and strategize with your loan officer.  Will a lower down payment work for you?  Then as your home value increases, explore your new options and analyze them.

Most importantly, you’ll be owning YOUR OWN HOME. That in itself is a huge reason to strategize.

 

Karen Jones Banner with Disclosure

AmeriFirst Financial, Inc., 1550 E. McKellips Road, Suite 117, Mesa, AZ 85203 (NMLS # 145368). 1­877­276­1974. Copyright 2017. All Rights Reserved. This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates, and programs are subject to change without prior notice. All products are subject to credit and property approval. Not all products are available in all states or for all loan amounts. Other restrictions and limitations apply. AZ: Arizona Mortgage Banker License No. BK0013635; CA: Licensed by The Department of Business Oversight under the California Residential Mortgage Lending Act; CO: Regulated by the Division of Real Estate; WA: Washington Consumer Loan Company License No. CL­145368. AmeriFirst Financial, Inc. is an independent mortgage lender and is not affiliated with the Department of Housing and Urban Development (HUD) or the Federal Housing Administration (FHA). Karen Jones is a licensed loan originator at AmeriFirst Financial.,Inc. Karen Jones complies with all regulations and rules of all government agencies and regulators including the Real Estate Settlement and Procedures Act. The services provided by Karen Jones are not a condition, nor do they create any obligation for any form of remuneration for any real estate settlement service related to any referral.

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