Home values are determined through a complicated series of calculations roughly based on the cost of actual construction plus value-adds like proximity to shopping and other conveniences. The prices
WHICH DOWN PAYMENT STRATEGY IS RIGHT FOR YOU
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 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 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.
THERE IS ALWAYS HELP
For those who may have difficulty coming up with even 3% towards their costs, there are many different programs available. They are available nationwide but one of the local one here in Central Ohio could get a home buyer up to $6000 towards downpayment and closing costs. This money does not need to be repaid, although they will usually have conditions like using it only as a primary residence and living in it for 5 years. Contact us at 614-354-4838 and we will either help you get the best programs available, or put you in contact with one of our agents who specializes in first time buyers in your area.
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I have lived in Central Ohio since the age of 10, only leaving Ohio during my active duty enlistment with the US Marine Corps. I love anything techie, taking photos and having fun with the kids and my....
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