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Low Down Payment Mortgage |
Are you interested in buying a home but not sure that you can without a large down payment?
If so, you are not alone. Many people stay trapped in the renting world simply because they
do not realize they can buy a house with a low down payment. The truth is that you can buy a
house with as little as 5% down.
Buying a house is the number one goal for most people. Owning a home offers a number of
outstanding benefits that include privacy, ownership, equity building, and individual freedom.
In addition to the personal success, being a homeowner is also filled with financial
advantages. Unfortunately, the down payment is the one obstacle faced by many families.
Most lenders ask for a down payment of 15% to 20% but for the average person looking to
buy a home that is not realistic.
You can reduce that amount to as little as 3% when you qualify for a home loan and the
mortgage is insured. The main thing a lender will consider is your ability to own a home, which
is the single most important factor. If a lender were to lend the money and the loan not be
paid, you would lose your home and the lender would lose money. In other words, it is a no-win situation. However, when the buyer is a strong, qualified buyer, the lender is more eager
to work with the mortgage company in lowering the required down payment since they want
good homeowners.
As you start the adventure of buying a home, when it comes to mortgage insurance, you will
have two options - government mortgage insurance and private mortgage insurance. Keep
in mind that the lender has quite a bit of pull when it comes to the type of insurance selected
for your loan. To be considered for private mortgage insurance, a homebuyer will need to put
5% down. However, under special programs, that down payment can be lowered to 3%.
These programs would include first-time homebuyers, lower income families, and so on. That
means on a $100,000 house, instead of needing $5,000 for a down payment, you would only
need $3,000.
Again, the lender is important in that they will work on your behalf with the conventional or
government mortgage companies in securing the type of loan that matches your situation best.
This is why you should talk to several lenders. You want to find a lender who will stand behind
you in finding options for low down payments. If you have a lender who is only interested in
securing the loan and is not looking long-term, then you pay more!
Good credit is another crucial aspect of qualifying for a low down payment. If you have a credit
history that shows you pay your bills on time, pay them off early, and do not overextend your
bills, you have placed yourself in a good position. You also want to have a minimum of two
months income in a savings account. Again, this shows the lender that you can make a couple
months payment if need be, which puts you in a better position for securing a low down
payment option.
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