Buy a home with a low down payment mortgage option!
Heard about the 20% required down payment? It’s a thing of the past now! Not long ago, making a traditional 20% down payment on a home purchase was necessary and quite common. However, inflation, along with other factors, caused home prices to increase rapidly over time. Fortunately, lenders are now making the process of home buying easier. If you’re committing to buying a home and can’t commit to a large down payment, don’t worry, you have several other options.
What is a Low/No Down Payment Mortgage
A low-down-payment mortgage means a very low amount or a fixed amount of minor percentage is required during the purchase. However, in the case of the no-down-payment mortgage process, no money is required at the closing, apart from the standard closing costs. Such options are great for people who want to purchase but don’t have upfront money or the ones who want to keep cash on hand to eliminate the risk of being house poor. The cons of such an option are that you won’t have any equity in your home and might have to pay upfront funding fees or mortgage interest/insurance. Putting zero down on a house is a real possibility. No down payment spreads ownership to those who may not have the means to save money for a down payment.
Can First-Time Home Buyers Get A Low Down Payment Mortgage?
There are many home loan options with low down payment options for first-time buyers like FHA loans and others. Not only this, but they are also eligible for the no-down payment options. Thus, it’s crucial to determine your options carefully. While no down payment option might make it easier for you to purchase your dream home, it might also affect your expenses in the long term. There are pros and cons to low or no down payment options, both. Weigh your choices carefully and make a wise decision for your financial future.
How Does it Affect Your Mortgage?
Two things happen when you purchase a home with no money down -
Higher interest rates - A higher perceived risk which is why the lender provides you a higher rate to reduce it. It’s based on risk-based pricing.
Pay mortgage insurance - Lenders want you to pay mortgage insurance on the loan and if you default on the home loan, mortgage insurance will protect you from losing the money that you’ve lent.
What’s the Right Choice For You?
There’s no magic formula when it comes to making a down payment. The amount you pay totally depends on your financial limits and requirements as a home buyer. If you’re looking forward to making a huge down payment, there are ways to boost up your savings. And, if a mortgage with no down payment option is your style, then you’ll still have options to explore. Begin the process online, reach out to us in case of any queries. Plus, you can check out the specialty mortgage loan options for more details.
We are here with customized mortgage solutions for real people. Visit our official website https://preferredrate.com/loan-options for more information! Dozens of specialty loan solutions are waiting for you and your family!