Let’s talk about First Time Home Buyers. Specifically, let’s talk about the biggest obstacle they face when they’re ready to buy a home. You may or may not know the answer, but let me make it clear.
Saving the Down Payment
Unless the First National Bank of Dad comes through, many first time buyers have to work and save for a long time before they have enough saved. And they also need to save for the closing costs. Additionally, they also need to consider their college loans.
However, it’s not as bad as one may think. You see, many believe they need a 20% cash down payment to purchase a home. However, a surprising number of buyers are putting down substantially less.
FHA Financing requires as little as 3.5% of the purchase price down. If you’re a veteran, you may qualify with nothing down. With these programs, you will pay mortgage insurance, but you still may be able to get that first home. And the mortgage insurance will go away at some point. The important thing is to actually get into your first home.
CLosing COsts
Yes – you’ll still need cash for the closing costs. Typically they’re 2.5 to 3% of the purchase price. On a $300,000 home, that’s $6,000 to $9,000, or more. But what if there were a way for someone else to pay your closing costs, like maybe the seller? It could happen. To make this simple, the closing costs can possibly be added to the mortgage, allowing you to spread the costs over 30 years. A simple calculation shows me that adding $6,000 to your mortgage results in an increased payment, at 3.75%, of $27.79 per month. That’s less than $1.00 a day!
Buy your coffee at WaWa instead of Starbucks and you just figured out how to pay the extra.
You Have Options
Investigate your options. Speak with a mortgage representative. I can recommend a few good ones if you need. Then give us a call when you’re ready to begin the process of becoming first time home buyers. Call Bunny and Art Reiman – Realtors and let us help you find your first home.