A lot of people will jump into buying a home not knowing anything except the mortgage myths they have been told their whole life. It is important to do your research before making one of the largest financial decisions of your life.
A 20% mortgage down payment is often recommended, but, much lower home loan down payment options are available in Montgomery County, MD.
Traditionally speaking, a 20% down payment is often recommended in order to acquire the best terms on a mortgage. However, since housing prices have risen dramatically over the last decade, obtaining a 20% down payment has become increasingly difficult, especially for first time homebuyers. As a result, many low-down payment options have become available through traditional lending channels, such as the Fannie Mae HomeReady and Freddie Mac Home Possible programs. These programs allow for a down payment of as low as 3%, and contrary to popular beliefs, these loans with less than a 20% down can actually have better financial terms.
Here are a few things to consider when determining your down payment:
- Private Mortgage Insurance (PMI) is not a “bad word”. PMI is required for conventional loans with less than 20% down payment. In recent years, PMI has become more affordable since the default rate for mortgages is also very low. Therefore, lower mortgage insurance premiums to buyers can be passed along.
- A common misconception is that the monthly payment will decrease/increase by a significant amount depending on how much money you put down. However the monthly payment will only increase/decrease by about$5/month for every $1K in sales price. So, every $25K increase/decrease of the loan amount will result in a $100 difference in monthly payment.
- Montgomery County, MD has among the highest home prices in the country. As a result, we have flexibility to offer very low-down payment options for loan amounts up to $726,525. Therefore, a 5% down payment is often acceptable on a $765,000 sales price.
In addition to the loan down payment programs mentioned, there is also an opportunity to get down payment assistance loans through the State of Maryland and Montgomery County. The down payment assistance can potentially allow a buyer to produce little to no money out of pocket when purchasing their first home.
Apex Home Loans has a wide variety of low-down payment options to meet your financing needs and goals. Learn more and apply now to get pre-approved.
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