Looking to buy soon but not sure you have the down payment?
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
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.
Looking to buy or sell, call Jill today. Jill Calderone, Exit Midlands Realty, 803-606-4491, firstname.lastname@example.org. Website jill.scexit.com.Text "Jill" to 803-753-4961 for my mobile app and to view MLS listings.
Chapin, SC is known as "The Capital of Lake Murray" and with good reason. The residents of Chapin enjoy a relaxed lifestyle with the convenience of the city. Columbia, SC is just a quick 20 minute drive and shopping is even closer.You are embarking on an exciting journey, be sure that you find agents that will take time and share your enthusiasm during this process.
EXIT Midlands Realty is a full service real estate firm dedicated to assisting our clients with the purchase and sale of real estate in the Greater Columbia Area. We were founded in 2005 and quickly grew into one of the most innovative and knowledgeable firms in and around Columbia. Our staff is made up of full time professional agents that are dedicated to the profession of listing and selling real estate.
Call one of our experienced agents to assist you with your real estate needs. It would be an honor to work with you.