‘I can’t afford to buy a home right now.’
You may have made some pretty big purchases in your life; like a college degree, your first car, a fancy wedding. But nothing will compare to the excitement, and the investment, that follows buying your first home. When you first consider purchasing a home, it can seem financially overwhelming. With a 20% down payment, plus closing costs, on top of insurance and ongoing maintenance fees…these can add up so fast that it may begin to seem impossible! Luckily, lenders are aware of the financial toll a home can take on a person and are determined to work with you to get you into a home with a loan type that will fit your situation and budget. Oh – and that 20% down thing? That’s a myth.
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It’s true, the “golden standard” in home buying is paying 20% of the purchase price upfront – but that doesn’t mean you can’t get a mortgage without it. There are plenty of programs built for those who find the idea of homeownership too far out of their reach. Some even require as little as 3% down! As for all of the other closing costs, these vary widely based on your state, but the average rule of thumb is to save about 3% of your home’s value.
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It is also not uncommon for first-time homebuyers to accept their down payment as a gift from family members, especially for young buyers. Be sure to speak to your Loan Officer about what will be needed from your gift donor. A down payment is a generous gift, but there are rules that need to be followed in order to make the transfer go smoothly. There are also federal, state and local programs that help first-time homebuyers qualify for mortgage loans; some even offer grants! Fannie Mae and Freddie Mac have options that can ease the way for borrowers with a wide range of incomes, such as an FHA loan. And if the rural life appeals to you, the U.S. Department of Agriculture may also be willing to offer a helping hand.
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