If you’re a first-time homebuyer, saving up for the down payment is a big undertaking. In fact, it can take some homebuyers years to save up for their down payment and, for some, that timeline might make it seem like buying property in Smyrna or anywhere else is not a realistic option. That’s not the case, however, and don’t feel alone if you’re struggling to work up a good percentage of the cost of a new home.
Why People Fret Over Down Payments
Having a sizeable down payment can reduce the cost of borrowing money to finance a new home purchase, and that’s the main reason that people put so much time and effort into coming up with the money. People who are buying their second, third or even fourth house have an advantage; they have equity in the home they’re selling and that can go toward the down payment.
For first-time buyers, however, homes can seem prohibitively expensive, particularly if you’re trying to come up with twenty percent of the home’s value, which will generally net you the best interest rates. For most people, that amount of money is two-thirds as much as the average yearly income.
What to Do if You Cannot Afford a Large Down Payment
The first and best option for help with a down payment is seeing if you can borrow the money, or part of it, from a family member or friend at good terms. Not everyone has that option, of course, so most people will have to look elsewhere.
One good option is looking at FHA loans, which have reduced—vastly reduced, in fact—down payment requirements for new homeowners. If you think you might qualify, talking to a mortgage broker is a good way to find out for sure.
You can also see what kinds of deals you can get on funding with whatever down payment amount you can afford. Some lenders might be willing to work with you and, with interest rates ratcheting up a bit, lenders are likely to be more willing to take on higher-risk clients than they would have been in the past, so be sure to ask.
Ask us about the ins and outs of purchasing homes. We are excellent at explaining the complexities in ways that make them as easy as possible to understand, and at finding options for anyone who comes into their offices.