You knew the moment you walked through the perfectly preserved arch-topped doors that this was one very special house. As your real estate agent guided you from room to room, all you could think was
Myths About Down Payment Assistance That Sellers Wont Accept Offers With Layered Financing
Are you worried the seller will balk at a contract with financing beyond a typical first mortgage? While that might happen, we also know sellers want to sell their home…for the best price. The real issue at hand is the fear of longer closing times or complicated closings. Sellers may have heard cash offers are better because they’re quick and will cost them less.
But, is cash really better? Consider that buyers with down payment assistance are actually coming to the table with extra funds (and more to bargain with), allowing them to compete with other buyers on price and sellerpaid costs. It also means the seller doesn’t have to take a lower offer to sell faster to a more aggressive (and less common) cash buyer. In fact, down payment assistance may cover items like closing costs and other seller-paid costs, allowing the seller to gain even more. When agents and sellers open their minds to buyers taking advantage of homebuyer programs, it can help all parties involved.
In order to improve the timeline and reduce any seller fears, you should complete homebuyer education early, submit loan documents to the lender promptly and do your part to expedite the process from the beginning.
A bigger down payment is always better.
Every situation is different, but keep in mind that the average down payment for first-time homebuyers is only about 6 percent. The challenge of saving for a down payment is the number one reason most buyers wait longer than they’d like to buy a home. In fact, many sidelined buyers have the income and qualifications to make the monthly mortgage payment – they only lack the down payment.
Many consumers and experts still assume 20 percent down is best. Yes, it will help you avoid paying private mortgage insurance (PMI), but it may be worth it to pay the PMI now and buy sooner. Consider this: when your rent increases each year (not to mention those student loans), it makes it more difficult to save for that big down payment, keeping you perpetually sidelined. Renting until you have 20 percent down payment can take years at a median income, all while prices and interest rates are on the rise.
Down payment and closing cost assistance may help you finance some or all of your upfront costs, helping you get in a home sooner. Today’s down payment programs allow you to retain some of your savings for long-term homeownership success. Plus, during the application process and required homebuyer education, you learn about the responsibilities and expenses of homeownership, including appliance repair, yard upkeep, heating and air checkups, home budgeting and much more.
With the help of down payment programs, you won’t have to put every last penny towards a down payment, leaving you “house poor.” Instead, you can move in with a financial cushion in place, some skin in the game, and critical homebuyer education under your belt.
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