First Time Homebuyer Myths
I often get ideas for blogs from situations that present themselves or from something someone else has written or newsletters I get in my email. In this case it is two of these!!
So many first-time home buyers think they need to put 20% of the purchase as the down payment. But, in fact, depending on the type of loan they qualify that is simply not the case. FHA loans are popular and only require 3.5% downpayment, there are some conventional loans that are as low as 3%, if you are a Veteran, you may be able to qualify for no money down and if the home you are buying is in a certain area you may qualify for a no downpayment USDA loan.
If my mortgage requires private mortgage insurance (PMI) I am stuck with it for the life of my loan. This, again, is not the case. In some cases, you can simply have your lender cancel the PMI when the value of your home reaches around 80% of its appraised value. Or you can refinance your existing loan when you feel the value of your home is high enough to allow the loan to value to reach that 80% range.
My parents can’t help with my downpayment. Mortgages popular with first-time buyers often allow their relatives or employer to chip in with “gift funds”. It’s also possible for the adult children of first-time buyers to chip in too, which is the case with recent clients of mine. You may also consider opening a special bank account, much like an account for an IRA or college savings account to save to buy a house, and instead of gifts for birthdays and holidays as family members to deposit that cash to your account to help you save to buy a home. In some areas of Maryland and DC there are government programs to aid with your downpayment too. Check out some of my previous blogs about these programs:
This is part of a series of blogs outlining some of the downpayment assistance programs in Baltimore City. In case you missed the others, links to these blogs are here:
I have been selling Baltimore City homes since 2003 and have helped hundreds of homebuyers become homeowners. I can help you too!!