What is one of the scariest parts of buying the home? Undoubtedly, the prospect of putting 20% cash down. This antiquated practice still remains a staple in real estate transactions nowadays, despite the fact that only 39% of house-hunting millennials are able to afford the recommended down payment. With this inability to pay a down payment comes an inevitable downturn in the purchasing market, with many deciding to rent instead. But the title of this blog post hints at something not many first-time buyers know
Mortgage Myth #1: Is 20% down required to buy a home? FALSE!
According to the National Association of Realtors, a lower, more affordable down payment of 11% (or less) is becoming the new norm – but be aware that there are other loan program options that could help you manage this expense further.
Aside from saving a bunch of cash, there are some important reasons you might want to consider NOT paying 20% down on a new house:
- Freeing Up Money for Renovations: It’s very rare that people purchase homes without having at least something they’d like to redo or renovate. Whether a relatively small job (repainting a bedroom) or a large endeavor (completely renovating the kitchen), having that extra spending cushion can help make those renovations happen faster and without as much financial stress!
- Purchasing a Home Sooner: The earlier you are able to purchase a home, the more likely you are able to avoid the continuously-rising home prices. Making the switch from renting to home ownership is a great financial accomplishment!
First: Buy A House In Your Budget
This is an important factor that many first-time homeowners will need to keep a close eye on. Separating emotions from reality can become difficult when visiting open houses and searching for listings online; it’s essential that you know for sure that you will be able to afford the home down the line. A great tool is utilizing a mortgage calculator which can help you determine whether a particular home is doable for you and your family.Now, what are some ways you can avoid paying 20% down on a new home?
