Tag: Mortgage assistance

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Buying a House

Is a 20% Down Payment Really Necessary To Purchase a Home?

Is a 20% Down Payment Really Necessary To Purchase a Home?

There’s a common misconception that, as a homebuyer, you need to come up with 20% of the total sale price for your down payment. In fact, a recent survey by Lending Tree asks what is keeping consumers from purchasing a home. For over half of those surveyed, the ability to afford a down payment is the biggest hurdle.

That may be because those individuals assume a 20% down payment is necessary. While putting more money down if you’re able can benefit buyers, putting 20% down is not mandatory. As Freddie Mac puts it:

“The most damaging down payment myth—since it stops the homebuying process before it can start—is the belief that 20% is necessary.”

If saving that much money sounds overwhelming, you might be ready to give up on the dream of homeownership before you even begin – but you don’t have to. According to the Profile of Home Buyers and Sellers from the National Association of Realtors (NAR), the median down payment hasn’t been over 20% since 2005. It may sound surprising, but today’s average down payment is only 12%. That number is even lower for first-time homebuyers, whose average down payment is only 7%.

Based on the Home Buyers and Sellers Generational Trends Report from NAR, the graph below shows an even closer look at the down payment percentage various age groups pay:

Median Percent Down Payment by Age of Homeowner

As the graph shows, the only groups who put 20% or more down on average are older homebuyers who likely can use the sale of an existing home to fuel a larger down payment on their next home.

What does this mean for you?

If you’re a prospective homebuyer, it’s important to know you don’t have to put the full 20% down. And while saving for any down payment amount may feel like a challenge, keep in mind there are programs for qualified buyers that allow them to purchase a home with a down payment as low as 3.5%. There are also options like VA loans and USDA loans with no down payment requirements for qualified applicants.

To understand your options, you do need to do your homework. If you’re interested in learning more about down payment assistance programs, information is available through sites like downpaymentresource.com. Be sure to also work with a real estate advisor from the start to learn what you may qualify for in the homebuying process.

Bottom Line

Don’t let the myth of the 20% down payment halt your homebuying process before it begins. If you want to purchase a home this year, let’s connect to start the conversation and explore your options.

Contact us:
PHP Houses
142 W Lakeview Ave
Unit 1030
Lake Mary, FL 32746
Ph: (407) 519-0719
Fax: (407) 205-1951
email: info@phphouses.com

Let’s Connect:
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THE INFORMATION PRESENTED IN THIS ARTICLE IS FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSIDERED LEGAL, FINANCIAL, OR AS ANY OTHER TYPE OF ADVICE.
Categories
Real Estate Market

Home Sellers: There Is an Extra Way To Welcome Home Our Veterans

Home Sellers: There Is an Extra Way To Welcome Home Our Veterans

Some veterans are finding it difficult to obtain a home in today’s market. According to the National Association of Realtors (NAR):

“Conventional conforming mortgages (mortgages that conform to guidelines set by Fannie Mae and Freddie Mac), accounted for 74% of mortgages obtained by homebuyers in May 2021, an increase from about 65% during 2018 through 2019…The share of VA-guaranteed loans has also decreased to 7% in May 2021 from about 10% in past years.”

Recent data in the latest Origination Insight Report from Ellie Mae sheds light on the continuation of this trend. Below, we can see just how small of a share of total financing VA loans made up in June of 2021, according to that Ellie Mae report:

VA Loans Make Up a Small Percentage of Total Financing

The drop in VA loan usage can be attributed to the difficulties veterans continue to face when buying a home. The NAR article elaborates:

“It is extremely difficult for FHA/VA buyers to get accepted in a multiple offer situation. They are on the bottom of the hierarchy.”

One contributing factor is that buyers with VA loans can’t waive certain contingencies. However, just because a certain contingency must be present for a particular buyer doesn’t mean that buyer’s offer shouldn’t be considered.

What Should Sellers Do To Help Create a Level Playing Field?

As a seller, it’s important to consider every offer in front of you regardless of loan type. If you’re selecting an offer because some contingencies are waived, keep in mind that it doesn’t always mean the offer is what’s best for you.

Buyers who can’t waive specific contingencies may adjust other terms in their offer to make it more appealing to sellers. This may depend on several factors, including their loan type and location, but a motivated buyer and their agent will do everything they can to present an offer that’s as appealing to you as possible.

Ultimately, you should make sure you take time to really understand the terms of their offer and see the big picture. Working with a driven buyer who’s motivated to purchase your house may provide a better opportunity for you to reach your overall best option and what’s most important to you.

Bottom Line

If you’re ready to sell, let’s connect. Together, we can make sure you understand the terms of all offers so you can give each one fair consideration, including those buyers using a VA loan. Our veterans sacrifice so much for our country. They’ve earned our gratitude and should have the same opportunity to obtain the home of their dreams.

Contact us:
PHP Houses
142 W Lakeview Ave
Unit 1030
Lake Mary, FL 32746
Ph: (407) 519-0719
Fax: (407) 205-1951
email: info@phphouses.com

Let’s Connect:
Facebook
Linkedin
Twitter
Instagram

THE INFORMATION PRESENTED IN THIS ARTICLE IS FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSIDERED LEGAL, FINANCIAL, OR AS ANY OTHER TYPE OF ADVICE.
Categories
Buying a House

Planning to Move? You Can Still Secure a Low Mortgage Rate on Your Next Home

Planning to Move? You Can Still Secure a Low Mortgage Rate on Your Next Home

This year, mortgage rates have started to slowly climb above recent record-breaking lows. Many homeowners planning to move may feel like they’ve missed the chance to score a great rate on their next mortgage. In reality, there’s still time to secure a rate far below the historic norm. Here’s why.

After creeping up for seven consecutive weeks, average mortgage rates have dropped more recently (See graph below). With rates taking a slight dip over the past two weeks at the same time the inventory of houses for sale is so low, homeowners today are sitting in the optimal seat to sell. What’s the advantage of selling your house now? Securing a low mortgage rate on your next home.

Mortgage Rates

To take advantage of today’s real estate market, experts are encouraging homeowners to act now before interest rates climb. Danielle Hale, Chief Economist at realtor.com, explains:

“…mortgage rates slid for a second week … but we don’t expect rates to stay at this level for too long.”

Hale continues to say:

“For sellers, getting in early optimizes odds of a quick sale at a good price before there’s too much competition, but that means acting now … In this environment, sellers probably really can’t go wrong, and that’s especially true in the nation’s hottest housing markets where homes are selling quickly and getting the greatest number of viewers online.”

Most experts agree that rates will continue to trend upward. Sam Khater, Chief Economist at Freddie Mac, states:

“Despite the pause in mortgage rates recently, we expect them to increase modestly for the remainder of this year.”

In addition, Freddie Mac recently released their Quarterly Forecast, which notes:

“We forecast that mortgage rates will continue to rise through the end of next year. We estimate the 30-year fixed mortgage rate will average 3.4% in the fourth quarter of 2021, rising to 3.8% in the fourth quarter of 2022.” (See graph below):

Mortgage Rates

While buyers everywhere want to secure the lowest rate possible, it’s important to remember that today’s rates are still much lower than the historic norm. Odeta Kushi, Deputy Chief Economist at First American, emphasizes:

“While mortgage rates have trended up in recent months, they are still historically low, so relative to one year ago, housing actually is still more affordable and that’s really thanks to this low mortgage rate environment we find ourselves in.”

Bottom Line

If you’re thinking of moving, don’t miss the opportunity to score a great rate on your next home mortgage. Let’s connect today so you can get your house ready to sell and find your dream home while mortgage rates are still low.

Contact us:
PHP Houses
142 W Lakeview Ave
Unit 1030
Lake Mary, FL 32746
Ph: (407) 519-0719
Fax: (407) 205-1951
email: info@phphouses.com

Let’s Connect:
Facebook
Linkedin
Twitter
Instagram

THE INFORMATION PRESENTED IN THIS ARTICLE IS FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSIDERED LEGAL, FINANCIAL, OR AS ANY OTHER TYPE.
Categories
Buying a House

Your Tax Refund and Stimulus Savings May Help You Achieve Homeownership This Year

Your Tax Refund and Stimulus Savings May Help You Achieve Homeownership This Year

If you’re planning to buy a home this year, saving for a down payment is one of the most important steps in the process. One of the best ways to jumpstart your savings is by starting with the help of your tax refund.

Using data from the Internal Revenue Service (IRS), it’s estimated that Americans can expect an average refund of $2,925 when filing their taxes this year. The map below shows the average anticipated tax refund by state:

Average Estimated Tax Refund

Thanks to programs from the Federal Housing Authority, Freddie Mac, and Fannie Mae, many first-time buyers can purchase a home with as little as 3% down. In addition, Veterans Affairs Loans allow many veterans to put 0% down. You may have heard the common myth that you need to put 20% down when you buy a home, but thankfully for most homebuyers, a 20% down payment isn’t actually required. It’s important to work with your real estate professional and your lender to understand all of your options.

How can your tax refund help?

If you’re a first-time buyer, your tax refund may cover more of a down payment than you realize.

If you take into account the median home sale price by state, the map below shows the percentage of a 3% down payment that’s covered by the average anticipated tax refund:

What Percentage of a 3% Down Payment Is Covered by the Average Tax Refund?

The darker the blue, the closer your tax refund gets you to homeownership when you qualify for one of the low down payment programs. Maybe this is the year to plan ahead and put your tax refund toward the down payment on a home.

Not enough money from your tax return? 

A recent paper from the National Bureau of Economic Research found that, of the households that received a stimulus check last year, “One third report that they primarily saved the stimulus money.” If you had the opportunity to save your Economic Impact Payments, you may consider putting that money toward your down payment or closing costs as well. Your trusted real estate professional can also advise you on the down payment assistance programs available in your area.

Bottom Line

Saving for a down payment can seem like a daunting task, but it doesn’t have to be. This year, your tax refund and your stimulus savings could add up big when it comes to reaching your homeownership goals.

Contact us:
PHP Houses
142 W Lakeview Ave
Unit 1030
Lake Mary, FL 32746
Ph: (407) 519-0719
Fax: (407) 205-1951
email: info@phphouses.com

Let’s Connect:
Facebook
Linkedin
Twitter
Instagram

THE INFORMATION PRESENTED IN THIS ARTICLE IS FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSIDERED LEGAL, FINANCIAL, OR AS ANY OTHER TYPE.