According to Black Knight Financial Service’s Mortgage Monitor Report, 1.5 million Americans have purchased a home with down payments under than 10% over the last 12 months. This is great news for buyers as this marks a 7-year high.
Many mortgage programs offered by agencies like Freddie Mac and Fannie Mae allow buyers to put down as low as 3% to purchase their dream homes. The strength of the housing market has aided buyers who used low-down-payment programs to buy. As a recent CNBC article points out,
“Defaults on recent low down payment loans, so far, are slow, but that is as much a factor of the good credit quality as it is the strength of the housing market. Home prices are rising incredibly fast, meaning those borrowers are gaining equity in their homes quickly.”
Low down payments aren’t just great for first-time homebuyers. These programs have allowed homeowners who want to capitalize on the equity they have in their homes to use the profit from their sale to pay off high-interest credit cards, fund education or even start a business.
According to a new Census Report, the Annual Survey of Entrepreneurs, home equity was used to start 7.3% of all businesses in the United States, which equates to over 284,000! The industries that saw the most growth from home equity are accommodation & food services, manufacturing and, retail trade.
Gone are the days of ‘20% down or no mortgage.’ What could you build with the equity in your house? Let’s get together today to evaluate your ability to achieve your dreams today!
9% of Buyers are Wrong About Down Payment Needs
According to a recent survey conducted by Genworth Financial Inc. at the Annual Mortgage Bankers’ Association Secondary Market Conference, mortgage professionals say that first-time buyers still believe a 20% down payment is necessary to buy in today’s market. Home Buying Checklist
Nearly 40% of mortgage industry professionals surveyed believe that a lack of knowledge about the home-buying process is keeping potential buyers on the sidelines. Saving for a down payment is often cited as a huge barrier for first-time homebuyers to make the leap into homeownership.
If homeowners believe that they need a 20% down payment to enter the market, they also believe that they will have to wait years (in some markets) to come up with the necessary funds to buy their dream homes. Home Buying Checklist
The greatest source of confusion cited in the survey results centered around down payments. The results are broken down in the chart below:
Top Tips To Save For A Down Payment
Being a renter does have some advantages. No paying off the mortgage, no property taxes, and the landlord takes care of any maintenance and repair costs. However, renting your home does have one major drawback: You are spending money on rent without gaining any equity of the property. Home Buying Checklist
Many renters want to own their home, but struggle to find the cash needed to make a down payment on a property. Home Buying Checklist
In fact, a recent survey conducted by the website gobankingrates.com showed that a fifth of adults in the U.S. don’t use a savings account, while a third of those that do have zero funds in their account. Home Buying Checklist
Below you will find some top tips to help you start saving and put aside enough funds to put a down payment on a home. Keith Kreis Home Buying Checklist