This is the ninth in a series of videos and articles inspired by Mars Bank’s First Time Homebuyer live events. Sign up today for our free online first time homebuyer seminar.
Historically, buyers were required to put at least a 20% down payment towards the purchase of a home. However, over the course of time that has changed. There are several different options that we have for down payments depending on the buyer’s needs and situation. The down payment is part of the cash needed at the mortgage closing to purchase a home. In addition to the down payment there are closing costs, prepaid insurance and taxes that are held in an escrow account to be paid through the mortgage holder to the payee.
A down payment is the money you put on the purchase of your new home at the closing. How much money the buyer puts down reduces the amount of the mortgage loan. The options for down payment can be as little as 3% for a conventional conforming loan based on certain criteria. An FHA loan may require only 3 ½% down payment. There are special low down payment loans for veterans and other options for first time homebuyers as well.
The closing costs cover payments associated with purchasing the home and attaining the mortgage. These include costs like an appraisal of the home. The prepaid escrow account holds payments for ongoing costs such as private mortgage insurance, homeowners insurance, taxes and special assessments. These expenses are paid by the homebuyer at closing for costs that are due throughout the year.
It is a myth that mortgages require 20% down payment. There are many options for a down payment! Call Mars Bank to help you get started on buying a home. Find out what options you have when you ask the question, “How much down payment do I need?”
To get started learning about your options for a mortgage down payment, contact Mars Bank today.
Considering a first home purchase? Sign up today for our free online first time homebuyer seminar.