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The 411 on Down payments Today

December 10, 2012
From Loan Officer Kelly Ifland

From Loan Officer Kelly Ifland

When the housing market was hot, close to half of all first time homebuyers took advantage of no down payment mortgages. That all changed with the market downturn. All aspects of the mortgage loan process were tightened up, including mortgage down payments. As the market begins to show encouraging signs, what is happening with down payments and how will it impact the recovery that some believe is underway?

First Time Home Buyers Putting Average 9% Down

According to RIS Media, the average down payment for a first time homebuyer is now 9%, which is actually down a bit from its high of 11% in 2010-2011.  This may be very good news for homeowners because saving for a down payment is typically the most difficult aspect of buying a home.

There have been proposals made in WashingtonDCabout mandating specific down payment levels to solidify the health of mortgage portfolios. However, what research does show is that low down payment loans, which have been offered by lenders for decades, performed similarly to other conventional mortgages until they were coupled with other exotic features, such as interest only payments and no income documentation.

Low down payment options still available!

There are still a wide variety of great mortgage choices, particularly for first time homebuyers.

FHA loans continue to be popular and require just 3.5% down. There are some qualifications with FHA loans that can be discussed with each buyer. In addition, USDA loans and VA loans continue to provide no money down mortgages to those who meet their criteria.

When it comes to more traditional conventional loans, down payments, which range depending on the type of loan and property being purchased – can be funded with cash gifts from friends or family, if buyers document the gift properly. A loan officer can detail that process, but a good overall recommendation is to maintain a very solid, clear paper trail between the gift giver and the gifted.

We offer many home loan options, including no down payment loans and low down payment programs, in addition to conventional fixed rate and adjustable rate loans.  Our entire mortgage team has extensive expertise in working with buyers and with down payments, so we can walk them through the process to ensure all goes smoothly.

To determine what’s best for your individual buyers, consult with your loan officer who can direct them to the options that fit their current budget and future goals.

RIS Media, The Fiscal Times

(http://www.thefiscaltimes.com/Articles/2012/05/24/Why-20-Percent-Down-Wont-Help-the-Housing-Mess.aspx#page1)

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