When you apply for a mortgage loan, lenders typically like some sort of down payment, which is the cash you pay up front when financing the remaining amount. The amount you need varies among lenders and loan programs, but depending on the type of loan, a down payment typically ranges from ZERO to 20 percent of the full purchase price.
Lenders appreciate large down payments because they signal a strong accountability on the part of the homebuyer. Mortgage lenders may offer better financing rates for those who put down a larger down payment.
For first-time homebuyers, however, saving for a down payment can feel like an insurmountable hurdle. If saving for a down payment — and the closing costs — stands in the way of buying a home, talk to Zachery Adam of GoPrime Mortgage in West Asheville. He knows about programs for first-time homebuyers to help you achieve your goal. Some programs even require a zero-percent down payment.
What’s Involved in Saving for a Down Payment?
Before you start shopping for a house, consider how much of a down payment you can realistically afford. Then start saving toward it. Tips for building a down payment include:
- Open a high-yield savings account or money market account that’s only for your down payment.
- Deduct a fixed amount from each paycheck that’s automatically deposited to this account.
- Use cash back credit cards and put that cash into your down payment savings.
- Place any extra money, such as from a raise or tax refund toward this account.
- Put cash gifts into your down payment account, as long as you can document where the money came from because it can’t be from a loan.
Make a budget and stick to it. Cut back on unnecessary expenses so that there’s money left to deposit in your down payment account. Maybe you can pick up a side hustle to help increase your income so that there’s extra cash available for this purpose. Any extra income helps.
Can I Get Down Payment Assistance?
If your budget seems to be stretched as far as it can go and saving for a down payment still feels out of reach, find out if you can get down payment assistance. This may be available in various forms, including:
- Deferred payment loans
- Forgivable loans
- Low-interest loans
- Grants
- Lender-specific down payment programs
- National down payment programs, such as VA & USDA loans
Most down payment assistance programs are geared to first-time homebuyers, Veterans or rural housing communities. You can find programs at state, regional and local levels. In North Carolina, refer to the North Carolina Housing Finance Agency (NCHFA), which is a public agency with a mission to create housing opportunities for North Carolinians.
Speak to a someone knowledgeable about relocation at GoPrime Mortgage in West Asheville. Contact Zachery Adam for tips on working toward mortgage approval. As an independent mortgage lender, Zack is here to help you save for a down payment and buying your next home in Western North Carolina. Get in touch today.
Keywords: saving for a down payment, relocation specialist, first-time homebuyer, NCHFA (NC Housing Finance Agency), down payment assistance
Sources:
https://money.com/how-to-save-for-a-down-payment/
https://www.nerdwallet.com/article/mortgages/buying-a-home-saving-down-payment
