The right down payment depends on your financial situation.  Deciding how much to put down on a new house depends on balancing liquid cash with other priorities, but economic conditions related to Covid-19 and a hot housing market have added twists.  Due to the nationwide sellers market, offering a large down payment could make it easier to win a bidding war because it improves your chances of getting approved for a loan. 

How Much of a Down Payment is Typically Required When Buying a House?

If you are wondering what percentage you should put down on a house, 20% down is the rule of thumb, but there is no one size fits all figure.  For example, some loan programs require a down payment of  as little as 3% or 5% and some do not require one at all.  The primary reason most consider 20% is if you have a conventional loan to avoid private mortgage insurance.  However, according to the National Association of Realtors around 72% of homebuyers put down less than 20%.  

What is a Good Down Payment for My Waltham Home?

There is no right amount for everyone to have set in their mind when it comes to down payments, it will ultimately come down to your own budget.  However, there are some guidelines to consider what you are planning to put down should be in line with your monthly housing budget, your loan program, your liquid cash, and your plan for the home moving forward.  The larger your down payment, the lower your monthly mortgage payment.  While 20% is a good rule of thumb there are other options for lower down payments.  

The reality of it is that most homebuyers pay much less than 20%.  The median down payment in 2019 was 12% for all buyers, 6% for first time buyers and 16% for repeat buyers.  Having a professional Waltham real estate agent can assist you with the down payment process in order to set you up with an easy buying process! 

How Can You Decide How Much to Put Down?

Among other aspects, your finances and your goals for the home help you choose the right down payment.

Here are some questions to consider :

• Will your new house require upgrades or updates?

• Are you handling a lot of other debts?

• How secure is your job?

 

Only you and assistance from your Waltham realtor can help you determine the appropriate down payment.  

 

Putting down a larger down payment will ultimately have you paying less per month on your mortgage.  When considering your budget for your down payment you should consider private mortgage insurance, interest costs, emergency funds, and closing costs.  These are all aspects that need to be considered to not bleed your bank account dry before even getting started with your new Waltham home.  This all might be a giant headache to most when trying to dissect the buying process, but a well experienced Waltham real estate agent will be able to thoroughly communicate each step with you in order to set you up for success!

Contact Hans Brings Today!

No matter if you are a fresh first time home buyer or are looking to move on to your next property Hans has the market knowledge needed in order to guarantee a smooth transaction.  Get assistance from someone with years dealing with the Waltham housing market today!  Get a hold of Hans by giving him a call at 781-891-9993 or by filling out a contact form on the website. 

Having a checklist is a great way to ensure that you avoid mistakes and oversight by laying out a clear plan and set of strategic steps to monitor progress.  Here are some basic steps to consider when you are ready to purchase your first home:

Find a Realtor

It is important to note that you are not required to have a realtor or real estate agent when you purchase your home.  However, a Waltham realtor can make it much easier to find a home that is perfect for you.  Real estate professionals are trained in every aspect of the home buying process.  They are there to assist you find a property that fits in your budget and seal the deal at closing.   They have your best interest at heart and will advise you on your offerings.  

Figure Out How Much House You Can Afford

A lender will only offer you the amount that you can afford to pay monthly towards your mortgage.  Knowing how much you can spend on a house is a good way to narrow your home search.  Having this figure prepared allows your Waltham real estate agent to find you properties that fit your budget.  The first step would be to have an understanding of your DTI ratio and how a monthly mortgage payment will fall into your budget.  

Find a Mortgage Lender & Get Approved

Next on your list should be getting preapproved for a mortgage.  Having a preapproved mortgage gives you an idea of how much house you can afford, your interest rate, and the type of loan program you qualify for.  This is also a great tool to show your real estate agent and the seller that you will not have trouble finding funding for your home purchase.  

Begin The House Hunt 

Now that you have your pre approval in hand, you can now start house hunting.  You may have seen for sale signs while driving around the neighborhood in Waltham, but nowadays most properties are listed virtually.  Your Waltham real estate agent will also have access to real estate databases to find more in depth information depending on what you are looking for.  Real estate professionals are experts in your local housing market and may have additional insider knowledge on which homes you may like.  

Having clear communication with your real estate agent is vital to ensure that you are finding a property that offers all the qualities that you are looking for.  That will provide them with other aspects to consider when they narrow the list of properties to show you.  

Gather Your Documentation

It never hurts to be proactive when you are on the hunt for a new piece of property.  You will need to submit financial documents to your mortgage lender, so you should have it on hand. 

These required documents include:

• Proof of ID

• Your Last 2 Months of Income

• Proof of Funds for the Down Payment & Closing

• Your Last 2 Years of Tax Returns, Bank Statements or Investment Account Statements 

• A Recommendation Letter

Make An Offer 

Once you have gotten through the first five steps you are now ready to put into an offer on a property that you like! It can be a difficult decision when it comes to how much you should offer.  So, it is best to refer to your professional real estate agent as they will gather local property values and other sales data.  They will also draw up an offer letter and submit it for you.  

Conduct a Home Appraisal & Inspection

After you reach an agreement with the seller, it is time for the appraisal and the inspection.  Appraisals and inspections vary in a few important ways.  An appraisal only gives you an estimate of how much your home is worth.  They look at factors such as overall property value in the neighborhood and the general conditions of the property.  A home inspection on the other hand, gives you a more in depth look into the inner workings of your home.  During the process a home inspector will take a walk through of your property and test things.  

Close on The House

After your home has passed inspection and undergoes an appraisal, you are ready to close.  Closing involves signing all the necessary paperwork on your mortgage and taking control of the property.  Before closing you will get documentation from your mortgage lender called a Closing Disclosure.  These documents will include the final terms of the mortgage loan, what you owe in closing costs, and your interest rate.  

Contact Hans Brings Today!

If you have decided that the time is right for you to purchase your first home then make sure that you do not go through the buying process alone.  Contact Hans today to get insight of the current market conditions to ensure that you get the best deal possible!  Get in touch with Hans by giving him a call at 781-891-9993 or by filling out a contact form here.