Farmington Hills MI First-time Homebuyers: The Down Payment

Farmington Hills MI First-time Homebuyers: The Down Payment

Farmington Hills MI First-time Homebuyers: The Down Payment

As a first-time homebuyer, socking away money for a down payment to purchase a home in Farmington Hills MI may seem like an overwhelming task. The down payment is the upfront cash you pay to qualify for a home loan, which is expressed as a percentage of the home price. 

Many potential homeowners think that 20% down is the only option when it comes to getting a mortgage, but, that is just a common misconception, as there are many options out there.  

Lenders often look at the down payment amount as your investment in the home. Not only will it affect how much you will need to borrow, but it can influence whether your lender will require you to pay for private mortgage insurance (PMI).

Mortgage insurance protects the lender in case the borrower defaults on the home loan, and typically, you will need PMI if you put down less than 20% of the home’s purchase price. 

Different loans require different down payment percentages

Down payment requirements can also vary by lender and your credit history. The minimum down payment for an FHA loan is just 3.5% with a credit score of 580 or higher, for example, but the minimum is 10% with a credit score of 500 to 579.

State and local down payment assistance

Exploring local and national first-time homebuyer assistance programs is an important step in the journey to homeownership. Down payment assistance is often combined with favorable mortgage interest rates or tax breaks.

Many state housing authorities combine closing cost and down payment assistance programs with mortgages that have favorable interest rates. Some states even offer tax credits you can use on your federal tax return.

These first-time homebuyer assistance programs can boost your chance of homeownership in particular geographic areas, or help borrowers in certain professions, such as educators, first responders, or active-duty military and veterans. 

It’s important to note that programs will usually set a maximum sale price and some have income limits, so not all home buyers will qualify. Still, it’s worth checking out programs in your state.

Down payment gifts from family members

It’s not uncommon for first-time homebuyers to get help from family members. Using a gift to supplement savings can help first-time homebuyers clear the down payment threshold.

According to a 2019 Generational Trends report from the National Association of Realtors, of all homebuyers ages 28 and younger, 28% used a gift from a relative or friend to make a down payment. And of all buyers ages 29 to 38, 21% used a gift.

Down payment gifts are acceptable to lenders, but applying a gift toward a down payment involves more than depositing a check. The donors will have to verify in writing that they made the gift and have the financial ability to make such a donation.

They will be required to provide bank statements as proof, along with a letter confirming that the donation is a gift and not a loan. 

If the gift funds are added to the buyer’s bank account after settlement, then documentation will still be required before it can be applied to the purchase. Typically, this will require a receipt of the cashier’s check as given to the closing agent.

Partner with top-rated Farmington Hills MI REALTOR® -Tom Gilliam

Whether you are interested in buying a home in Farmington Hills, MI, or its time to list your current property, experience matters most in a changing market.

Offering over 20 years of local experience, top-rated Farmington Hills REALTOR® – Tom Gilliam offers in-depth local market knowledge and access to the most up-to-date listings. Tom is known for his professionalism and is an expert at uncovering the perfect home for his clients’ lifestyle needs in the right Farmington Hills neighborhood or community. 

2020 Best of Farmington Hills REALTOR - Tom GilliamFor sellers, Tom will create a comprehensive marketing plan that exposes your home to the public as well as to other real estate agents through the Multiple Listing Service (MLS), other cooperative marketing networks, open houses for agents, and so on.

Your listing will appear on all the most popular real estate sites where buyers spend hours a day looking at homes such as Realtor.com, Zillow, Trulia, REMAX, Redfin, and dozens of others.

Your property will also be featured on Tom’s own highly-trafficked website Homes2moveyou.comYou can be assured that your home will get sold quickly and for the highest market price.  

Farmington Hill MI Homes for Sale

Tom works very hard for his clients. As your agent, he will protect your interests, negotiate on your behalf, advocate for you, and be your trusted guide and advisor throughout the home buying or selling process.

If you or someone you know is interested in Farmington Hills MI real estate, please give Tom Gilliam a call today at (248) 790-5594 or you can reach him here.

Tom Gilliam, REALTOR®
RE/MAX Classic
29630 Orchard Lake Rd.
Farmington Hills 48334
Direct: 248-790-5594
Office: 248-737-6800
Email: Tom @ Homes2MoveYou.com
License #314578

 

 

Buying a Home in Oakland County, MI? Low and No Down Payment Mortgage Options

Buying a Home in Oakland County, MI? Low and No Down Payment Mortgage Options

Buying a Home in Oakland County, MI? Low and No-Down-Payment Mortgage Options – You don’t have to be a first-time homebuyer in order to qualify for a low or no down payment mortgage. Some low down payment loans assist buyers in economically disadvantaged areas. VA loans cater to borrowers with military connections and USDA loans are for buyers in rural and suburban areas. Some conventional loans like the Home Possible®loan and the HomeReady™ mortgage have income limits rather than first-time homebuyer requirements. 

A no-down-payment mortgage allows first-time home buyers, and repeat buyers, to purchase a home with no money required at closing except standard closing costs. USDA and VA government-backed loans allow you to purchase a home with zero down. The fact that these loans are backed by the federal government allows lenders to be more lenient with down payment requirements. To qualify for a USDA loan, you and your home must meet USDA loan standards, and to qualify for a VA loan, you must meet service standards.  

If you don’t meet the qualifications for either a USDA loan or a VA loan requiring no down downpayment, you may want to get a low down payment government-backed FHA loan or a conventional mortgage. You can get an FHA loan with as little as 3.5% down. Backed by the Federal Housing Administration, these loans are for people with low to moderate-income levels and have fewer requirements than USDA and VA loans. 

USDA Rural Housing Loans 

The USDA Rural Housing Loan is available to buyers in suburban neighborhoods as well as rural neighborhoods. The USDA’s goal is to reach low-to-moderate income homebuyers wherever they may be. Going one step further in helping prospective homebuyers, the USDA issues mortgages to applicants deemed to have the greatest need. That means an individual or family that is without “decent, safe, and sanitary housing, unable to secure a home loan from traditional sources and has an adjusted income at or below the low-income limit for the area where they live.

The USDA usually issues direct loans for homes of 2,000 square feet or less, with a market value below the area loan limit. Many borrowers using the USDA Single Family Housing Guaranteed Loan Program make a good living and reside in neighborhoods that don’t meet the traditional definition of rural.

VA Loans

A VA loan is a $0 down mortgage option issued by private lenders and partially backed, or guaranteed, by the Department of Veterans Affairs (VA). Eligible borrowers can use a VA loan to purchase a property as their primary residence or refinance an existing mortgage. With a VA loan, eligible homebuyers are not required to have a down payment in most cases.

There is also no monthly mortgage insurance premium to pay. The combination of no down payment and no mortgage insurance can save homebuyers, who qualify for a VA loan, a significant amount of money. VA loans continue to have the lowest average interest rates of all loan types and VA buyers can pay off a loan early without any financial penalties. 

FHA Loans

In order to qualify for an FHA loan, you must plan to live at the property you are purchasing as your primary residence. You must also buy a home that meets livability standards and move in within 60 days of closing. With a down payment of less than 10%, you are also required to pay mortgage insurance throughout the life of the loan. FHA loans are a great option for people with a low down payment and are also a viable option for those with a low credit score.

In order to get an FHA loan combined with a lower down payment, you will need a credit score of at least 580. If your credit score is lower than 580, you’ll have to make up for it with a larger down payment. You may even be able to get a loan with a credit score as low as 500 points if you can bring a 10% down payment to closing.  

Conventional Loans  

In today’s market, conventional loans account for more than half of all mortgage loans made. By contrast, conventional loans are not backed by the government. Conventional loans are backed by Fannie Mae and Freddie Mac, and these two agencies exist solely to help banks make mortgage loans. They offer no mortgage insurance to lenders, leaving that task to private mortgage insurance (PMI) companies.

If you have low to moderate-income compared to others in your area, you may want to consider a Home Possible®loan from Freddie Mac. With this loan type, you are allowed to purchase a home with a 3% down payment and lower mortgage insurance options. In order to qualify, you can’t earn more than 100% of the median income in your area.

Another 3% down payment option is the HomeReady™ mortgage backed by Fannie Mae. This loan type offers below-market mortgage rates, reduced mortgage insurance costs,  and the income of everybody living in the home can be used to get mortgage-qualified and approved.

The good news is that there is a bevy of mortgage programs requiring little or no money down and they are available to the general public. Want to buy a home in Oakland County, MI with little or no money down? Give top-rated Oakland County MI REALTOR – Tom Gilliam a call today!

Partner with Top-rated Oakland County MI REALTOR® -Tom Gilliam 

A top-rated Oakland County MI real estate agent like Tom Gilliam can show you more properties and save you thousands of dollars when buying a home. You need an agent who knows the area, processes a vast network of local connections, and has the skills to negotiate like a pro. From first-time homebuyers to multi-million dollar investors, Tom continually strives to provide top quality service for his clients. With access to the most up-to-date MLS listings for Oakland county MI properties, Tom is able to match your lifestyle needs with the perfect home.

If you are ready to list your current property, Tom has the experience and skills necessary to handle the sale and marketing of your home for the optimum results. Tom employs the latest technology to deliver massive exposure that will drive mega-response from qualified buyers. Tom also partners with the most talented home stagers to ensure that your home is thoughtfully staged to highlight its features and amenities.

Offering over 25 years of local real estate experience, Tom will protect your interests, advocate for you, and go the extra mile to ensure a smooth and successful transaction. If you or someone you know is interested in buying or selling real estate in Oakland County, MI, please give Tom a call today at 248-790-5594 or you can get in touch here.

Tom Gilliam, REALTOR®
RE/MAX Classic
29630 Orchard Lake Rd.
Farmington Hills 48334
Call: 248-790-5594
Office: 248-737-6800
Email: Tom @ Homes2MoveYou.com
License #314578

Down Payment Under 6% For Many Home Buyers

Down Payment Under 6% For Many Home Buyers

It seems that the biggest hurdles and worries for penitential home owners is the down payment on a home, leaving potential home buyers feeling defeated in the first steps to moving and getting their own Down Payment Under 6% For Many Potential Home Buyershome. The potential home buyer still believes that it is the 20% traditional down payment that is needed to secure a mortgage and to purchase a home. This way of thinking and believing can stop any potential home buyer from even taking the first step into becoming a homeowner, but this has changed and many potential home buyers are unaware that the traditional days are long past us.

Down Payment Changes

Times have indeed changed for most potential home buyers, depending on your credit worthiness and other factors the 20% down day’s area thing of the past. Many potential home buyers are able to get a mortgage for a new home with not 10% down payment, but as low as 6%. That’s right, in 2017 over 61% of potential home buyers made a 6% and sometimes less down payment on their new homes according to  National Association of Realtors’ Realtors Confidence® Index. Not only that, but I have seen in recent months new homebuyers getting down payments as low as 3%. For potential home buyers this is reason to celebrate.

Low down payment mortgages such as FHA and others have paved the way for potential home buyers to realize the American dream of home ownership without having to stash away and struggle with trying to save up to 20% on a down payment for their first home. This is good news for a whole new generation of potential home owners that were concerned and stressing about a large down payments in order to be able to purchase a new home.

The Take Away

If you have been unable to save up to 20% for a down payment, it’s time to start talking to some lenders to determine the right situation for you. Your dream of home ownership without the stress of depleting your savings or having enough for a down payment is awaiting you. I know some great lenders that I can suggest to you. Give me a call 248-790-5594 or Contact Me

Listing: Contact Form

 

 

The Top Sacrifices Millennial Buyers Say They’ll Make

The Top Sacrifices Millennial Buyers Say They’ll Make

Buying a house is a major financial transaction and, for most Americans, the largest one they’ll ever undertake especially the millennial population. So pulling the necessary resources together to be able to afford the upfront costs, in addition to the ongoing obligations, maintenance, and upkeep can be difficult. Especially for first-time home buyers who don’t have the benefit of being able to sell a home to help fund their down payment.

For this reason, many millennial buyers who aspire to homeownership have decided it’s worth making a few sacrifices in order to help save money to buy a house. In fact, according to a recent survey from ValueInsured, there are some common sacrifices young Americans say they are willing to make in order to buy their first home. For example, nearly 60 percent of respondents said they would cut down or give up eating out – which made giving up restaurants the most popular sacrifice among survey participants. Other common sacrifices included taking a second job, not going on vacations, moving back in with their parents, and giving up shopping for clothes. More here.

Millennial Home Buying Roadblocks

Millennials, which is the generation comprised of people born from 1980 to 1998, are buying homes at a much lower rate than previous generations in favor of renting or moving back in with their parents after college. And a large reason they’re not buying?

Because they believe they can’t afford it. According to data from Apartment List, 72% of millennials say they can’t afford to buy a home.

 

One of the major roadblocks millennials believe stands in their way to homeownership is the down payment. But many millennials are operating with incomplete or incorrect information about how to purchase a home. According to a Fannie Mae survey, 73% of millennials surveyed were unaware of lower down payment options (like the ability to pay 3% to 5% of the home’s purchase price instead of the traditional 20%).

 

These lower down payment options are increasingly common in today’s market. According to a recent NerdWallet report, 30% of all homebuyers put down 3% or less when purchasing a home.

Listing: Contact Form

Pin It on Pinterest