Savings For A Down Payment, You Don’t Need 20%
If you’re planning on buying your first home, you are probably wondering all the money that you have to save and what are the amounts that you have to save. Well, as you may know, the biggest payment that you will have upfront in buying a house is your down payment. And you might be intimidated because you feel that you have to save 20% down to buy a house. And that is not true in this video I’m going to show you or tell you what you need or how much down payment you’re going to need to buy your first home if you’re thinking of buying a house. So it’s a lot easier for you to save a lot less than 20%. Buying a house is challenging, but it does not have to be very much challenging. Don’t have to put too much pressure on yourself. You have to know the facts. And one of the facts is you don’t need 20% to buy a house because that is what most of the buyers think and they give up on buying a house. So it’s a wrong reason not to buy a house or not to buy your dream home. According to the National Association of Realtors, one of the biggest misconceptions among housing consumers is what the typical down payment is and what amount is needed to enter home ownership. And a recent Freddie Mac survey also finds that nearly a third of prospective homebuyers think they need a downpayment of 20% or more to buy a home. This myth remains one of the largest perceived barriers to achieving home ownership.
So once you decide to buy a home and find out that, hey, you don’t need 20% down, you could buy with much lower, then you want to make sure that you don’t make other mistakes. And believe me, buyers do make mistakes. I’ve been selling homes for years and years and years and I find that buyers do make a mistake. I’ll give you a quick example. I have an offer out on a property and of course, the market is crazy right now and we are competing on multiple offers. There were eight offers and I just talked to the listing agent and the listing agent is telling me that the seller is going to either accept my offer or another offer from another agent and another buyer. So I asked the listing agent, what kind of offer are the other buyers offering? Because right now we are the highest offer on a house. They were asking for $880,000 on the house. We offered $920,000. I just found out that another agent has offered a little bit less than $920,000, which is less than our price. But they have removed all contingencies even before getting into escrow. Which means that if they buy the house, the buyers has removed all contingencies. That means they will buy the house without inspections, without checking any rent control or noise control or whatever. That’s a big, big mistake. I wish the buyer does not do that and I wish the buyer’s agent advises them better.
So here’s one mistake that I just want to tell you about. So if you want to learn about more buyer mistakes not to make, or deadly mistakes not to make, please watch the video. We’ll have a link at the end of this video. So if you’re a first-time buyer, the good news is you don’t have to put 20% down. According to Nar, they found that the most first-time home buyers put an average of 6% down, which is way less than 14% down payment on average. That all the buyers put down. So if you’re a first-time buyer, you may need as low as 6% down. But I’m not going to talk about the types of loans out there. But there’s loans out there. If you’re a VA, you need 0% down. And if you use a first-time home buyer FHA loan, you could buy it as low as 3.5% down. But I’m not going to talk about that. I just wanted you to know that you don’t need 20% to buy a house. If you’re thinking of buying a house, I wanted to give you some facts and figures. According to National Association of Realtors, of which I’m a member since the last 20 years, it shows that today’s medium down payment is less than 20%. Now, if you look further, it says that there are common misconceptions that you need 20% down. But if you look at the first-time homebuyers chart, the average down payment is 6%. And if you look at all the homebuyers, then the average is only 14%, nowhere close to 20%. So what does this mean for you? It means that you may not need to save as much as you originally thought.
The other misconception, or the other thing that a lot of buyers don’t know. Obviously, I mentioned to you that there’s a three-and-a-half percent down, there’s a 0% down. If you’re a veteran, there’s also conventional loans where you can put 5% down. Yes, a conventional loan with only 5% down. Of course, it all depends on your terms and conditions and your qualifications and your income and expenses. And if you are looking for a lender in your local neighborhood, I’ll be glad to provide you a lender whom you can talk to with absolutely no obligation. And based on your income and your dream home purchase price in the area, they can tell you how much you’re going to need, whether it’s 3% down or 10% down or 5% down. And then you can start saving for that, whether you’re going to buy a house in the next six months or a year or two years.
But the other thing that a lot of first-time home buyers do not know. That’s why it’s important that you talk to a professional and I’ll be glad to refer you. Just direct message me is there are a lot of grant programs out there. There are first-time home buyer grant programs. The government wants you to buy homes, so they are giving out grants. And these grant programs are not only for first-time home buyers but is also for repeat buyers. So grants are given by the federal authorities, state authorities. A lot of the counties give grant programs and a lot of the city gives you grant programs. So look into that, google them in your local neighborhood. There’s a lot of grant programs out there so you can get started. There’s also grant program for first-time responders. So there’s lots and lots of programs out there. So don’t not buy a house because you think you have to put 20% down. So I’m hoping that you can buy a house, your dream home because that’s one of the biggest goals that people have is to buy a house. And if you don’t buy because you thought you need 20% down, that’s the wrong reason. So let’s get to it. Let’s get you in a program, start saving, and you can have a house in one or two years or even sooner. So good luck to you. Please watch this video, “Deadly Home Buyer Mistakes.” And please don’t make those mistakes.