The Benefits of a 20% Down Payment

May 9, 2019 By Realtor Millie Gil

The Benefits of a 20% Down Payment. If you are in the market to buy a home this year, you may be confused about how much money you need to come up with for your down payment. Many people you talk to will tell you that you need to save 20% or you won’t be able to secure a mortgage.

If you are in the market to buy a home this year, you may be confused about how much money you need to come up with for your down payment. Many people you talk to will tell you that you need to save 20% or you won’t be able to secure a mortgage.

The truth is that there are many programs available that let you put down as little as 3%. Those who have served our country could qualify for a Veterans Affairs Home Loan (VA) without needing a down payment.

These programs have cut the savings time that many families would need to compile a large down payment from five or more years down to a year or two. This allows them to start building family wealth sooner.

So then, why do so many people believe that they need a 20% down payment to buy a home? There has to be a reason! Today, we want to talk about four reasons why putting 20% down is a good plan, if you can afford it.

1. Your interest rate will be lower.

Putting down a 20% down payment vs. a 3-5% down payment shows your lender/bank that you are more financially stable, thus a good credit risk. The more confident your bank is in your credit score and your ability to pay your loan, the lower the rate they will be willing to give you.

2. You’ll end up paying less for your home.

The bigger your down payment, the lower your loan amount will be for your mortgage. If you are able to pay 20% of the cost of your new home at the start of the transaction, you will only pay interest on the remaining 80%. If you put down a 5% down payment, the extra 15% on your loan will accrue interest and end up costing you more in the long run!

3. Your offer will stand out in a competitive market!

In a market where many buyers are competing for the same home, sellers like to see offers come in with 20% or larger down payments. The seller gains the same confidence that the bank did above. You are seen as a stronger buyer whose financing is more likely to be approved. Therefore, the deal will be more likely to go through!

4. You won’t have to pay Private Mortgage Insurance (PMI)

Simply put, PMI is “an insurance policy that protects the lender if you are unable to pay your mortgage. It’s a monthly fee, rolled into your mortgage payment, that is required for all conforming, conventional loans that have down payments less than 20%.”

As we mentioned earlier, when you put down less than 20% to buy a home, your lender/bank will see your loan as having more risk. PMI helps them recover their investment in you if you are unable to pay your loan. This insurance is not required if you are able to put down 20% or more.

Many times, home sellers looking to move up to a larger or more expensive home are able to take the equity they earn from the sale of their house to put down 20% on their next home.

If you are looking to buy your first home, you will have to weigh the benefits of saving a 20% down payment vs. the time and cost of continuing to rent while you save that amount.

Bottom Line

If your plan for your future includes buying a home and you’re already saving for your down payment, let’s get together to help you decide what down payment size best fits with your long-term plan!

We’re here to help you in all your Florida real estate matters, starting with arriving at decisions that let you feel comfortable. I hope you’ll give us a call! View all St. Lucie, Palm Beach & Martin County Florida homes for sale Click Here

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Keeping an Eye on Mortgage Experiment for Florida Buyers

June 28, 2015 By Realtor Millie Gil

Keeping an Eye on Mortgage Experiment for Florida Buyers

Florida home buying activity may be going great guns, but for some would-be buyers, credit score woes are still a stubborn obstacle. That’s why we have been keeping an eye on the new pilot project that was announced late last year. This was the one called the “Wealth Building Home Loan.” It’s an experiment aimed at opening up home ownership options, particularly for first time home buyers. Bank of America and Citibank were first to sign up for the program, said to “take a fresh approach to affordable mortgage lending.” It sounds like a pretty good idea!

How It Works
The Wealth Building Home Loan is a mortgage that runs for 15 years at a fixed interest rate. Because the term is so short, equity builds rapidly. The payments are more manageable than any reality-grounded Florida mortgage watcher would think because discount points can be used to buy the interest rate down to…well, “zero”! Since no down payment is generally required, home buyers can apply their available cash to purchasing those points. Since that sounds almost too good to be true, we’ve been keeping an eye open for progress reports.

Extra Help for Buyers with Modest Income
Qualifying for the mortgages would emphasize home buyer income rather than credit score. This would be a real godsend to the many people still rebuilding their credit after the economic downturn. Furthermore, interest would be set at three-fourths of a percent lower than the 30-year FHA rate—which makes sense, since shorter terms mean lower lender risk—with additional points to be offered at special bargain prices.

A Game-Changing Approach
The loan program is piloted through The Neighborhood Assistance Corporation of America, which secured underwriting from BofA and Citibank. It’s intended to be “a game changer,” because equity ownership takes place rapidly. Already in the first three years of a WBHL, 77% of the monthly payments pay off the principal, rather than the 68% that goes to interest under a standard 30-year mortgage. The effect is to accumulate a significant ownership stake almost from the word ‘go’—and more ownership equates to better loan performance.

When last checked, the program was in “pilot project” status (still in the initial shakedown phase) while the innovators who came up with the idea figure out how to make the loans widely available. So far, so good, apparently—we’ll keep an eye on developments to see if the program is greenlighted by the two underwriters.

In the meantime, Florida mortgage-seekers have a wide variety of currently available options for taking advantage of the great buys viewable on this morning’s Port St. Lucie, Stuart, Jensen Beach, Palm City listings. Give us a call 772-224-1634 for a no-obligation discussion of how you can take advantage of today’s home buying opportunities!

We know all the Communities, New Homes, Furnished Models and Builders. We can even save you money on Pre-Construction properties and find you a model lease-back money opportunity. Please contact us for your customized real estate tour of your desired Florida community. We will send you all the information you need to find or build your dream home.

For Immediate Assistance contact us 772-224-1634 or email your specific request to communityinfo@comcast.net

About the Author: Millie Gil has been a successful REALTOR® servicing the Florida market for over 25 years. Millie is Broker-Owner of Bold Real Estate Group located in Stuart. A Broker agency committed to concierge personalized service for discerning Buyers and Sellers of Real Estate properties. This commitment level has helped build a remarkable track record of delivering results. Doing Real Estate Relocation is also a passion, by assisting families with every residential Real Estate need. Millie is fluent in English and Spanish with a strong network of Real Estate Professionals Worldwide. Other real estate blog posts by Millie Gil

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Shopping For The Best Home Loan

December 10, 2013 By Realtor Millie Gil

Shopping For The Best Home Loan

Finding the perfect home is a task, but shopping for the best home loan can be even more tedious. With so many lenders promising low rates, closing costs and little or no down payment requirements, it’s often difficult to know which way to turn. Luckily, there are several steps that you can take to find the right lender for your individual needs.

Assess Your Situation

Do you know what your credit score is? If not, you should. Most lenders rely on this triple digit number to determine both your creditworthiness and interest rates. If you have excellent credit, you can probably work with almost any lender. If you have severe blemishes in your financial past, however, finding the right lender may require a little more footwork.

How much money do you have for a down payment? If you are on a budget, you will need to choose a lender that can help to get you into a home with a minimal down payment. Knowing where you stand will give you a good idea as to which lender you need to work with.

Compare Rates

As is the case with anything in life, it pays to shop wisely. Because a home is the largest investment that most people will ever make, it stands to reason that comparison shopping is a must. As you speak with various lenders, ask about their rates, loan terms, qualification process and down payment requirements.

Interest rates change often, which means locking in your rates when they are low can save you a bundle of money. Because there are so many lenders competing for your business, you will be greeted with plenty of appealing offers, including low rates, closing costs and down payment requirements.

Demand The Best

You are the one buying the home, so you should be the one to choose the length of your loan term. With the exception of a situation where payments are simply unaffordable, it’s up to you to decide how long you want to pay for a house. Many homebuyers prefer a longer loan term to keep the payments low, while others want to get the home paid for as quickly as possible with a shorter term. It’s important to keep in mind that the longer you pay for a home, the more money you will end up spending in interest.

It’s a good idea to talk to your lender about their willingness to accommodate your needs. If you’re in doubt about which lender to choose or are new to the area and need a little guidance, contact us for a referral. He/she knows the business and will be more than happy to assist you in making your dream of home

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About the Author: Millie Gil has been a successful Licensed Real Estate agent for over 25 years in Florida. Millie is Vice President of Bold Real Estate Group, a boutique agency committed to concierge personalized service for discerning buyers, sellers and renters of residential and commercial properties. Millie is fluent in English and Spanish with a strong network of real estate professionals worldwide. Other post by Millie Gil

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Buying a Florida Home? You Are Always in the Driver’s Seat

November 25, 2013 By Realtor Millie Gil

Buying a Florida Home? You Are Always in the Driver’s Seat

This summer, the National Association of Realtors^® reported the largest number of existing home sales since February 2007— and I expect we will see similar results when this fall’s final numbers come in. With more individuals looking to enter (or re-enter) the real estate market, buying a house in Port St Lucie, Palm City or Stuart Florida can be expected to continue to be newly competitive.

That does not mean that you should adopt a defensive mindset. Even after finding what looks like a great deal on a seemingly terrific home, it’s wise to keep an eye out for unexpected developments that could make it necessary to walk away from the deal. Some of the situations that usually don’t (but still can) trigger that option:

If the Florida home inspection uncovers issues that you didn’t know existed, you have several options. The seller may offer to pay for needed repairs, or add a credit at closing. Depending on the extent of the problem, it’s sometimes wiser to simply take the credit and avoid complex amendments that could over complicate the contract. But if the seller refuses any concessions, it could be that you won’t be buying a house as quickly as hoped.

A mortgage can fall through unexpectedly. An abrupt change in employment, credit downgrade, or if the bank has trouble verifying income, an underwriter may back away from the table. Most often, financing contingencies in the paperwork will allow you to walk away from the deal.

An unexpectedly Florida low appraisal can make buying a house financially unworkable. When a home appraises for less than the agreed-upon selling price, the bank will not finance. This means the seller will either have to lower his price, or you as the buyer will need to come up with additional cash to cover the difference. You may believe the appraisal is not a fair measure of the property’s true worth (at least to you) — but remember that should you later wish to sell, the next appraisal may not be much higher. In all cases, whenever you contemplate buying a house in Port St Lucie, Palm City or Stuart, I’m hereto help you reach smart long-term decisions.

Having the right Florida real estate agent means having an agent who is committed to helping you buy your new home with the highest level of expertise. This commitment level has helped Bold Real Estate Group build a remarkable track record of delivering results.

Should You Rent To Own a home in Stuart FL?

November 16, 2013 By Realtor Millie Gil

Should You Rent To Own a home in Stuart FL?

If you have been wanting to buy a home in Stuart FL but the large down payments and the new strict lending policies have been keeping you from qualifying for a mortgage, then perhaps you should consider a rent to own option in Stuart FL. A rent to own option is great for first time homebuyers who don’t have the equity from the sale of a home to put down on another home.

Here are some tips to using the rent to own option of buying a home in Stuart FL.

Find a seller who is willing to offer a rent to own option. Market conditions are a key factor in finding someone who is willing to offer a lease-option deal. Ask the home seller if you could apply the rent towards the purchase of the house. This will help you save money for the down payment of that Stuart FL home and give you time to strengthen your credit if need be. If you find a seller that has been having a hard time selling their home, they may consider this option as it benefits them as well. This is how it works:

• You (the renter) agree to rent the house for a pre-determined timeframe

• You may be required to pay an upfront consideration fee

• You may be required to pay a higher monthly rent

• A portion of your monthly rent will go into a fund that will be used later as a down payment

• You will usually be able to lock in the price of the home at the onset of the deal with the option to purchase the home at that price on or before the lease is up

There are many benefits of a lease with option to buy; however, there are many risks as well. For example: if the option to purchase is not exercised, you will forfeit all of the money you have invested.

If you decide to pursue a lease with option to buy a home deal, you should consult a real estate attorney to make recommendations and to thoroughly review the contracts to ensure financial protection and security. A lease-option makes good sense, especially for first time homebuyers. A lease-option will help you reach your dream of home ownership more quickly than having to follow traditional methods of obtaining a conventional loan.

Talk to a Florida realtor about helping you find a seller that is willing to offer a lease-option home in Stuart FL. A Florida realtor has extensive knowledge and will be more than happy to help you through the entire process every step of the way. The next thing you know you will be relaxing in your new home in Stuart FL!

Sign Up for Listings! Help us out by selecting the Stuart FL communities you wish to receive updates about, and choose from Resale and New Homes Ready Now, homes ready in 30 or 60 days, or all homes! It’s that simple. Sign up now!

About the Author: Millie Gil has been a successful Licensed Real Estate agent for over 25 years in Florida. Millie is Vice President of Bold Real Estate Group located in Stuart FL, a boutique agency committed to concierge personalized service for discerning buyers, sellers and renters of residential and commercial properties. Millie is fluent in English and Spanish with a strong network of real estate professionals worldwide. Other post by Millie Gil

Your Source for exclusive Residential and Commerical Real Estate in Jacksonville, Ponte Vedra, St. Augustine, Palm Coast, St. Johns

August 23, 2011 By Realtor Millie Gil

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There are key differences between investment property and a second home. Many assume that buying another house for investment purposes is just like purchasing a vacation property for the family. This can lead to a lot of frustration as the process will not meet their expectations. Understanding the differences helps to make the process of moving from personal to investment purchases a bit easier.

A major area of difference is home financing. Each type of property has distinct qualification standards. You may qualify for a second home but not for an investment property. This is caused by the higher risks involved in rentals and investment value. Market conditions, unknown tenants, and other factors cause lenders to see a greater chance of financial problems. Understanding the distinction between lending criteria and why differences exist will help you get through the investment process with less stress.

Investment Properties and Personal Use Homes

Down Payments:

A larger down payment and/or more collateral are required to finance a second home, compared to your primary house. While a loan for your first home may only require a 5 to 10 percent down payment, additional properties may need as much as 25% down. Lenders will usually require more collateral, larger down payment or shorter loan period for investment properties. Remember, the lender is attempting to balance the risks with the potential income from interest.

Interest Rates:

Interest rates usually rise for second and third properties. This is also true for leased and rental properties. Statistically, homeowners with additional property are more likely to default on at least one loan. In addition, properties which are leased or rented out can be subject to a lot of wear, tear, and damage from the temporary residents. The higher interest rate ensures a faster return on the loan for the lender, insulating them from these risks.

Homeowner’s Insurance:

Homeowner’s insurance almost always rises for secondary properties, whether for personal use or investment purposes. With personal use, such as vacation homes, the properties are left unattended and vacant for periods of time. This raises the risk of theft, unnoticed problems, and insufficient property maintenance. For investment properties, there are liability risks and a higher chance of property damage.

Other Factors

There are a few other things unique to rental and investment property that you should keep in mind:

1.A common requirement is the escrow of three months of financial obligations. This includes insurance premiums, loan payments, and taxes.

2.Only 50% to 75% of the expected lease or rental income will be taken into account when applying for a loan. You need to be able to show that you can cover a quarter to one-half of the expected payment without rental income. Documentation supporting the projected income is expected. The best way to get it is to ask the seller about their rental income from the property.

3.If there are no current occupants, the lender may require that you have a qualified lessee or renter lined up for the property. This helps reduce the risk of a loss on vacant property.

There may be other factors considered by the bank or lender for investment properties. However, a good credit rating, reliable income, and substantial down payment are universally required

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About the Author: Millie Gil has been a successful Licensed Real Estate agent for over 25 years in Florida. Millie is Vice President of Bold Real Estate Group, a boutique agency committed to concierge personalized service for discerning buyers, sellers and renters of residential and commercial properties. For more information please forward your request to communityinfo@comcast.net

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