One of the most important components to obtaining a good Gulf Shores mortgage is the down payment. Unfortunately, many homebuyers have misconceptions about down payments and how they impact their ability to obtain home financing. Let’s examine some of the down payment myths that are prevalent in the Gulf Shores mortgage arena.
4 Gulf Shores Mortgage Untruths
1. You have to have a 20% down payment.
While it’s true in days gone by a 20% down payment was required for a conventional mortgage, such is not the case today. Homebuyers have a much larger array of mortgage options available that don't require such a hefty down payment percentage.
In a recently-published Consumer Protection Financial Bureau finding, approximately 50% of prospective home purchasers fail to explore all their options when shopping for a mortgage. From conventional loan offerings with a lower down payment to Fannie Mae, Freddie Mac and other products with down payments ranging from 0% to 3.5%, buyers can find Gulf Shores mortgage loans that meet their needs, and their pocketbooks.
2. Making a large down payment is always best.
While some Gulf Shores mortgage lenders suggest a down payment of at least 20%, sometimes it may not be the best thing to do. A smart homebuyer should weigh all the factors and expenses involved in a real estate purchase. Don't forget big-ticket items such as loan closing costs, moving expenses, repairs or cosmetic improvements, or additional furnishings. Even though a larger down payment will make your monthly payments smaller, it could deplete your financial reserves. Consider finding the proverbial "happy medium." Put down what you feel comfortable with. Don't empty your savings — even if it means a slightly larger monthly payment. You'll sleep better.
3. Sellers won't accept offers with a gift or homeownership program for the down payment.
Home sellers often operate under the misconception that cash is king — and for good reason. However, today's buyers equipped with a homeownership program, a gift or a grant can more readily compete on a level playing field with other prospects when it comes to the seller's asking price and costs sellers may pay. The advantage, therefore, to the seller is that he stands more to gain by broadening his pool of potential purchasers.
4. Financing a home with a down payment programs is difficult.
Let's face it, in today's Gulf Shores mortgage market, paperwork and processing time is just the nature of the beast. The simple truth is that the qualification process for a homebuyer down payment program isn't much different than the required process of any mortgage loan. Down payment programs are often available through local or state housing finance entities, who in turn approve certain qualified mortgage lenders. Getting an early start with the process will ensure a smoother transaction.
Knowing the "ins and outs" of down payment requirements will better equip a prospective home purchaser and make searching for a home — and the best Gulf Shores mortgage loan — more enjoyable and more affordable.
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