How Much of a Down Payment is Needed for Buyers Seeking Homes for Sale in Wayne?
Many first-time buyers seeking homes for sale in Wayne and other Main Line communities worry that the necessary down-payment will be too much to allow them to qualify for a mortgage. However, you may be surprised to learn that 61% of first time home buyers make less than a 6% down payment, according to National Association of Realtors’® latest Realtors® Confidence Index.
The average down payment in 2017 for all buyers was 10%. For first time buyers, the average was even lower at 6%. The fact is that buyers can purchase a home with even less than a 6% down payment, but they may face special additional considerations.
According to the National Association of Realtors®, in order to make mortgages more accessible to first time buyers, Fannie Mae and Freddie Mac began to accept applications with 3% down payments in 2015. This type of arrangement often means that the buyers have to pay PMI (private mortgage insurance) or higher interest rates, but the benefit of getting into a home of their own for the first time is more than worth the trade-off for many buyers. This feeling is especially true when considering that according to a 2017 study by GoBankingRates, only 43% of Americans have $10,000 or more in savings.
Buyers seeking homes for sale in Wayne or the Philadelphia area who are in the lower earning end of that category would be unable to pay a 20% down payment on a $300,000 home. With their income and the money these buyers probably save vs. renting, they could possibly afford a lower down payment and the extra required each month for PMI and interest until they can get their LTV (loan to value) ratio below 80%.
Other Costs to Consider
Having a lower down payment could also help first time buyers manage other costs that are associated with home buying, such as:
- Closing costs, which sometimes surprise first time buyers at 3-6% of the home’s price.
- Moving costs, which can include truck rental, professional movers and interim housing if the move occurs after the end of a rental contract.
- New furnishings or appliances may be needed for the new living space.
- Utility hookups, since gas, water or cable will need to be established and often require deposits.
The bottom line is that first time home buyers may be in a better position than they think to purchase a new home. An experienced real estate agent can give guidance about the possibilities.
Sage Helps Buyers Seeking Homes for Sale in Wayne, Villanova and Other Main Line Area Communities
Buying a home can be complicated, with lots of paperwork, and every transaction has different factors that may come into play. Utilizing the services of a Main Line Realtor® will allow those buyers seeking homes for sale in Wayne to be informed of all the possible pitfalls. A real estate agent will also be able to shorten the time for home searches and give experienced advice for offers and negotiations. If you are a buyer seeking homes for sale in Wayne, or any of the other desirable Main Line neighborhoods, contact Sage Realty today for more information.