(Here’s the Inside Scoop from Expert Dan Stone, Mortgage Fee Coach)
In recent news, you’ve seen that more lenders are lowering down-payment requirements. Sounds like a great idea, right? People with good credit scores (see more on that soon) are being offered down payments as low as 3.5%. In fact, Fannie Mae and Freddie Mac have even accepted down payments at the 3% level!
The idea is to help people with good credit own a home even if they have not been able to amass enough savings for a down payment. This might be particularly helpful in a market where housing is very expensive.
There are risks:
1. If the price of your home goes down, you might owe more than the house is worth because you took out a bigger loan.
2. You’re paying the interest on a bigger loan amount, and that reduces your ability to save money for other things.
3. Mortgage insurance costs are higher on a larger loan.
4. The interest rate and fees you pay for this lower down payment are higher.
Your credit score will determine if you’re eligible for a lower down payment option, and you may now be able to fulfill the American Dream of owning a home.
BUT PLEASE be careful that you understand the risks.
** Contact me and I’ll help you decide if it’s a good deal for you. **