Down Payment Assistance And Affordable Home Loan Options In Today's Housing Market

Home affordability is more important than ever, especially in a hyper-competitive market. You may be looking for ways to secure a smaller down payment or lower interest rate. The good news is that there are a variety of loan options and products that can help you get into a home now, rather than waiting to save for a down payment or for the market to shift. If you’re a first-time homebuyer — defined by most lenders as someone who has never owned a home or has not owned a home in the last three years — or you are a borrower with a lower income, there may be even more home loan options available to you.

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A local independent mortgage broker can help you navigate the complexities of these options to find the right fit for your financial situation. Here’s a breakdown of some of the ways you may be able to save hundreds or even thousands of dollars on your mortgage — and how you can leverage them to get into your dream home.

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Saving On The Down Payment

You may have been told you must bring 20% down to the closing table — this is far from the truth for most homebuyers. In fact, there are a surprising number of options available today to help you secure a lower down payment.

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Government loans (FHA, VA or USDA) offer first-time homebuyers and veterans a variety of home loan options. If you are a first-time homebuyer looking to buy in a rural area, you may qualify for a USDA loan, allowing you to put as little as 0% down on a property. Similarly, if you or your spouse have served in the U.S. military, you could qualify for a VA loan, making you eligible to put 0% down on your home purchase. An FHA loan, for which eligibility is typically based on your credit score, could allow you to bring as little as 3.5% down to closing.

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Saving On The Interest Rate

Rate buydowns are offered by many lenders and allow you to pay upfront to secure a lower interest rate. This can lead to significant savings, as rates can sometimes be lowered by as much as 3%. Typically these programs reinstate the original interest rate after a set number of years, allowing you and your family time to more comfortably manage any expenses that come up as you settle into your home. Some lenders even allow for seller concessions, costs that the seller agrees to pay to the buyer, to be used toward rate buydowns. You can always refinance later to secure a lower interest rate beyond your buydown term if interest rates drop.

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Similarly, depending on the market, an adjustable-rate mortgage (ARM) could be another option for you, allowing the interest rate on your mortgage to adjust based on market conditions. This may be a smart choice if rates are expected to drop, or if you don’t plan to stay in your home long-term. Your local independent mortgage broker can help you determine if a rate buydown or an ARM is the right home loan option for you.

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Other Cost-Saving Options

An escrow waiver allows you to pay property taxes and insurance directly rather than wrapping the costs in with your home loan, meaning a lower mortgage payment. This is a great choice if you prefer to manage your own cash flow. An appraisal waiver may also be an option depending on the chosen lender and property, which could not only save you a hefty appraisal fee, but also help speed up the financing process. Lenders may also allow closing costs to be financed as part of the mortgage.

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Is Affording Homeownership Too Good To Be True?

Purchasing a home is one of life’s biggest financial decisions — and educational resources around homeownership and affordability products are more crucial than ever. If you have questions about utilizing certain home loan programs, or you’re uncertain about down payment assistance, it’s important to recognize the extensive regulations set forth by the government and mortgage lenders today that protect homebuyers. They also ensure that lenders are using criteria consistently and fairly to evaluate whether they lend to a borrower based on their proven ability to pay back that loan, including FICO score, income, employment history and other variables. These regulations and policies strictly forbid predatory or “subprime” lending practices.

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Accessing Home Affordability Products

A mortgage broker is a local home loan expert who can break down home loan options that can help you save the most money and will be by your side throughout the entire home financing journey. They can assist you with getting an initial approval or a pre-approval letter before or while you’re house hunting, which is likely to increase the strength of any offers you submit for a home. Mortgage brokers are also known for their competitive pricing and speed and elite client service — they’re available when you need them, even on weekends — and they can help you close on a mortgage quickly so you can get into your new home even sooner than you may have imagined.

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Connect with a mortgage broker in your area to discuss the best and most affordable mortgage options for you — start the search for you home loan expert below!