What Down Payment Will You Need to Purchase a Home?


Do you have the money for a down payment and closing costs? The down payment is a percentage of the value of the property. Freddie Mac says the percentage will be determined by the type of mortgage you select. Down payments usually range from 3.5% to 20% of the property value. Also, you may be required to have Private Mortgage Insurance (PMI or MIP) if your down payment is less than 20 percent. Closing costs include points, taxes, title insurance, attorney fees, financing costs, and items that must be prepaid or escrowed and other settlement costs such as surveys and home inspections. You can expect to pay between from 2% (if paying cash) to 6% of the property value in settlement costs. Buyers will receive an estimate of these costs from your lender shortly after you apply for a mortgage and you will have 10 days to accept the loan or reject it. And, you can always ask the seller to help defray some of your costs (not the down payment, but customary settlement costs.)


Having a good down payment will open up more house buying options for you. Getting pre-approved will also put you in a great position to purchase from the best homes. As your real estate professional, I will make sure that these and other advantages are explained to you so that your position is stronger than many other buyers bidding on the same homes. Feel free to call me at your convenience for a no obligation conversation about your home buying goals.

Thomas Schoenbeck, Associate Broker, Keller Williams Realty, 18344 Coastal Highway, Lewes DE (302)360-0300(o) (302)632-7407(c)

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