Whether you’ve owned a home before or you’re ready to take the leap into homeownership for the first time there are usually a handful of questions around what is required for a down payment and how-to best source down payment assistance. In today’s blog we’ll go over how much you really need for a down payment and how you can get help with down payment and closing costs.

Interesting Statistics About Your Credit Score and Down Payment

• According to a study done from Fannie Mae’s ESR team, fewer than 1-in-4 consumers are aware that low down payment programs exist. With that said, many still don’t know mortgage lenders’ credit score, down payment, or debt-to-income ratio requirements.
• Most people think that you need a minimum credit sore of 650 when actually a 580 is sufficient.
• In regards to down payment, many think that they needed 10%. Some mortgage lenders offer small down payment mortgages — as little as 3% down payment — to borrowers who qualify. Get in touch with your loan office to discuss your options.

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How Much Do You Really need for a down payment?

First let’s clear up a common myth. You DO NOT need 20% down for a down payment. A survey from Fannie Mae shows only 17% of consumers know the minimum options are actually between 1 – 5% of the purchase price and 40% don’t know how much they need at all.

 

There are many mortgage loans available that require as little as 3% down for first-time buyers, and some ask for only 3.5% down from repeat buyers. There are even loans available for Veterans that provide 0% down payment options too.

Saving for a Down Payment

Saving for a down payment is often the biggest hurdle for a first-time homebuyer. Depending on where you live, median income, median rents, and home prices all vary.  However, if you’re planning to put down just 3%, the research shows it may be possible in most states to have enough saved for a down payment in less than a year. That puts homeownership in a much closer reach for many potential buyers, maybe even you!

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How can I get help with my down payment?

Regardless of the loans available, many buyers still need assistance with a down payment. The great news is, there are a lot of ways to tap into down payment assistance options:

1. Assistance from Family Members:

The (NAR) said, “a third of recent first-time buyers received down payment assistance from family members.” They also mentioned, “the average net worth of those aged 75 and over stands at $264,800…They just might offer the boost the next generation needs to become homeowners.”

That means one of the ways to find help with a down payment is to accept a gift from a family member. If this is an option for you, make sure you talk to your loan officer before you accept the money, to ensure you document the process the way it is required by your loan. This way, it will be received properly and you can still potentially qualify.

2. Down Payment Assistance Programs:

With Greenway’s FHA Down Payment Assistance program you only need 3.5% and you can cover some of that with the Down Payment Assistance grant.  

What is the FHA Down Payment Assistance Program?

With this program, first-time home buyers can get money for down payment and closing costs. Through NJ’s Housing and Mortgage Finance Agency, Greenway is able to offer first-time buyers in NJ an FHA Mortgage with a $10,000 grant for down payment and closing costs.

Program Details:

• $10,000 towards down payment and closing costs
• All New Jersey properties eligible (no zone restrictions)
• First-time buyer is anyone that has never owned a home or hasn't owned in the last 3 years

Fine Print:

• Approved counseling required
• 3yrs tax returns, NJ and Fed
• 3mo bank statements
• Borrowers with funds to cover 20% down payment ineligible
• Forgivable 2nd lien expires after 5 years as primary residence
• First lien has 9-year recapture tax

For more information, questions, or to see if you’re eligible visit our website here. You can also visit our First-Time Home Buyer Resource page to see what other programs are available.

Keep in mind, there are more than 2,500 down payment assistance programs available (by local areas like city, county, or neighborhood), and some of them are even specifically for first-time buyers.

It is so important to get familiar with these options by doing your homework before you plan to buy a home. Determine what is available in the area where you ultimately want to live, so you have all the details you need to take advantage of the down payment assistance option that is best for your family.

Are you ready to take the next step? 

 

At Greenway Mortgage, we want you to feel comfortable making the decisions that get you into the home of your dreams.

A big part of that is speaking the language. We've created The Ultimate Mortgage Glossary just for you which includes major loan types and other terms you will run into during the mortgage process.  

A basic understanding of these terms will make you feel right at home working with a Greenway Mortgage loan officer.

Take me to the Mortgage Glossary >>

 

The purchase of your first, or even a new home is one of the biggest investments you’ll make in your life. It’s easy to get distracted by all the listing photos available as you scroll through Realtor.com or Zillow, and while a great kitchen is important, it’s the information you won’t find in a photo that can really help ensure you’re making a solid investment for years to come. Here are 5 things to consider when finding the right location for your new home:

1. Increased Household Incomes – look at census data to help find the median household income in a neighborhood you might be considering. Surrounding yourself with neighbors who make a higher salary means there’s more likelihood they can afford home renovations. If the houses around you boost their value, the prices for the neighborhood increase. 

2. School Ratings – Even if kids aren’t in the cards for you, or they have already grown and moved out, the school district ratings in your new neighborhood play a significant role in home prices. School ratings are commonly listed online, but you can dive even deeper into research to find test score averages and AP enrollment numbers if you’re interested. 

3. Home Prices on the Rise – one of the best indicators of a great neighborhood is climbing home values. If you can find a location where they are increasing higher than the national average, then you are hitting the right spot. Investing in a neighborhood with a proven track record of profitable real estate sales means you are likely to have the same success should you choose to put your home on the market. 

4. A Friendly Community – how many times have you heard a friend talk about buying the perfect house only to find out their neighbors are a nightmare? It is an extremely worthwhile investment of your time to check out your community in person before purchasing a home. Consider visiting the park, restaurants, historical society, etc. of your potential neighborhood to meet some people. Don’t be afraid to ask them what they love most about living there. You can even be so bold as to knock on the neighbor’s door to see what they’re like. 

5. Proximity to Amenities – take note of how often you typically drive to the bank, or your local grocery store, shopping malls, etc. How feasible is it if you were located 20 minutes away from these basic amenities? Sometimes location is one area that ends in compromise, but it’s worth clocking the distance before making a final decision on your new home.

 

 

Check out the top 4 home renovatons that will give you the greatest return on investment (ROI).

 

 

Some Highlights:

• Whether you are selling your home, just purchased your first home, or are a homeowner planning to stay put for a while, there is value in knowing which home improvement projects will net you the most Return On Investment (ROI).

 

• While big projects like adding a bathroom or a complete kitchen remodel are popular ways to increase a home’s value, something as simple as updating landscaping and curb appeal can have a quick impact on a home’s value.

 

• Planning a home renovation? Contact us today for a free Renovation Loan Quote.

 

#1 What is Refinancing?

Refinancing is the process of replacing an existing mortgage with a new loan. Typically, people refinance their mortgage in order to reduce their monthly payments, lower their interest rate, or change their loan program from an adjustable rate mortgage to a fixed-rate mortgage. In addition, some people may need access to cash in order to fund home renovation projects or pay off debts, and will leverage the equity in their house to obtain a cash-out refinance. The process of refinancing works in the same way as when you applied for your first mortgage. Take a look at some of our loan options here.

#2 What are some benefits to refinancing?

• Refinancing will lower your monthly payment - You’ll be able to put your savings towards debts and other costs or apply the savings towards your monthly mortgage payment and pay off your loan sooner!
• Refinancing will reduce the length of your loan.
• Switch from an adjustable-rate mortgage to a fixed-rate loan - This will result in reliable and stable monthly payments, giving you the security of knowing that your payment will never change.
• Use the equity in your home to take out cash – use the money for home improvements, pay off debts, etc.
• Consolidate your first mortgage and your home equity line of credit (HELOC)

In our recent blog, find out 5 Smart Ways to Refinance your Mortgage.

#3 Should I refinance if I only plan on living in my home for a few more years?

Similar to when you initially purchased your home, you will have to pay fees, taxes and closing costs on your refinance mortgage. With that said, it’s important to find out how long it will take to reach your “break-even point” when refinancing. What is the break- event point? It’s the point at which the monthly savings created by a mortgage refinance offsets the cost of refinancing.

You may also want to consider how long it will take for the monthly savings to pay for the cost of the refinance. Find out how much you’re closing costs were for your original loan because refinancing costs may be the same amount. A common rule of thumb: proceed only if the new interest rate saves you that amount over about 2 years. Still unsure if refinancing is right for you? Contact Greenway Mortgage today to see if refinancing makes sense!

Our Refinance Calculator can help you determine if refinancing is right for you. Try it out today!

#4 How does my credit score affect refinancing?

Your credit score is important! It will help determine your mortgage refinance approval along with the interest rate the lender will offer. The higher your credit score, the lower your interest rate is going to be. If your credit score has fallen since your original mortgage, you can expect to pay higher rates.

#5 Is Refinancing available for FHA, VA, Jumbo, or USDA Loans?

Yes, these loan options are available depending on your current situation. Contact your local Greenway Loan officer to find out if one of these options might make sense for you!                                                               

#6 Is NOW the right time to Refinance?

It’s important to crunch the numbers to see if refinancing makes sense for you. Loan programs and rates are always changing. These changes, along with rising home values may enable you to reduce your rate or lower your monthly payments. But you don’t have to go at it alone! Our expert Loan Offices at Greenway Mortgage are always ready to answer your questions and guide you along the path to a successful refinance.