The busiest time of the year for real estate in Raleigh is almost here and that means potential buyers need to start doing their homework now to be ready to go when homes start popping up for sale. A big part of buying a home is setting aside funds for a down payment, and that alone can have many considerations.
Here are three things to think about when figuring out how much to save for a down payment on a new home:
- How will the home be financed? Some types of loans specify what percent of down payment one should have. Some are even set up for no down payment at all! However, the more a homebuyer puts down on a home purchase, the less they will need to borrow and ultimately will have a lower payment and pay less in interest.
- Is Prime Mortgage Insurance an option? The typical 20% down payment on a home might be difficult to save up, so some people opt to put down less but have prime mortgage insurance added to their payment. This could be a good gamble to take in a market where home values are shooting up because once you build the necessary equity in the home, PMI can be taken off. However, real estate markets can be fickle and there may be additional costs involved when reassessing the home to get rid of PMI.
- What are the plans for the home? If one is looking to make lots of changes to the home, there will be a need for cash on hand. So while still probably wanting to save a lot of cash, a home buyer will need to balance what they want to use on the house upgrades versus what they want to put down to buy it.
We’d love to help explore your home-buying options and find you that perfect place to call home. Contact Raleigh Cary Realty to get started!