Buying or owning a new home in Georgia can be tedious task. First of all one has to find a suitable home in a suitable area which itself is hugely time consuming. Then there’s the process of down payment or mortgage, a process that not many home buyers are familiar with.
New and gullible buyers looking for new home buying options in Jonesboro can be easily fooled into paying higher rates of mortgage and compulsory down payment by sketchy and unknown firms if they are not aware of its important aspects beforehand. This post aims to clarify some important points relating to those.
What are Down Payment and Mortgage?
Imagine you want to buy a good house. The market price of that house is $50,000, but you can afford to pay only about $10,000. This amount is called down payment. The remaining $40,000 left is called mortgage, which you’ll have to pay in installments along with a fixed interest.
Myth #1: Many people who are looking for new home buying options believe that down payment is compulsory, and one cannot buy a new house if they do not hand over a portion of the house’s cost in cash. Sadly that is not true for all. There are many loan options that clearly state that down payments are optional. You can either pay some amount from your pocket or buy the entire house on mortgage. For more information, you can check with the locally available mortgage options in your area.
Myth #2: A survey conducted by the National Association of Realtors showed that about 87% of the first time buyers believe that the minimum down payment for buying a new house is 10% or more. This is simply not true. The average down payment for first time buyers stands at an average of 6% more or less, and there are a few loan programs that do not require down payment at all!
Advantages of Down Payment
- You pay a lower loan amount as mortgage.
- No mortgage insurance necessary.
- More number of loan options to choose from
Disadvantages of Down Payment
- More down payment does not equal better mortgage rate.
- Your cash reserves for emergencies might get depleted.
- Risks are greater with down payments.