What Kind Of Down Payment Will You Need For Your Central Ohio Real Estate?

Chances are, if you’re going to buy Central Ohio real estate, you’re going to need a loan. Traditional lenders prefer a down payment of twenty percent. When you’re looking at a $200,500 house, which is the national median sales price according to the National Association of REALTORS®, that can be a lot of money to come up with at once. The good news is that there are some options for you, if you can’t afford such a large down payment. (Check out my website for even more information on Down payment assistance).

FHA
When purchasing using FHA the required down payment is 3.5%. In years past some folks stayed away from FHA due to the many restrictions and the PMI (Private Mortgage Insurance), however, recently, FHA has made headway in becoming more users friendly and much more competitive. FHA has also retooled their lending thresholds.

Private mortgage insurance is paid as part of your monthly mortgage payment. You’re required to pay for it until you’ve reached twenty percent equity in your house. In some cases, it will be canceled automatically, but check with your lender to be certain it's canceled.

The 80/20 Option
Some lenders will offer an 80/20 mortgage option. It means that you take out two loans, one for eighty percent of the [city] real estate price, and a higher interest loan for the other twenty percent. Taking out this kind of mortgage means that you won’t have to come up with a down payment.

The 100 Percent Option
There are lenders that offer 100 percent mortgages. They’re a little harder to get these days because of the recent credit crunch. There’s no down payment needed, but the interest rate is far higher. Because the lender is at a greater risk of loss from default on this type of loan, you will be required to carry private mortgage insurance (PMI).


Why Wouldn’t I Want A No-Money Down Loan?
A no-money down loan means higher interest rates and higher payments. It’s harder to find a lender that offers this type of loan. Generally, the more money you put for a down payment, the higher loan amount the lender will offer. If you don’t put any money down on the house, you’re likely to get approved for a smaller loan amount. You may have to settle for a house that is less than you wanted.

Why Buy Now?
In recent history, there's never been a time as perfect as this to buy real estate here in Central Ohio. With interest rates at the lowest they've been in decades, and the price of houses the lowest they've been in years, you'll be able to get much more for your money.

Let me help you find a great house and negotiate the best price and terms for you. Call me today at 614-273-6406 or email me at Vanessa.simmons@realliving.com

KEYWORD: Columbus, Reynoldsburg, Canal Winchester, Pickerington, Gahanna, New Albany, Worthington, Ohio real estate
LINKS:
1. Down payment: http://www.nolo.com/definition.cfm/term/FF59FEA0-C558-4703-8F70C42FE3CA7A7E
2. Credit crunch: http://www.teachmefinance.com/Financial_Terms/Credit_Crunch.html
3. Private mortgage insurance: http://www.frbsf.org/publications/consumer/pmi.html
4. FHA Q&A: http://www.fhaoutreach.gov/FHAFAQ/
5. Vanessa’s Site: http://www.herrealtors.com/vanessa.simmons/