Tehama Country Real Estate

Tehama Country Real Estate – 3 How to Decide on a Down Payment for a Home uying a home may be the biggest pur- chase of your life, so you want to make good decisions every step of the way. The buying process is more than simply signing on the dotted line. You still have many important factors to consider and must take careful consideration with all you do. The down payment is not a cut-and-dry deal. This is one aspect of the home buying process where the buyer, the seller and the bank must all agree. B How Much Should I Put Down? The answer will likely be the amount that you can afford. Persons buying homes with a surplus of cash may opt to put down 20 per- cent or more. In general, the higher the down payment is, the lower the monthly payments will be. However, in some cases, the total purchase price will remain high due to interest rate from the banks. Always check and see what different down payments would do to the interest you pay. If you wish to do business with a particular lender and roll your monthly payments back, one good option is to buy down the loan with points. Points to Reduce the Mortgage The process of buying down points allows a borrower to gain access to a better interest rate which will cut down the total mortgage balance over the life of the loan. A buyer with some extra cash available for the purchase of a home will save money in the long run by buying down a few points. When buying down points, be sure that the payout does not leave you in the financial lurch. Buy only what you can comfortably afford with the option of refinancing the loan at a later date. Government Assistance for a Low Down Payment Freddy Mac and Fannie Mae are an excel- lent resource to find a bargain priced homes that require a minimal down payment. Typically, a borrower may put down just 4 percent of the real estate cost and enjoy a nice discount on quality housing. Many Real- tors and real estate brokers are experts in the Fannie Mae and Freddy Mac field. To get started and save big bucks, contact your local real estate professional for assis- tance in housing from the Department of Housing and Urban Development and seal- ing the deal on the loan. Rent-to-Own Home Purchase The rent-to-own, also known as lease-to- own agreements, can get you into a house or condo in the blink of an eye. This innovative open door allows the home owner and renter to set their own terms and conditions that may lead to the purchase of the leased property at a later date. In many instances, a seller may accept a full or partial down payment taken from the monthly rent, thus making the down payment a snap if the renter would like to buy the home later. The down side is that the buyer will have mini- mal choices when looking for a place to live. However, the upside is the potential for an easy down pay- ment that is ideal for buyers with a low cash flow. The Bottom Line In the end, the bot- tom line of how much you put down on a new home is going to be dictated by your financial sit- uation. When making that decision, be sure to factor in the closing costs, moving expenses, new fur- nishings and appli- ances, and set aside as many monthly mort- gage payments as you can. In addition, home buyers who have not sold their old home and must continue to pay the mort- gage need to be practical and cal- culating when juggling two loans. Always leave your- self plenty of finan- cial leverage for emergencies and find your perfect balance of down payment and month- ly mortgage pay- ment. If you don't have peace of mind with your current situation, walk away. It is much better to downsize your home and buy something cheaper than to lie awake at night and worry about what you have done. Alex Mason is a former real estate agent and mortgagebroker living in Los Angeles. Real Estate Spotlight By Alex Mason

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