Tuesday, June 17, 2014

NoVA Homebuyers May Be Overestimating Down Payments

When preparing to purchase a home in Northern Virginia, many homebuyers concentrate on the neighborhood, the size of the home, and of course, the price. And with all of the paperwork that comes with putting in an offer, the one aspect homebuyers actually may be focusing too much on is the down payment. 

 According to the vice president and head of single-family sales at Freddie Mac, many consumers are overestimating how much of a down payment they need to purchase a home. 

 Most believe they need between 11 and 15 percent in order for a lender to approve them for a mortgage, found one survey of renters and non-homeowners. What's more, 39 percent of those surveyed admitted they believe they need at least 15 percent of the purchase price of their Northern Virginia home to even qualify for financing and just 28 percent believe they would qualify at all. It seems today's homebuyer has a skewed image of down payments in Northern Virginia real estate, when in reality, they can qualify for a mortgage loan with much less. 

 In today's local real estate markets, homebuyers can qualify for a conventional mortgage with as little as 5 percent in a down payment and at times, even 3 percent. In the past five years alone, Freddie Mac has seen their numbers for down payments of less than 10 percent more than quadruple. Realtor.com even states that, for 2014, 1 in 5 borrowers on a conventional mortgage put down at least or less than 10 percent. While homebuyers are overestimating how much they need to save to purchase Northern Virginia real estate, their dreams of becoming homeowners may very well be already within their reach.

 "Letting more consumers know how down payments are determined could bring more qualified borrowers off the sidelines," said the Freddie Mac executive. "Depending on their credit history and other factors, many borrowers can expect to make a down payment of about 5 percent or 10 percent."

 Buying a home in Alexandria, Arlington, Annandale, Herndon, Mount Vernon or McLean may seem a bit less daunting now, but keep in mind that any down payment of less than 20 percent will require a homebuyer to purchase mortgage insurance. Ready to make the real estate leap? Contact me today! I'm happy to help find you a property that fits within your budget.

 I happily serve the areas of Alexandria, Annandale, Arlington, Burke, Centreville, Chantilly, Clifton, Fairfax City, Falls Church, Great Falls, Herndon, Lake Ridge, McLean, Mount Vernon, Reston, Rosslyn, Springfield, Tyson’s Corner and Vienna.

Earle Whitmore
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