As I mentioned in a previous blog post, obtaining a mortgage will soon be easier for Eastern Panhandle homebuyers. New 3% down payments from Fannie and Freddie will allow first-time homebuyers back into the market and expand the opportunity of homeownership to more residents in Jefferson and Berkeley County.
However, there are many benefits to making a larger down payment when purchasing a home in Shepherdstown, Charles Town, Ranson, Inwood, Falling Waters, Harpers Ferry, Martinsburg and Hedgesville. If you can afford it, consider these reasons for putting more money down up front:
Faster, easier approval
A larger down payment is often a strong sign that a homebuyer knows how to save and is financially responsible. The down payment is also one of the biggest signals of creditworthiness and homebuyers are likely to get approved faster with a larger amount.
Better interest rate
When a homebuyer has a lower loan-to-value ratio, banks and lenders are more likely to offer you a better interest rate. Not only will your larger down payment lower your ratio, but it lowers the lender's initial risk. Your credit score is also a big indicator of the interest rate you will receive, so be sure to do your research on your own number before you begin the homebuying process.
Lower monthly payments
Keep in mind that putting more money down on your Eastern Panhandle home does mean lower monthly payments. A lower mortage amount, and thus lower payment, means less money paid in interest over the life of your loan.
No mortgage insurance
A down payment of less than 20 percent typically requires homebuyers to purchase private mortgage insurance (PMI). With a larger down payment, you can avoid this additional expense altogether.
2015 is looking bright for both homebuyers and sellers in West Virginia's Eastern Panhandle. If you plan to buy a home in the new year, you may have questions about the process— The Kable Team is here to help! Contact us today!
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