The average down payment might be lower than you think…
Many folks think you need 20% down in order to purchase a home. That’s just not the case. Yes, if you have 20% set aside it’s probably a good idea to use it. But let’s take a look at what homebuyers’ down payments are currently averaging.
| First time buyers = 7%All homebuyers = 13% |
| Well, what if you just WANT to put more money down, and you know you can save another $20,000 within the next year. Let’s take a look at that scenario… OPTION 1 – buy now Current principal and interest on $600,000 loan @ 3.25% = $2,611 (property tax, insurance not included) OPTION 2 – save $20,000. Interest rate rises slightly, a quarter point. Current principal and interest on $580,000 @ 3.5% = $2,604 Waiting a year allowed you to save an additional $20,000 (yay!) and rates rose to 3.5%. Unfortunately, that almost completely negated all your hard work and savings. BUT, you still save $7 a month… Or do you? We forgot one thing…That prices of homes typically rise. 2022 Expectations: Interest rates average of 3.53% by end of year. Home values to increase an average of 5.3% Do we know anything about the housing market next year with 100% certainty? Absolutely not. But I always say let’s look at what a purchase looks like today. *Note: Always seek advice from a lender regarding this information.* |