With increasingly low supply on the market, home prices around the country are rising at their fastest pace in 15 years. It then comes as no surprise that only 51 of 175 major U.S. cities have a higher median income than the amount needed to own a home. Affording today’s high prices is an ongoing challenge for buyers, but luckily, there are loan options on the market that can help remedy homebuying costs.
Many buyers cite the down payment as their largest barrier to homeownership, often assuming that 20% down is the standard amount. The truth is, a down payment can be as low as just 3-5%. Lower down payment options, through government-backed loans, for example, can be especially helpful for first-time buyers who have less on hand for upfront costs.
But buying a home doesn’t end with a down payment. Closing costs are the fees and expenses homebuyers are charged at closing, which can often add up to around 2-5% of the loan total. Choosing to roll in closing costs lets buyers pay them back over the life of the loan instead, all at one interest rate. The amount of money this saves depends on how long the buyer plans to stick with the loan before potentially refinancing or selling, so it may require some calculation.
Economists expect home price growth to slow down by about half by the end of 2021, but the price tag on a home is just one aspect of its total cost. To get a sense of your entire homebuying budget, see how your finances stack up with today’s rates. With the right loan, your budget could stretch further than you think.
Our team is here to walk you through your options and help you make an informed decision about which loan is right for you. Contact us so we can help make you homeownership dream a reality.