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Instead of pouring money down the drain, why not buy the drain?
(ARA) - Do you ever feel like there are insurmountable barriers to homeownership? Have you been saving for a down payment
for years, without making much headway? If you answered "yes," you're in good company.
It is estimated that roughly 32 percent of the U.S. population are not homeowners, even though financial advisors and other experts agree that investing in a home is almost always a good idea. Instead of paying rent, homeowners are building equity and there are often significant tax benefits; they’re gaining long- and short-term financial benefits.
“Homeownership can be a lot easier than people think,” says Lori Vella, senior vice president of retail lending for the Home Loans Group at Washington Mutual, a leading retailer of financial services. “There are a lot of great home loan programs available and we’re committed to making the dream of homeownership a reality.”
Down Payments are Less Important Today
In today’s mortgage world, it is no longer necessary to have a significant down payment. There are many home loan programs that require only 1-to-5 percent of the down payment to come from the borrower’s own funds. Some home loan products do not require a down payment at all.
“It’s important that potential homebuyers speak to a loan consultant to help them determine how much ‘house’ they’ll qualify for, what loan product would best serve their individual financial situation and help them decide when the time is right for them to buy,” says Vella. “Sometimes it’s not in your best interest to save for a down payment, for example. While you’re slowly squirreling away your money, property values and mortgage rates can be climbing, making it more difficult to buy a home.”
How much you should contribute for a down payment depends on what you’re trying to accomplish. While a 20 percent down payment will mean that you don’t have to pay private mortgage insurance, saving that amount can sometimes be a challenge.
In addition to low or zero down payment loans, there are nonprofit organizations in most areas dedicated to affordable housing that offer down payment assistance programs. In the early 1990s federal housing laws were changed to allow these nonprofits to help low-income families fund down payments, closing costs and other upfront cash requirements.
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