Borrowers make mistakes when they borrow because they misunderstand their options with respect to down payments or how these decisions will affect them over the lifetime of their loans. To help prevent this from happening, we thought it would be useful to put together a list of common mistakes to avoid. If this is something that you want to learn more about, read on for four downpayment mistakes that you have to know about

Assuming You Need to Put Down 20%

Some homebuyers hesitate because they struggle to save up a 20% down payment on a home. They feel like they need this massive down payment before moving forward with their purchase, but this is often unnecessary. If you have the right qualifications and you opt for a low down payment mortgage, you don’t need to save up as much. In fact, you can choose a mortgage type that requires zero down.

Failing to Look Into Down Payment Assistance Programs

If you have trouble making a down payment on a house, you may think that you have no resources available to help make your dream of homeownership a reality. However, there are actually down payment assistance programs that can help. When you take out a loan with these programs, the funds can be used as part of your down payment to cover closing costs. With these programs, the money works just like normal financing – you just need to find the right program for your situation.

Putting Down Too Much for a Home

Homebuyers are not always motivated to put down the highest possible initial payment on a mortgage because they believe they must. Sometimes, they do it because they assume it is always the strategic choice for their finances. Making a larger initial down payment means you can complete paying off your mortgage sooner and/or your monthly mortgage payment will be lower. That’s true when you have the money for it, but even if you can afford a large initial down payment, you should not overlook the potential advantages of making a smaller one. If you have just moved into a new home, having some cash on hand to furnish it or upgrade features can be quite helpful.

You also can bolster your overall financial stability by making a smaller down payment. By paying less money up front, you’ll have more money to fall back on if you experience an unexpected expense. Additionally, if you make a smaller down payment, you can invest the difference and potentially make more money than you would by paying off your mortgage sooner.

Assuming You Don’t Qualify for an FHA Loan

One common mistake about FHA loans is thinking that these mortgages are only for people buying their first home ever. But if you have owned a home before, you may be surprised to find out that you are eligible for an FHA mortgage. These loans have low down payments, so they may be a good option for you when choosing a mortgage. Do not overlook the possibility of applying for an FHA mortgage when considering your options.

Final Thoughts

We hope this article proves to be useful when it comes to helping you avoid these common down payment mistakes. Be sure to keep everything that you have learned here in mind so that you can avoid any potential issues when buying a home. If you need more help with this, we suggest that you look for a mortgage broker.

Are you looking for a mortgage broker in North Palm Beach or throughout the state of Florida that can help you buy a home? America’s Mortgage Solutions can help make the home purchase or refinancing process as easy and stress-free as possible. Call us at (561) 316-6800 today!