When it comes to buying a home in Chevy Chase, Bethesda, Washington DC, and the surrounding Metro DC communities, there are many options for mortgage loans. DC area homebuyers can shop around for a mortgage loan and see what works best for them and their finances.
As your local Metro DC real estate experts, The Estridge Group is here to offer you some general information on your down payment options. There are many programs out there now that allow to you put down as little as 3 or 5 percent on a DC Metro home. With VA loans for veterans, you don’t need any down payment.
These programs are wonderful for families who do not have 20 percent saved for a home, as they can start building wealth sooner as Metro DC homeowners. However, if you do have a large sum of money saved for a down payment, or you can save one soon, it might be worth it.
Below are just a few benefits of the traditional 20 percent down payment:
- You don’t have to pay private mortgage insurance (PMI), which may be the biggest benefit of all. With less than 20 percent down, PMI is usually required as an insurance policy that protects the lender if you’re unable to pay your mortgage. This monthly fee is combined with your mortgage payment, making the amount you pay each month increase until you pay it off. This is not money you see again, so it’s best if you can avoid it.
- Your interest rate will be lower. If you put down 20 percent on a home, your loan is seen as less risky than a loan with only 3 or 5 percent down. Therefore, you will most likely be offered a better rate, which means less money that you have to pay over time. This also means lower monthly mortgage payments over the life of your loan.
- You’ll pay less for your home. All of this combined means that the more you put down initially, the less you’ll pay over time, and the lower your monthly payments will be. The less you put down, the more interest you’ll be paying, and the higher your payments will be.
- Your offer will stand out. It’s a competitive market, with inventory of homes for sale lower than average. This means that having a higher down payment will make you stand out to sellers, as they will have more confidence that the deal will go through because your financial situation is positive.
As you can see, it is beneficial to make a 20 percent down payment if you are able. Current homeowners can typically use 20 percent from the sale of their current home for the purchase of their next property. For first-time buyers, it’s much more common to put less than 20 percent down.
Every buyer situation is different, so your best bet is to meet with a local mortgage lender and discuss your options! When you are ready to buy in Bethesda, Chevy Chase, Washington DC, or Northern Virginia, give The Estridge Group a call!
We would be happy to help you find a home that fits your needs.