Tagged: downpayment

3 Tips On Purchasing a Home In New York If You Don’t Have Enough Money Saved for the Downpayment

Purchasing a home may seem like it is an impossible task for some people, especially for those who have never owned a home before.  Sometimes it can be challenging to find the perfect home but even more of a challenge to some may be saving up money for a downpayment on a house.

Downpayments for homes in New York is generally 10% of the purchase but can be higher or lower depending on the seller of the home.  You may find yourself in a dilema because you want to purchase a home and want to take advantage of the homebuyer tax credit, low interest rates and low housing prices but do not have enough money saved up right now for the downpayment amount.

Here are some tips that may help you get the money for the downpayment amount you need so that you can purchase a home and take advantage of the first time homebuyers tax credit of up to $8,000 before the time is up on April 30, 2010 (must be in contract by this date):

  •  If you see a house you are interested in find out how much they are asking for the downpayment amount if it is a little too pricey for what you are looking for in a downpayment amount but you are able to handle the monthly payments it would cost for the mortgage of the house try to negotiate with the seller to find out if they would be flexible with the downpayment amount and lower it slightly;
  • If you get a lump sum of money back for taxes and are expecting your refund to arrive soon you may want to consider using the money you get back from taxes for a downpayment on a home;
  • If you do not have enough for a downpayment on a house and are looking to purchase a home in New York City (Staten Island, Brooklyn, Manhattan, Queens and the Bronx) you may be eligible for assistance with your downpayment amount with the HomeFirst Downpayment Assistance Program.

Lower Interest Rates for Smaller Downpayments

The general rule used to be that if a homebuyer did not put at least a 20% down payment on a house they would face the risk of expensive private mortgage insurance and higher interest rates.

Rules put in place by Fannie Mae and also adopted by Freddie Mac at the end of 2008 made it so that people putting down between a 20 - 25% downpayment were considered “riskier” mortgages to lend out than those who are in the 20% or lower range or than those above the 25% range.

People who put down below 20% on a house are usually required to pay for private mortgage insurance but received the same interest rate as those who put down 20%.  Whereas those who put down over 20% but less than 25% were considered a higher risk and were offered higher interest rates even as high as a whole percent higher than those in a different down payment class.

Fannie Mae and Freddie Mac representatives said that the reason they count them as a riskier investment is because they are they are at the lower end of downpayments that do not require private mortgage insurance.

If you are interested in purchasing a home in Staten Island or Brooklyn, New York or New Jersey contact Steven T. Decker, an experienced New York real estate attorney, at 718.979.4300 to discuss how we can represent you in the purchase of your home.