This week’s Q&A column is sponsored and written by Hope Peele of The Peele Group and McEnearney Associates Realtors®, the leading real estate firm in Alexandria. To learn more about this article and relevant Alexandria market news, contact Hope at 703-244-6115 or email [email protected]. You may also submit your questions to McEnearney Associates via email for response in future columns.
Question: How can I accomplish my goal of becoming a homeowner in 2020?
Answer: The New Year’s Resolution. Such hope. Such optimism. Such unrealistic goals.
“This year I will lose 100 pounds by Valentine’s Day and work out 8 days a week!”
“This year I will read one book every day!”
“This year I will save $200,000 for a down payment and never pay a landlord again!”
While I can’t add another day to the week, or force you to read “The Iliad”, I can tell you that purchasing your first home may be a more realistic goal than you would think.
The truth is that there are many options for loans. Some loans require that the buyer come up with just 3%, while other loans require 5% or 10% down. In 2019, the median down payment for first-time home buyers who financed a purchase was just 6%, according to the National Association of Realtors. The same report showed that the median down payment for repeat buyers was just 16%.
Often times, while new buyers are working hard to save a hefty 20% down payment, the type of home they wanted ends up costing significantly more a year or two later; all the while, they are spending thousands on rent, and not earning the benefits of appreciation that come with a home investment.
It’s true that in a competitive market, faced with multiple offers, a seller may choose one with a higher down payment. However, there are many ways to structure a great offer in a way that remains highly competitive. Having an experienced realtor and a great lender on your team is key in getting your offer accepted.
Another concern for buyers is “how fast will I need to transfer the cash for my down payment?” Many buyers have their funds in interest bearing accounts and it takes a few days to access, so this is a great question. When we write up your offer, we can specify how many days it will take to deliver the earnest money deposit (EMD). The EMD is just a portion of your down payment, usually just 2-3% of the sale price. It will be used towards your down payment at settlement and the remaining balance of your down payment is not due until settlement day, allowing plenty of time for you to transfer the funds.
While the offer process can be fast paced, your Realtor and lender will guide you through the process, each step of the way. They work on many home purchases each year. Trust their advice and your path to home ownership will be much less stressful, and a lot easier, than doing crunches and eating kale!
If you would like a question answered in our weekly column or to set up an appointment with one of our Associates, please email: [email protected] or call 703-549-9292.
McEnearney Associates Realtors®, 109 S. Pitt Street, Alexandria, VA 22314. www.McEnearney.com Equal Housing Opportunity. #WeAreAlexandria