Purchase your new home with confidence; thanks to this complete guide to putting money down. Whether you’re saving up for your first home, moving to a forever home or considering a commercial real estate investment opportunity, find out how to put money down on a property and how hard money real estate lenders can help you land your dream property and afford the down payment and renovations.
Down Payment Percentage
Few homebuyers pay for the property in full. If you’re like most buyers, you’re seeking a mortgage or other loan option to finance your home. Your lender usually asks for a down payment, which is a lump sum that goes toward the total cost of the property.
Down payments can vary dramatically in cost. Most are expressed as a percentage of the total home value. Some loan programs allow you to pay as little as 3.5%, but most expect a down payment of at least 20%.
A larger down payment reduces the long-term cost of your mortgage, but can leave you without the capital you need to make renovations, personalize your home or cover any emergency repair costs. Renovating a home you’ve recently purchased is a great way to improve your investment and create a personalized home.
Before you become concerned about finding 20% of the cost of your new home, there are several factors to consider. First, the down payment is rarely a single payment. More often, it’s split into earnest money and a final payment. The earnest money is due when you sign the contract, but the final payment isn’t typically due until closing.
This amount is part of the down payment but is used to show that you’re serious about purchasing the property. Earnest money is often between 1% and 3% of the total price of the home. Once you’ve paid this amount, it’s typically not refundable. Even if you decide on the day of closing that you’re going to back out of the deal, you may not be able to receive your earnest money back. This amount is applied to the total amount of your home, so if you continue with the deal you won’t lose any of the value of your earnest money.
Best Options for Real Estate Lending
A down payment can leave you with limited working capital in your personal or business accounts. If you need assistance paying a down payment or wish to expand your renovation options, look for a hard money lender near you. A hard money loan is a short-term financial solution that gives you the breathing room you need. Close confidently and invest in a fix-and-flip strategy to make improvements on your home before refinancing.
Explore the best hard money loans San Diego for more information. The rates and terms of these loans can vary considerably, so work with a local, reliable lender to discover how you can close on your home without draining your working capital. Move into your dream home with the cash you need to handle any unexpected issues or investment opportunities that come your way.