It is possible to buy single family homes for sale without putting any money down; but, is this the best route to take? There are times when this may be a good idea, and there are also times when this may be the only way a person can buy a house; however, putting money down on a house is typically a better option for the following reasons.
You will owe less and have lower payments
One of the top reasons it is better to have a down payment is so that you will owe less money on the house. Your down payment will instantly give you equity in this home, and your down payment will lower your principle balance. This means that the monthly payments you will have to pay will be lower than they would be if you had not put money down on the house. In addition, putting money down may decrease the principle balance enough that you could choose a shorter-term loan simply because the payments would be more affordable if you finance less money.
You can avoid paying for extra insurance
It's also important to realize that when you buy a house without putting money down, you will most likely be required to pay some type of mortgage insurance. There are several different types, but a common one is called private mortgage insurance (PMI). PMI is something people pay when they have conventional mortgages and put less than 20% down on them. Paying this insurance offers no benefits to you; it only benefits the mortgage lender, so it is basically a waste of money. You can avoid paying premiums like this if you are able to put a good down payment on the house you purchase.
You will have more loan programs to choose from
The other thing to realize is that there are many types of loan programs you can choose from when buying a house; however, your choices will be limited if you do not have any money to put down. With a down payment, you will have the ability to choose from multiple types of programs, and this is one of the best ways to find a loan that offers the best terms for your situation.
If you want to buy a house and are in the process of saving money to use for your down payment, keep saving until you have the amount you need to buy a house. To find homes in your price range, talk to a real estate agency today.