How much of a down payment should I make? Where can my loan funds come from? These are just a couple of the most common questions that we hear from potential home buyers as we begin to assist them with navigating through the buying process. Here are a few answers to these questions so that you may make the most informed decision possible regarding your down payment.
Should I put more than the minimum down on an FHA purchase?
FHA mortgage loans allow for borrowers with less than perfect credit to purchase a home with a down payment of only 3.5% of the purchase price. As a result of credit guidelines that are not quite as strict as those found on conventional financing, FHA requires both up-front and monthly mortgage insurance on all FHA loans. While it is possible to reduce the dollar amount of the monthly mortgage insurance component by putting down 5% or more on a home purchase, the reduction in the monthly mortgage insurance amount is minimal compared to the out of pocket expense of the larger down payment.
For example, on a $200,000 home purchase with the minimum 3.5% down payment ($7,000), the monthly mortgage insurance is calculated by multiplying the loan amount by the monthly mortgage insurance factor (1.35%), and then dividing by 12 (193,000 x .0135 / 12 = $217.25 monthly mortgage insurance amount). By applying a 5% down payment ($10,000) you can lower the monthly mortgage insurance factor from 1.35% to 1.30%. Using the same calculation (190,000 x .0130 / 12 = $205.83) you can see that by applying an additional $3,000 toward your down payment, the resulting savings on the monthly mortgage insurance payment equates to about $12/month. At that rate of savings, it will take approximately 20 years to recoup the additional $3,000 that was applied to the down payment.
Since most buyers utilizing an FHA mortgage have intentions of refinancing into a conventional mortgage loan at some point in the future, it is generally not recommended to apply more than the minimum down payment on an FHA purchase.
Should I put more than the minimum down on a conventional purchase?
Conventional mortgage loans require a minimum down payment of 5% of the purchase price but also require mortgage insurance if the down payment is less than 20% of the purchase price. Unlike FHA financing however, mortgage insurance rates for conventional financing are not calculated using a flat percentage of the loan amount but rather are underwritten much in the same way that the mortgage loan itself is. This means that your credit history, source of down payment, and down payment amount are all taken into consideration when determining the amount of the required monthly mortgage insurance amount. As a result putting down more than the minimum, even if it is less than the 20% required to eliminate monthly mortgage insurance entirely, can save you a significant amount of money on monthly mortgage insurance premiums.
What are the allowable sources of down payment funds?
• Gift funds (entire down payment can be from gift funds on both FHA and conventional financing with appropriate documentation)
• Loan or withdrawal from 401k or IRA with no impact to debt-to-income ratio
• Sale of stocks or bonds
Do I have to have the entire down payment saved before buying a home?
Depending on the amount that you already have saved you may be able to save the remainder over time as long as you have a savings plan in place which can be verified by the lender, and that you will have the minimum down payment saved by the time that your purchase closes. This can be an advantage of buying a brand new home with a 3-6 month build time as opposed to a resale which typically closes within 30-45 days from the date of the purchase contract.
With all these factors in mind, it’s important to consult with your lender to decide what will be best for your situation. Beazer Homes offers Mortgage Choices so that you have the ability to shop around, compare lenders, and find the best deal for your new home.
*Content provided my Marquee Mortgage, a Beazer Homes preferred lender in the state of Arizona.
Understanding the types of mortgage options you have is an important part of buying a new home. One decision you will face is choosing between a variable-rate loan or a fixed-rate loan. Knowing the differences between each type of loan can save you money in either the long-term, or the short-term, depending on which will best fit your needs.
A fixed rate loan keeps the same interest rate throughout the entire term of the loan. The benefit to this type of loan is that you will pay exactly the same amount on the note itself from your first payment to your last payment. Whether that is 15, 20, or 30 years from now, your mortgage payment will always be the same. If you are planning to stay in your home for years to come, a fixed-rate loan might be the best mortgage option for you.
Variable Rate Loans
Right now, during a time of historically low interest rates, an adjustable rate mortgage may not seem like a smart choice. However, there is a benefit to this type of loan for some home buyers. If you do not plan to stay in your home for an extended period of time, usually not more than five to seven years, you can get a significantly lower initial interest rate with an ARM. Buyers looking to stay in their home for five to seven years may want to consider a 5/1 or 7/1 adjustable rate mortgage. With a 5/1 loan the initial interest rate is fixed. Then, at the start of the 6th year of the loan, it becomes an adjustable rate mortgage, adjusting each year based on an index, plus a fixed margin. The interest rate on a 5/1 is considerably lower than on a fixed rate, so borrowers can save a substantial amount of money during the first 5 years of the loan.
For most home buyers, the type of loan you get is heavily dependent on how long you plan on staying in your new home. If the plan is short term, an adjustable rate mortgage like a 5/1 ARM may be the best option. For a home that you plan to live in for years to come, a fixed-rate mortgage may be the better choice, especially since rates are extremely low.
Find out more about Beazer Homes Mortgage Choices and how you can save with our preferred leaders.
When shopping for a new home, Energy efficiency is one of the main factors considered. With that in mind, Beazer Homes takes additional steps to ensure our homes meet the latest ENERGY STAR® requirements. Every Beazer home is built to ENERGY STAR standards, is tested, and receives an individual ENERGY STAR certification. This means that Beazer homes are built to conserve energy and reduce your monthly costs. For example, Beazer Homes in the Houston, TX area are currently built with spray foam insulation which saves on energy costs and lowers utility bills. Studies by the US Department of Energy show that 40% of a home’s energy is lost as the result of air infiltration through walls, windows and doorways. Therefore buildings & homes treated with spray foam insulation typically insulate as much as 50% better than if built traditional insulation products. Here are a few other benefits of Spray Foam Insulation:
- Spray foam insulation creates a moisture barrier. Mold grows in damp environments. An effective moisture barrier, like spray foam insulation, will prevent the growth of mold. Less mold means you and your family are less likely to suffer the health effects caused by living in a moldy environment.
- It fills gaps and cracks around pipes and between joints where outside air can get into your home. By sealing these areas that typically allow hot and cold air from the outside in, your indoor heating and air system can to take a break and run less frequently, allowing you to save money on your monthly energy bills.
- Spray foam insulation makes it much more difficult for pests to find an entrance into your home. Neither insects nor rodents find spray foam insulation enticing. Therefore, these unwanted pests won’t chew through the insulation and enter your home like they would with other types of home insulation’s.
- Spray foam reduces noise levels in your home by blocking outside annoyances, such as traffic. A quiet home is a peaceful home, and is one more reason why spray foam insulation contributes to the over-all comfort of a new home.
If you’re looking for a new home near Houston, TX and want to enjoy all the benefits that spray foam insulation has to offer, please visit our website for more information. Keep up with Beazer Homes’ latest events and specials on Facebook and Twitter.
With every Beazer home being built to the latest ENERGY STAR ® standards, it’s no secret that Beazer Homes takes energy efficiency seriously. Therefore, you may find our New Home Counselor’s driving around town in a Beazer Smart Car!
As our Beazer Atlanta team gears up for the Grand Opening of Gwinnett County’s newest community—Kensington, they want you to join-in on the festivities. Find the Beazer Smart Car that has been strategically placed in the Hamilton Mill area and you could win! It’s easy to enter. When you see the Beazer Mobile in the Hamilton Mill area snap a photo and post it to Twitter using #BeazerAtlanta, and mention us @BeazerHomes to receive a free gift card!* So, next time you’re in the Hamilton Mill area be sure to keep your eyes peeled.
Learn more about Kensington, a brand new community in Hoschton, GA featuring brand new homes with high-end finishes, amenities, and award-wining schools. Stop by the grand opening on Saturday August 16th, 2014 from 11:00 A.M.- 2:00 P.M. for tours of our new designer-decorated model home, savory barbecue, and free family fun with golf-themed activities!
*No purchases necessary to enter or win. Purchase does not increase your chances of winning. Open to legal residents of the United States who are 18 or older. Void where prohibited. Promotion runs until August 19th, 2014. Limit one entry per household. Prize consists of $10 The Home Depot gift card while supplies last. Winnings cannot be redeemed for cash. Beazer Homes reserves the right to substitute item of comparable value. Additional restrictions may apply. See a New Home Counselor for complete details.
There many benefits of incorporating ceiling fans into your new home. While it’s nice during these hot summer months to add an extra source of air to a room, ceiling fans add-value year round because they are energy efficient, stylish, and can provide an additional light source.
- Energy Efficient- Ceiling fans allow rooms to feel cooler than they actually are. During these hot months, turn on your fan before your air conditioner. You’ll likely notice a lower energy bill when your statement arrives.
- Stylish- Ceiling fans are an inexpensive way to give a room an upgraded sense of style. With a variety of colors, finishes, shapes and sizes to choose from at your local hardware store, or from your new home builder, you can add a stylish look to almost any room.
- Illumination- Selecting a ceiling fan that also provides light is an easy way to brighten up your space. Not all rooms have the luxury of large windows offering natural light, therefore consider adding a light fixture when picking out your favorite ceiling fan design.
- Year-round value- During the cold winter months run your ceiling fan blades clockwise to push warm air down into the lower half of the room without creating the cool draft associated with running the blades counter-clockwise in the summer. This helps keep down the cost of gas and energy bills associated with heating your home during harsh winter months.
*Content and image credit from our partner, Progress Lighting.
If you’ve been contemplating a new home, now is the time to act. Beginning August 1st through August 17th unique savings opportunities for buyers will be offered across cities in Arizona, California, Delaware, Florida, Georgia, Indiana, Maryland, Nevada, New Jersey, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas and Virginia . Our Love It, Live It sales event is your opportunity to stop dreaming about a new home and make it a reality of your very own.
Aside from the special offers available during the Love It, Live It Sales Event, each of the homes that Beazer builds gives you MORE: more energy efficiencies, more FREE design and personalization options, and more mortgage choices. Visit our website today for complete details about new homes in your area as well as these limited time offers.
If you haven’t already, make sure to also connect with us on Facebook and Twitter for the latest community openings and other new home news. We hope to see you in one of our communities so you can see for yourself why so many love and live in Beazer homes.
It’s the season of green! With new grass, plants and trees sprouting their new leaves, people are removing winter’s remnants and busy tending to their yards. A beautiful yard is a badge of honor to most new homeowners, but achieving lasting results does take some work. Here are some homeowner tips to help you achieve a lush, green yard:
Watering Your Lawn:
When the rainy season just isn’t rainy enough, supplemental watering is required to maintain a healthy lawn. Most types of grass need around 1 inch of water per week to keep it alive, healthy and growing. Also, the best time to water your lawn is in the morning so that it has the rest of the day to absorb the water. Keeping your yard watered consistently will not only keep it healthy, but it can also help to keep it disease and pest free. It’s also important to use a good fertilizer in conjunction with your watering routine.
Add New Landscaping:
Adding additional landscape elements to your yard is a great way to accent your new home with some color. These colorful additions can also emphasize the exterior design features you’ve selected for your home. Decide what works best to meet your aesthetic goals as well as the growing requirements of the plants you like. Making sure that your plants receive the right amount of sun and water is important to their health. Containers with plants and flowers or a wildflower garden are creative and easy ways to add visual interest to your yard.
When planting trees make sure you remember that your little seedling may grow into a mighty oak one day. Providing trees and their root systems with room to grow will give you taller, hardier trees long-term. Any landscape designs should provide adequate space away from your foundation to avoid any problems down the road as well as allow your plants ample space to reach full maturity.
These tips will help you achieve a beautiful yard for years to come. Make sure to join the conversation with Beazer Homes on Facebook, Twitter and Google + for more landscaping tips to keep you new yard looking great this season. Happy planting!
On May 30th, The Home Builders Association of Delaware honored the area’s finest home builders at the 22nd annual Regal Awards. Guests, sporting their finest beach cocktail attire, were treated to ocean views atop the Henlopen Hotel in Rehoboth Beach. Award categories included design, sales, marketing, production, and technology for projects completed in 2013.
Beazer Homes’ Bishops Landing marketing team, led by Regional Marketing Manager Cindy Plackmeyer, had a fantastic showing receiving awards for best image campaign and best logo. The Bishop’s Landing signature logo adorns billboards and signs throughout Sussex County. It adorns not only the shuttle to and from the beach, but can also be seen at the beach on hats and sunscreen bottles.
Congratulations to Cindy Plackmeyer and the entire Bishop’s Landing team for your success at this year’s Regal Awards! Peruse our website to learn more about the available new homes in Delaware Beaches.
Buying your first home is an exciting step, but it’s also one that requires careful consideration and planning. We understand that it’s important to get the answers to your questions so you can make an informed decision and end up with a house that will serve your needs best for years to come.
Beazer Homes strives to facilitate the home buying process, whether it’s your first home or your 5th, to make the transition as smooth as possible. See what our Nashville homeowner, M.J., had to say about her experiencing buying her first home with Beazer.
What does a red front door mean?
- In early American tradition, a red front door signaled weary horse and buggy travelers that the home was an open place to rest.
- In Scotland, a red front door signifies that the homeowners have paid off their mortgage.
- According to Feng Shui standards a red front door is said to exude a welcoming energy
In addition to these culturally based standards, red doors also convey the positive color psychology of passion, vitality, and excitement. With these positive thoughts in mind, we’re kicking off our National Red Door Sales Event Sunday, June 1st and offering unique savings opportunities for new home buyers until June 15th, 2014. If you’re in the market for a new home now is the ideal time to buy from Beazer Homes. Visit our “Find Homes & Communities” page for complete savings and incentive details for the communities closest to you.
These limited time offers are an added value to the Beazer difference: energy efficiency, design options and personalization, and mortgage choices that are standard with every home we build. We’re painting the front door red here at Beazer to welcome all those interested in a new home, whether you’re a first time buyer or an active adult looking to downsize.