Important Choices on the Road to Owning a Home

author imagePosted by Mascoma Bank on February 14, 2022

We asked our Mortgage Lending team for some advice they give to people who are on the road to owning a home about making the process easier.

Our first questions was: What are the pros and cons of committing more or less of a down payment?

“It’s very much a personal choice and the answer varies for each person, it’s really important to talk it through with you lender, we are here to help. The pros to putting more down: lower monthly payment, lower loan fees, and the potential to avoid paying for PMI. But if you put less money down, you improve liquidity in the event funds are needed for home repairs.”

Jim Giller – NMLS #1026709
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“I typically recommend folks put down a 20% down payment to avoid having to pay Private Mortgage Insurance (PMI). More than that is up to you. With low rates, it is often beneficial to finance more since you can leave your existing assets invested and making money for you. Of course, you need to also consider that a higher loan amount comes with a higher monthly payment.”

Cody Dana – NMLS #1791451
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“It’s better to put 20 percent down if you want the lowest possible interest rate and monthly payment. But if you want to get into a house now and start building equity, it may be better to buy with a smaller down payment—say, 5% to 10% down. In an aggressive real estate market, some sellers prefer a higher down payment.”

Sherry Noyes – NMLS #1135349
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“The pros for making less than 20% down payment:
You have more money in your pocket to do upgrades on the property.
You will have more money in the bank for emergencies.

The cons for making less than 20% down payment:
You will have to have mortgage insurance (PMI), a monthly fee that will significantly raise your monthly mortgage payment and typically does not go away for approximately 11 years or until 20 % equity has been obtained.”

Mark Roux
Mascoma Mortgage Specialist

Should we get a home inspection? Is it worth the money and time?

“I always recommend my customers get home inspections, even in this competitive market where people are waiving inspection contingencies to try to get the deal. You don’t know what you don’t know—what if there’s a major issue with the home that would be a deal breaker? You’ll be glad you spent the money on the home inspection when you’re avoiding thousands fixing the issue after closing on your new house.”

Cody Dana – NMLS #1791451
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“A home inspection is really important. It will identify items that need immediate repair and those things that need to be addresses down the road.”

Jim Giller – NMLS #1026709
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“After making the down payment and closing costs, a new home owner may not have the financial capacity to address improvements that must be made immediately to keep the home safe and preserve its value.”

Christie Mitchell – NMLS #515972
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“Many customers have discovered very costly issues during an inspection that were not obvious when they were writing their offer. Without an inspection, they could have purchased a home with costly repairs or safety issues that were noticed soon after their purchase.”

Sherry Noyes – NMLS #1135349
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“Catching a major home repair at a home inspection can save the buyer a lot of time, money, and frustration.”

Sarah Powell – NMLS #446222
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“They are invaluable. If the home inspection turns up something that keeps you from buying the house, good. You saved yourself a lot more money in the long run.”

Philip Juanes
Mascoma Mortgage Specialist

“I would absolutely get a home inspection. This is the biggest purchase you will make in your lifetime. An inspection is a way to cover your asset and really get to know your new property from a neutral third party. Even if the property seems immaculate, there might be issues that cannot be seen by the simply walking through the home. I would rather spend a few hundred dollars on an inspection than have to buy a new roof one year later because no one saw that roof had issues.”

Mark Roux
Mascoma Mortgage Specialist

Next: Closing on a Home Mortgage