Joel Margolis - J. Barrett & Company | Beverly, MA Real Estate, Salem, MA Real Estate


We all know that buying a home is a significant decision that comes with a great deal of financial planning and preparation. However, few of us are taught the ins and outs of actually obtaining a mortgage to make your dream of homeownership come true.

Mortgages are a complicated business that is always changing, both with fluctuations in market rates and with policy decisions.

But, if you’re hoping to buy a home in the near future, it’s important to understand all of your options when it comes to mortgages.

In today’s post, we’re going to address the 20% down payment myth, where that number comes from, and what your options are when it comes to applying for a mortgage.

Where does the 20% down payment number come from?

For most people, 20% of a house is a serious amount of money that would take years to save up. If you’re a first-time homebuyer and don’t have any equity to use from selling another house, 20% may seem like an impossible amount to save within the time you want to buy a home. Fortunately, there are several ways to buy a home without having 20% in cash saved up.

But first, let’s understand where that number comes from.

Most mortgage lenders will want to ensure that lending to you is a safe investment of their money. They want to know that they’ll earn back what they’re spending. To do this, they use several methods.

First, they’ll check your credit history to see how often you pay your bills in time. Then, they’ll want proof if your income and financial stability. Finally, they’ll ask for either a down payment or a guarantee that you will pay them back. Here’s where that 20% comes in.

If you don’t have 20% of the mortgage amount saved for a down payment, you will typically have to pay something called private mortgage insurance. This is an extra monthly fee, on top of your mortgage payments with interest, that you pay to ensure the lender that they’re seeing a return on their investment.

Most homeowners put much less than 20% down

If you’re feeling bad about the amount of money you have saved for a down payment, don’t be! In fact, most first-time homebuyers put, on average, just 6% down on their first home.

Since first-time homeowners don’t have the benefit of equity they’ve accumulated by making payments on their previous mortgage, they often have to come up with down payments out of pocket.

Other options besides a 20% down payment

There are several ways to secure a mortgage without putting 20% down on the home. First, check to see if you are eligible for any loans that are guaranteed by the government. These can come from the Department of Veterans Affairs (VA), or the USDA single-family home program.

The third option is to take on private mortgage insurance until you’ve paid 20% of your mortgage payment.

Private mortgage insurance can be paid to an insurance company or to the federal government in the case of FHA loans, you can put down as low as 3.5%.


Between these three options, you should be able to find a mortgage that you can afford and one that will give you the best possible financial stability in the long-term.


Do you know how to get your house ready for the real estate market? If not, you may miss out on opportunities to showcase your home to the right buyers. Perhaps even worse, you may struggle to maximize your home sale earnings.

When it comes to selling your house, it usually helps to plan ahead. Fortunately, we're here to help you do just that.

Now, let's take a look at three tips to help you get your house ready to sell.

1. Clean As Much As Possible

Let's face it – a messy kitchen, bathroom or bedroom is an eyesore. And if you fail to clean your house prior to listing it, you risk alienating buyers time and time again.

Cleaning is a necessity for home sellers, regardless of a house's age or condition. If you allocate time and resources to ensure each room in your home looks pristine, you can increase the likelihood that your residence will make a positive first impression on buyers.

Mopping the floors, wiping down walls and taking a room-by-room approach to home cleaning generally is recommended. In addition, if you need extra assistance, you can always hire a professional home cleaning company.

2. Perform Home Exterior Maintenance

Although you may spend a lot of time cleaning your house's interior, you shouldn't forget about your home's exterior as well.

Ultimately, how your home's exterior looks may dictate how quickly your residence sells. If your house boasts a beautiful front lawn and immaculate exterior, a buyer may fall in love with your home instantly. Conversely, if your home's front lawn is uncut and your house's siding is damaged, your residence is unlikely to impress potential buyers.

When it comes to home exterior maintenance, it helps to do as much as you can. Trim the front lawn, repair damaged home siding and perform assorted home exterior maintenance. By doing so, you can immediately bolster your house's curb appeal.

3. Remove Clutter

Over the years, you may have collected a lot of items. But these items may make your house appear smaller than it actually is – something that all home sellers should try to avoid.

If you have a large collection of clutter, you may want to consider selling or donating various items. Or, you can always rent a storage unit for assorted belongings and move these items to your new residence after your current house sells.

Clearly, there are many ways to prepare your house for the real estate market. If you want to ensure the best-possible results from the home selling journey, you may want to reach out to a real estate agent too. This housing market professional can guide you along the home selling journey and ensure you can get the support you need to achieve your desired goals.

Start getting your house ready to sell – use the aforementioned tips, and you can quickly and effortlessly enhance your residence before you list it.


This Single-Family in Salem, MA recently sold for $280,000. This Victorian style home was sold by Joel Margolis - J. Barrett & Company.


11 Ames St, Salem, MA 01970

Single-Family

$259,000
Price
$280,000
Sale Price

7
Rooms
4
Beds
1
Baths
Cash offers must show funds to purchase. Priced below market value for ocean frontage. Great opportunity to own property with ocean frontage for swimming or boating at high tide. Small but nice yards on both sides of the house. Walk up attic could be finished and would have stunning ocean view. BUYER MUST DO THEIR OWN DUE DILIGENCE. A property survey is usually required by the settlement agent/attorney responsible for closing a property purchase transaction - the survey will reveal if the property is located in a Flood Hazard Area. The Salem maps show the house outside the flood zones.




After you accept a buyer's offer to purchase your house, it may be only a few weeks until you finalize your home sale. However, problems may arise that slow down the home selling process. And if these problems linger, they may stop your home sale altogether.

As a home seller, it is important to do everything possible to ensure the home selling journey is quick and seamless. If you know what to expect after you accept a buyer's offer to purchase your residence, you can prepare accordingly.

Now, let's take a look at three tips to help you wrap up a home sale.

1. Negotiate with a Homebuyer As Necessary

Typically, a homebuyer will request a house inspection after his or her offer to purchase your residence is accepted. This appraisal will enable a buyer to identify any underlying problems with your home. It also may lead a buyer to request a price reduction or property repairs in order to finalize a home sale.

Although you may have allocated significant time and resources to upgrade your residence before you listed it, a home inspector still might identify assorted house issues. In this scenario, you should be ready to negotiate with a homebuyer to find a solution that satisfies the needs of all parties involved in a home transaction.

2. Remain Patient

Ultimately, the period between when you accept an offer to purchase your house and closing day may seem endless. At this time, try to remain patient and focus on the big picture, and you may be better equipped than ever before to limit problems that could slow down your house sale.

It generally is a good idea to be open to communication with a homebuyer as well. If you keep the lines of communication open with a buyer, both parties can work together to ensure a home sale goes according to plan.

3. Collaborate with a Real Estate Agent

For those who are stressed out about the home selling journey, there is no need to worry. In fact, if you work with a real estate agent, you can receive expert guidance at each stage of the home selling journey.

A real estate agent is committed to helping you achieve the best-possible results. He or she will collaborate with you throughout the home selling journey and help you identify and address any potential home selling hurdles.

Let's not forget about the assistance that a real estate agent provides after you accept a buyer's offer to purchase your home, either. At this point, a real estate agent will keep you up to date about a home inspection request and the final results of an inspection. Plus, as closing day approaches, a real estate agent will help you get ready for the big day.

Take the guesswork out of selling your house – use the aforementioned tips, and you should have no trouble wrapping up a home sale.


Many factors come into play when determining whether you can afford to buy a house. Since the monthly rent for an apartment is often close to what a mortgage payment would be, you can't help but wonder if your rent money would be better spent building equity in your own home.

While this is often the case, first-time home buyers often underestimate or overlook expenses that accompany home ownership. Although a mortgage broker or bank loan officer can help you calculate the maximum mortgage you can afford, here are a few tips to keep in mind as you weigh your options.

  • Create a detailed budget. By taking the time to figure out how your income stacks up to your monthly expenses, you can get a clearer picture of your financial situation. If you have a good credit score, a positive monthly cash flow, and enough funds to pay closing costs and a down payment, then home ownership may be a viable option. (Your credit score, which you can obtain once a year for free from the three main credit reporting companies, will have a major impact on both your interest rate and your monthly mortgage payments.)
  • Factor in other expenses: Figuring out your current budget is relatively easy, but predicting your future budget as a homeowner can be a lot more challenging. A big part of the equation will depend on the amount of property taxes and school taxes that will be tacked on to your mortgage costs. A real estate agent can provide you with those figures, as well as other information you need to calculate how affordable it would be to live in a particular house. They have access to a wide range of relevant information, such as utility expenses, water bills, and homeowner association fees (if there are any). Since property taxes sometimes cover the cost of services like garbage and yard waste collection, you may not have to factor in those items into your projected budget. Your real estate agent can help you come up with a rough estimate of home maintenance costs -- especially if they're familiar with the history of the home you're considering buying. As the process moves forward, a property inspector can provide you with more details about the condition of the home and whether any costly repairs are likely to be needed soon.
  • Home maintenance and furnishing costs: Other possible expenses to consider when estimating the cost of home ownership include yard maintenance, landscaping, HVAC service calls, electrician services, plumbing repairs, and homeowners' insurance. If you're a first-time home owner, there's also a good chance you'll need to buy some furniture to fill out those additional rooms!
  • Buying your first home definitely takes a lot of planning, budgeting, and research, but the rewards of owning your own home will more than justify the effort!



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