Exploring your down-payment options

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It’s an exciting time when you’re starting the home-buying process. One of the big questions most buyers ask at this point is, “How much do I need for a down payment?” There are a handful of options to choose from.

Options for first-time homebuyers vary from state to state and it’s always good to check with a licensed mortgage broker.

People who have owned homes before and are looking to relocate are still able to qualify for an FHA loan with a down payment as little as 3.5 percent of the purchase price. However, for this type of loan, the buyer will have to pay a mortgage insurance premium (MIP). This cost is paid at the closing table along with a premium added to your monthly mortgage payment. Once the value-to-loan reaches 22 percent, the MPI will automatically be removed. However, the borrower can request the removal of the MPI when 20 percent of equity has been reached.

Conventional loans typically require the buyer to put down 20. If 20 percent cannot be achieved, qualified borrowers can still obtain a loan at low as 5 percent.

Then there’s the VA-guaranteed loan. Available to our beloved veterans and their spouses, this loan allows them a zero down payment. Eligible veterans have to have an honorable discharge after 90 days of service during wartime and a minimum of 181 continuous days in times of peace, or six years enlisted as a reservist or member of the National Guard. Un-remarried spouses of veterans whose deaths were service related also qualify.

You should always sit down with a loan officer about your concerns and needs. Once you and your loan officer choose the best program for you, you and your real estate broker can start the home-search process. This is always the best course of action since not all properties will qualify with each program. For example, many times a home that’s in disarray or disrepair will not qualify for an FHA or VA program.

To contact me, call 708-583-8300, email gz@zerillorealty.com or visit www.zerillorealty.com.

About Giuseppe Zerillo

Giuseppe Zerillo is the managing broker and owner of Zerillo Realty Inc. He is active on many boards, serving as village trustee of Harwood Heights and corporate secretary for Casa Italia. In 2011, he received the IANU Foundation's 2011 David Award for outstanding promise in the field of real estate, and in 2012 he was honored by the Illinois State Crime Commission for his community outreach. Constantly seeking opportunities to give back, he donates to several charities and raises money for children with disabilities.

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