Preparing to buy a home in Wilmington, DE can be overwhelming, there's no doubt about it. There is much to do to get ready— from grooming your credit score to researching your budget to scouting potential neighborhoods to saving for a down payment. However, if you've been waiting to purchase a home until you have a larger down payment, you may be surprised to learn it may not actually save you money. 

In considering the following, it is evident that putting down the ideal 20 percent can help you save on your monthly mortgage payment right now:

On a $200,000 Home
Down Payment: 5 percent ($10,000)
Loan Amount: $190,000
Interest Rate: 4.5 percent
Private Mortgage Insurance: $80
Monthly Payment: $1,043

Versus

On a $200,000 Home
Down Payment: 20 percent ($40,000)
Loan Amount: $160,000
Interest Rate: 4.5 percent
Private Mortgage Insurance: $0
Monthly Payment: $810

But will the same be true if you wait to purchase a home in the Greater Wilmington area? While you might believe it's best to wait until you have saved 20 percent of a New Castle County home's price to buy, what's more important to consider is the amount of time it will take you to do so. 

Home values are projected to increase by 4.3 percent over the next twelve months and the amount of money you would have saved by avoiding private mortgage insurance (PMI) could actually be surpassed by the amount of money you end up paying for the home. 

Consider the extra costs of PMI now compared to the projected appreciation over the next year:

PMI costs over the next 12 months: $2,793
Appreciation over the next 12 months: $8,600 
The difference: $5,807

20 percent down is required to avoid PMI, but it is not required to obtain all home loans. There are many mortgage programs in place that allow Wilmington buyers to put down as little as 3 percent on a new home!

Contact the KG Home Team today to discuss how you can save money by purchasing a home this fall! We look forward to hearing from you!

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The majority of homebuyers today do not know what it takes to qualify for a mortgage and as a result, may be struggling to save a 20 percent down payment to purchase a home. Keep in mind that homeownership does come with costs, but the cost of waiting also needs to be a factor in your timeline! Waiting to save a down payment or come up with a "rainy day fund" for expenses and repairs is not always the best decision, especially given currently low mortgage rates. 

Katina Geralis
Wilmington, DE Real Estate Expert
Keller Williams Realty
Wilmington Real Estate
Wilmington Homes for Sale
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