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What is a Down Payment?
What is a Down Payment?
A down payment is a lump sum of money that a buyer pays upfront when purchasing a property, typically as a percentage of the total purchase price. This amount is not financed through a mortgage and represents the buyer's initial equity stake in the property.
How Much Will I Need?
How Much Will I Need?
In South Florida, the specific amount required for a down payment can vary based on factors like the type of property, your creditworthiness, and the lender's policies. Traditionally, down payments range from 3% to 20% of the property's purchase price. For example, if you're buying a $300,000 home, a 20% down payment would be $60,000.
Here are some alternative terms you might here for "Down Payment":
Initial Deposit - Earnest Money Deposit - Upfront Money
Where can I get the money for down payment? Here are a few potential sources:
Savings and Investments:
This is the most common source. It includes money you've saved in a savings account, certificates of deposit (CDs), stocks, bonds, or other investments.
Gifts from Family:
Some buyers receive a down payment gift from family members. *Consult with your lender about rules and documentation requirements.
Retirement Accounts:
Some retirement accounts, like IRAs, allow for penalty-free withdrawals for First-Time Home Buyers.
Other sources for obtaining the money for a down payment might include:
Inheritance: If you've inherited money, this can be used for a down payment.
Government Assistance Programs: In some cases, there are government programs or grants available to assist with down payments, especially for first-time homebuyers.
To "Season" or not to season, that is the question......
Regarding "seasoned money" in the context of a down payment:
Seasoned money refers to funds that have been in a bank account or investment for a specific period of time, usually 60 to 90 days. Lenders often want to see seasoned money to ensure that the funds used for the down payment are not borrowed or subject to sudden changes in value. This helps verify the stability of your financial situation.
Speaking of Seasoning........
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