How Down Payments Affect Your Mortgage
A down payment is the first money you put towards the purchase of your home. Being able to make a substantial down payment on the purchase of your home will show a lender that you are a serious buyer and that you are less of a risk. While there are many options available to home buyers, some of the most attractive interest rates and loan programs are available to home buyers who can put at least 20% down on their mortgage.
Your down payment should primarily come from you; however there are some people, such as family members, who may provide you with a gift for your down payment. There are some home loans, FHA loans, which require as little as 3.5% down on your mortgage. However, if you have the ability to make a down payment of at least 20% then you will not be required to have mortgage insurance, which will save you money in the long run.
According to Bill Weldon, vice president, mortgage lending with United Home Loans, “The amount you are able to come up with for down payment will determine the rate and structure of the loan but the notion that 20% down is necessary or the best option is fading away. Taking the time to understand a borrower’s full financial picture allows us to set up the best options and structure for their loan. For example, there are some great jumbo mortgage programs that only require 10% down with no private mortgage insurance. It all depends on the borrower’s financial goals and financial situation to set them up with a mortgage that best suits their specific profile.”
If you have any questions about what loan programs are available to you, contact us below or at 708-531-8388.