How Much Should I Put Down As My Down Payment?
Once you have figured out how much you are
comfortably willing to pay each month for your new home, you will need to determine how much of a down payment you need. A general rule of thumb with conventional loans is to put down 20% of the purchase price. Many lenders see buyers who have at least 20% down as more attractive and stable and will often give them better interest rates. When saving your money for the down payment, also remember to set some of that aside for costs associated with the purchase of the home such as inspections, appraisals, closing costs and moving expenses.
Some lenders are offering new products for conventional loans that only require 3-5% down. When choosing your lender, make sure to do a little research into what types of products they each offer. Depending on the lender, they can do some creative lending if your credit is less than perfect. Not sure what your credit score should be to purchase a home? Find out here!
I’ve Heard About PMI, But What Is It?
If you are not able to put down at least 20% of the purchase price of your new home, your lender will charge you PMI or private mortgage insurance. This is insurance for the lender in case the buyer is not able to make their monthly mortgage payments and default on the loan. Even if you cannot put down the full 20% of the purchase price, try and put down as much as you can. In most cases, the more you put down the lower your PMI will be. Speak to your lender for the most accurate rates for you.
Interest rates can have a big effect on your monthly mortgage payment. OR if you want to keep your payment at a certain amount, it can affect how much house you can afford. Not only will your monthly payment be higher, your loan costs will be greater over the life of a loan. Check out this example below!
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Amanda McNew
(772) 663-2823
amanda@movetovero.com
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