Mortgage Down Payment
When considering a
new mortgage, whether for a home purchase or doing mortgage refinancing, there are many factors you will need to
consider when determining how much you can borrow. One of the
biggest of these factors is the amount of money you will need for a down payment. Let’s look at the down payment details.
asking for a down payment, the lender assumes less risk because if you put down money, it shows that you are at
least somewhat capable of saving money if you were able to save enough for a down payment. This historically has been shown to mean that you are more likely to make your
monthly payments if you know how to save money. To have less risk
exposure, the lender also will likely want you to put at least 10 - 20% of the value of the home down so that if
you were to default, there is equity in the home if he has to quickly sell it to recover his
mortgage down payment is necessary when you are purchasing a house, there are different rules for a mortgage
refinance. When you are doing mortgage refinancing, you are
borrowing against the equity in your house, so you may not need a down payment. Instead, the lender looks at the equity you have in your home as the
collateral to secure the loan, in a sense.
Different loan programs require
different amounts for a down payment. A VA loan doesn't usually
require a mortgage down payment, but you must be a veteran to qualify for this type of loan and also meet other
requirements. A conventional loan usually requires at least a 10%
down payment, while an FHA loan usually only requires 3.5% down. A
bad credit mortgage will usually require more money down than if you have good credit and can qualify for a
traditional mortgage. A jumbo mortgage usually requires 30 to 35%
down, since it is a greater risk to the lender. You will need to
consider this in your planning.
payment can vary greatly from one lender to another, so it really pays to shop around for a loan that you
qualify for that has the lowest down payment available. Talk to
several lenders and get their ideas for what may fit your individual needs and circumstances. Even though it takes a lot of time, checking around to get the lowest interest
rate and lowest closing costs can end up saving you thousands of dollars in the end.