Home Tours - Examine The Outside Carefully via @homebidz

What You Need to Know About Down Payments

When taking out a mortgage, the down payment is a payment made in the amount of a percentage (usually 20%) of the cost of the loan. Below are common questions about this part of the homebuyer's process. 

1. Does the size of my down payment matter?
Yes, the size matters quite a bit. As a rule, a lender expects 20% of the total cost down. If you can't do this, there are ways around it, but you will end up paying a lot more over time if you take this route. You will likely have to pay mortgage insurance, but it may be worth it for you to get into your own home. 

2. I don't have the cash; where can I find money for my home's down payment?
Obviously, you can ask family for the money, but there are some other options that you may not have thought of. Consider dipping into a 401K or a stock/ bond that you have. This money is yours, and it's there for a reason. For more ideas read Creative Funding Ideas for Those Who Don't Qualify for Conventional Loans.

3. I only have about 10% to put down, not 20%; should I buy the house anyway? 
If you believe that you will live in the home for at least 5 years, yes, you should go ahead and buy. You should be confident in your decision before you make the commitment to pay the extra fees that come along with a partial down payment. In general, however, the investment will pay for itself if you plan on staying.

4. Which is more important: a 20% down payment or the fact that I have the money to make a mortgage payment?
Making the payments on time, when it comes to credit, is more important. It's usually possible to pull together a down payment, but if you can't make your monthly loan payments on time, the decision will follow you for a long time.

As you can see there are various options, even if you don't have the 20% down payment. While it's definitely best, there are many people who pay extra fees and still end up being thankful for their new homes and feeling positive about their decision. In other words, don't let the 20% down payment keep you from buying if you have other options.

Latest Posts

The Art of Changing Realtors When You Need to via @homebidz

The Art of Changing Realtors When You Need to

First Time Home Buyers Click Here Finding a realtor can be kind of like dating. There are a ton of them, each with their own set of pros and cons, different areas of expertise, etc. So, when you start forming a...
Loans, Fees, and the Real Cost of Owning Your Home via @homebidz

Loans, Fees, and the Real Cost of Owning Your Home

Need a Home Loan? We know this may come as a shock, but that home that’s for sale for $350,000 will actually end up costing about $575,000 over time. How? Between the interest rates, insurance, property tax, and...
Rent to Own vs. Traditional Mortgages via @homebidz

Rent to Own vs. Traditional Mortgages

Need an FHA Loan? It’s no secret that most people seek out rent-to-own home options over traditional mortgages because of credit issues: either their credit is fair or poor or simply just unestablished. Depending...
Why Does My Credit Matter? via @homebidz

Why Does My Credit Matter?

Click Here to Look at Bad Credit Home Loans Honestly, if you have less than perfect credit, you can still potentially buy under a rent to own option, but you still have to get financing at some point, so you'll need to...
Taking the First Step on Your Rent to Own Journey via @homebidz

Taking the First Step on Your Rent to Own Journey

Looking for Rent to Own? When considering a rent to own journey, there certainly are a couple different choices. Each requires the rental property itself, two authorized documents, and then -- sometimes -- an...
Simple Ways to Save for Your Down Payment via @homebidz

Simple Ways to Save for Your Down Payment

Need Family Support? There are a lot of different ways to purchase a home. You can get creative and try owner-financing, or even buying a home at an auction. For the majority of us though, we’re still using banks and...