The Advantages of Putting 20% Down on a Home

How Much Should You Put Down on Your House?

If you’re thinking of buying a home, you’re probably wondering what you need to save for your down payment. Is it 20% of the purchase price, or could you put down less? While there are lower down payment programs available that allow qualified buyers to put down as little as 3.5%, it’s important to understand the many perks that come with a 20% down payment.

1. Your Interest Rate May Be Lower

Puttting 20% down shows lenders that you are financially stable and will be able to handle the payments on the mortgage. While there are loans out there that only require 3-5% they tend to have higher interest rates.

2. You’ll End Up Paying Less for Your Home

The larger the down payment the smaller the monthly payment will be. This will ending with you paying a lot less interest.

3. Putting Down 20% Will Make Your Offer Stand Out With Sellers

It's smart to invest in your future. You want the best house, and you'll likely get it when people know that their offer is more serious than others because of financing which can be approved fast enough for them too!

4. You Won’t Have To Pay Private Mortgage Insurance (PMI)

“For homeowners who put less than 20% down, Private Mortgage Insurance or PMI is an added insurance policy for homeowners that protects the lender if you are unable to pay your mortgage.

It is not the same thing as homeowner’s insurance. It’s a monthly fee, rolled into your mortgage payment, that’s required if you make a down payment less than 20%. . . . Once you’ve built equity of 20% in your home, you can cancel your PMI and remove that expense from your monthly payment.”

Many times, home sellers looking to move up to a larger or more expensive home are able to take the equity they earn from the sale of their house to put 20% down on their next home. With the equity homeowners have today, it creates a great opportunity to put those savings toward a larger down payment on a new home.

If you are interested in learning more on this subject contact me I will be glad to go into further depth.

Lamont "Ben" Orr - The Orr Team eXp Realty 720-425-3365

Post a Comment