Saving for a Down Payment from your Trusted Mortgage Knowledge Professional
A down payment is the amount of money that you are able to put towards the purchase of a home. The down payment amount is subtracted from the purchase price of your home.
If you’re thinking about buying a new home, one of the most difficult things right now will be saving for a down payment. How much do you really need to be able to afford the home of your dreams?
In this article, I will discuss the benefits of saving for a:
If you’ve experienced the housing market before, then you may remember a time when the banks offered mortgage options like the ‘zero down payment’. Options like these were no longer offered after the 2008 recession.
As a result, if you’re looking to purchase a home through a federally-regulated lender, you will be required to have a minimum 5% down payment.
Most major credit unions still do offer zero down mortgages, but the biggest draw back is the extremely high interest rate.
If you save less than 20% for a down payment, you will be required to purchase default insurance. This insurance is a pricey addition to your regular mortgage payments. If you save 20% or more, you will be exempt from this burden.
If you find yourself somewhere between 0% and 20%, you may want to look into different areas to purchase. Whatever the situation, it is always a good idea to have the professionals look into it with you to ensure you’re making the best decision.
If 20% is good, then 35% must be even better! Simply put, the more money you’re able to put towards a down payment, the less you will pay on interest in the long run. Not only will you have less to pay off, but you will also qualify for better interest rates.
Of course, not everyone will be able to afford to put down 20-35%. Although there are benefits, a down payment of this size is not required to get into the housing market. If you are a first-time home buyer, there are options available for you as well.
If you have any questions about saving for a down payment, then contact Milka Lukacevic from the Mortgage Centre TMK Team.