| The down payment seems to be one of the most | | | | $107.37. Over 1 year that's $1288.44. Over 5 years |
| important factors in buying a home. As it should be, | | | | that's $6442.20! |
| because the more money you put down, the lower | | | | The important part to keep in mind about that example |
| your total monthly mortgage payment will be. | | | | is that the difference in monthly payments just saved |
| A down payment should be determined by the | | | | you $6442.20 over the next 5 years, because the |
| following questions: | | | | down payment is only 10%. Now, the difference in |
| 1. How much can you afford? | | | | down payment money is $10,000. So, if you are looking |
| You should NOT consider all the money you have in | | | | to save the most money out of your pocket, then put |
| your savings account towards the purchase of a | | | | a less money down. As long as the monthly payment |
| home. Why? Well, let's say the water heater happens | | | | is affordable, you will always keep more money will |
| to break down in the first year of buying the home. | | | | less of a down payment. |
| That kind of break down can cost thousands of | | | | 3. What is the minimum down payment lenders allow? |
| dollars! It's something most people would never expect, | | | | Right now, in today's lending environment, there are |
| but it's possible. | | | | only 2 ways to obtain a mortgage with absolutely no |
| You see, most people buy an existing home (especially | | | | money down. |
| a first time home buyer) and existing homes do have | | | | |
| wear and tear just like anything else. Eventually, | | | | 1. VA Mortgage Loan - You can be eligible for this |
| something will break or tear, leading to a repair. | | | | type of mortgage if you or your spouse is active in the |
| Sometimes it may only cost $10, but other times it may | | | | military or is a veteran of the military. |
| cost $5000. So, keep a little money in that savings | | | | 2. Rural Housing Loan - You can be eligible for this |
| account in case of an emergency. You will thank me | | | | type of mortgage if the home you are looking to buy is |
| later! | | | | in a rural housing area. The area is determined by the |
| 2. Is the monthly payment or the down payment more | | | | USDA. |
| important to me? | | | | If you don't qualify for a no down payment mortgage |
| It's quite simple, the more money you put down, the | | | | loan, then the next lowest down payment mortgage is |
| less your overall monthly payment will be. The less of | | | | a FHA mortgage loan. FHA only requires a minimum of |
| a down payment you have, the more your overall | | | | 3.5% for a down payment. Yes, only 3.5% is required |
| monthly payment will be. | | | | for a down payment with this mortgage program. It |
| Example in real numbers: | | | | has become the most popular program lately, because |
| The purchase price is $200,000 and you decide that a | | | | of it's low down payment, favorable interest rates, and |
| down payment of 20% is something you can afford. | | | | you can still qualify will less than perfect credit. |
| The principal and interest payment (not including the | | | | These are the types of questions you should know |
| taxes and insurance) on a 30 year mortgage at 5.0% | | | | the answers to before looking to buy a new home. |
| would be $858.91. Now, assuming the same scenario, | | | | The more knowledge you have, the more comfortable |
| but the down payment is only 10%, the payment would | | | | you will be in making an offer on a home. |
| be $966.28. The difference in a monthly payment is | | | | |