Most of the time, the goal is to put as little down as possible on a home, but paying more money upfront has its advantages. Here are just a few of them for you to consider.
Putting a large down payment can save you thousands of dollars of accrued interest over the loan term. This is especially true with 30-year mortgages.
A larger lump sum can also reduce your rate! Basically, the larger the down payment, the less risk it is to a lender, thus lowering your interest rates.
Similarly, if you have poor credit, you can lower your rate by putting down larger payment upfront. With a large down payment, you reduce your "riskiness," and lenders can offer you a better mortgage rate, regardless of credit score.
If you opt for a conventional mortgage, a substantial down payment can help you avoid paying mortgage insurance. To qualify, you must have a loan-to-value ratio (LTV) of 80%. That means that you'll need to make a down payment of at least 20% of the home price.
If you're unable to put down a large sum all at once, there are still affordable options! Consider the following loans and contact us to learn more about each of them (and more!):
Federal Housing Administration (FHA) and Veteran Affairs (VA) loan provide better financing options for borrowers making a small down payment.
For example, FHA mortgages require as little as 3.5% of the total loan cost for a down payment. VA-eligible borrowers have no down payment options along with inexpensive closing costs.
There is also the option of waiting and saving for a large down payment. However, with government loans, it may not be necessary. Contact us today to see which is the fastest and most affordable option for you.
We've been helping customers afford the home of their dreams for many years and we love what we do.
EON Mortgage Group Inc
Illinois Residential Mortgage Licensee
MB. 6761207 NMLS 1547930
For licensing information, go to:
950 Skokie Blvd Ste 204
Northbrook, Illinois 60062