|
Ideally you ought to make a mortgage down payment of 20 percent of the price of the property that you intend to buy. You will also have to pay closing costs of 3 to 5 percent of the price of the home, and have enough money left over to cover the monthly housing expenses for about three months.
This would give you a healthy piece of equity in the property, and make the mortgage lender happy, which translates into a better deal for you. The problem is that most people don’t have the money to make such a large down payment!
However, lenders now offer borrowers a low down payment mortgage, and are willing to finance as much as 97 percent of the price of a home, because they can reduce the risk of default by selling the loans to Fannie Mae (Federal National Mortgage Association).
Borrowers can now hope to get a mortgage loan by making a home mortgage down payment as small as 5 percent of the price of the home.
If you put down less than 20 percent of the price of the home, you will be asked to pay an additional amount towards private mortgage insurance (PMI), which protects the mortgage company against the risk of default.
If you can’t afford to make a down payment for a mortgage, you can find out about getting a no down payment mortgage or one with a very small down payment with a very low interest rate, which may be provided by your city or state.
If you are really short of cash, you can also try to get 100 percent finance. This involves getting a second mortgage for about 20 percent of the price of the home, at a higher interest rate than what you will have to pay for the 80 percent first mortgage amount.
To get free mortgage quotes from the best mortgage companies, please fill out our short form. You will receive mortgage quotes for free, and without any obligations! Your contact details will never be revealed to anyone without your permission.
Please feel free to send us an email if you need any advice about home purchase mortgages. We will help you to find mortgage solutions that are just right for you!
|
