What is the lowdown on the down payments required when you buy a house?
In most cases people struggle to save up the down payment needed to buy a home. These is especially true of first time home buyers that have a lower income. Lenders often have suggestions and plans that will work with smaller down payments.
Most Mortgage lenders require a down payment of 5-20 percent of the sale price of the home.
There are a few programs that allow zero-down mortgages but you must have excellent credit and no blemishes anywhere. If you put down less than twenty percent you will be required to have PMI or private mortgage insurance. This adds cost to your loan each month. It is in place to protect the lender.
You can often lower your mortgage payment or afford a more expensive house by putting more money down.
What is the real lowdown on down payments?
An example would be a person that makes $40,000 a year. Your maxiumum monthly payment should not exceed 28% of your gross income! . This translates to a payment of $933 a month toward housing.! I f you have good credit and 20% saved to put down you can save more. Here is how that works. If you bought the house but didn't have as much to put down and you get an average interest rate of 7.5% your total principal would be $133,435.45. BUT if you put 10 percent down, that mortgage would cover a house worth $148,262 and if you put 20 percent down you could cover a mortgage of $166,794. The best scenario is twenty percent down.Assuming your total monthly debt is no more than $1,200 (36 percent of gross income), the bigger the down payment, the more expensive the house you can buy.
This helps if you are backing into how much house you can afford to buy. If you want to keep the monthly payment to $1060, the chart beleow considers! the key factors of interest rate, down payment and length of term:
With over 12 years in the industry, brothers, Justin and Morgan make quite a team at Mortex Lending in Lewisville, Texas.
Call Morg! an at 21 4-705-2643
or Call Justin at 214-377-1583
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