How Much Should I Put Down On My Mortgage?

How Much Should I Put Down On My Mortgage?
by Somerset Mortgage Lenders: "The Brains, The Courage and The Heart to Make Your Dreams Come True"

Somerset Mortgage Lenders and Gregg Marcus strive to keep the public educated with tips meant to make getting your loan as easy and painless as possible. To this end, they have put together this brief explanation of how much you should expect to put down on your mortgage.

In an ideal scenario, you would buy your home with a 20% down payment, have closing costs that come to around 3-5% of your home’s purchase price, and have enough money remaining in your bank account to cover 2-3 months of housing expenses.

The peace-of-mind this gives lenders usually translates into a nicer deal for you. And as a bonus, you start out owning your home with a sizable amount of equity already in it.

Of course, it’s not all that easy to meet those qualifications, meaning that most home loan scenarios are somewhat less than ideal. First-time homebuyers, for example, may have great difficulty in coming up with that 20% down. That amounts to $40k down on a $150k mortgage or $70k down on $250k.

Fortunately, over the past several years, lenders have started showing an increasing willingness to finance the majority of home’s purchase price - in some cases as much as 97%. That amounts $4,500 down on a $150k mortgage or $7,500 on $250k.

This is because lenders are now able to sell loans with as much as 97% financing to the Federal National Mortgage Association (Fannie Mae) to be bundled as securities sold to investors on the secondary market, thereby taking the risk of making the loan off of themselves.

The allure of down payments as low as 3-5%, however, is deceptive and should be weighed against the “costs”, namely that you would start out owning your home with very little in home equity, and with less than 20% down, your mortgage insurance rates could run quite high.
Though mortgage insurance rates for fixed rate loans given to people with decent credit are generally standard across the board, if you have poor credit or are considering an adjustable rate loan, you may want to consider putting up more of a down payment or risk paying exorbitant insurance rates monthly.

Finally, we come to the popularly-sought “Zero-Down Loan“. City and state organizations have programs benefiting potential homebuyers with low-to-moderate incomes and those looking to buy in urban areas. These programs offer loans that are below-market rates with little-to-no down payment necessary.

The enticing proposition of 100% financing is available!

SOMERSET MORTGAGE LENDERS
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get a free quote now at http://www.somersetmortgagelenders.com or call 1-800-675-9783