Why Putting A 20% Down Payment Is Beneficial When Buying A Home
If you are in the market to buy a home, there are various home buying tips that you have to understand. The first thing that is essential is your down payment. Generally, buyers are encouraged to put down between 20% and 30% on their homes. This can be an amount that seems insurmountable, but a good saving strategy can make it attainable. Nowadays, there are lenders that are willing to give you a mortgage for only 3% or 5% down. Even though it can be tempting to put less down and buy a home quickly, in reality, it can be more beneficial to save more and put down 20%.
#1 You Will Pay off Your House Sooner
When you put down 20% for your future home, you are able to pay off your home faster. A down payment goes towards the principal of your home, so you will end up having to pay less money over the life of your loan. When you put down 20% for your down payment, then you are only left with 80% more to pay over the life of your loan.
#2 You Will be More Likely to Get a Good Rate on Your Mortgage
Lenders want to know that you are creditworthy. This means that you want to show your lender that you have the capacity to pay them back. The best way for a lender to know that you are going to be financially savvy enough to pay them back is to see that you have already gathered 20% to make the down payment. Lenders are more likely to give you a loan with a lower interest rate if you have put down more money in the first place.
#3 You Are More Likely To Get the Home
When it comes to homes for sale in Lakeland, sellers know that it is necessary for you to get a mortgage in order to make your purchase. They are concerned with their house selling in a timely fashion, and they want to deal with buyers that are going to be able to get a mortgage quickly. When you come with 20% to the table, sellers have the faith that you are going to be able to get a mortgage quickly.
#4 You Can Avoid PMI
Private Mortgage Insurance is what your lender will add as a fee if you do not put at least 20% down. This is a fee that you are going to have to pay every month until you reach 20%. When you put 20% down, you can avoid this extra monthly fee.
You Do Well to Save
Even though it can seem like a large amount, 20% is the best amount to put down if you are looking to buy a home. Once you have 20%, not only do you instill confidence in the homeowner and the lender, but you can have the satisfaction of knowing that you were able to save enough money to pay for 20% of your home before you made the purchase.