The typical down payment on a home is 20 percent.
There are ways to get a mortgage for less than that, but there are good reasons to plunk down that magic 20 percent. If your down payment is less you are required to buy mortgage insurance, which can cost up to 1 percent of your entire loan, every year, according to Money Talks News. One percent may not sound like a lot, but if your loan is $100,000, you’ll pay an extra $1,000 annually.
Additionally, you’ll have a better chance of being approved for a loan, have lower mortgage payments and lower interest rates with a 20 percent down payment, according to Forbes.
There are many ways you can start saving toward your goal. One is a down-payment assistance program that can link you to lenders who will help you come up with your down payment, based on income.
Another way is by setting up a savings account with the highest interest rate you can find and dedicate it solely to your down payment. Have the money automatically withdrawn from your checking account. If you get a raise, or any extra money, whatever the source, add it to your down payment account, says Money Talks.
You can also make money by selling items in your home you no longer need or can do without like a boat, motorcycle, expensive electronics or sports equipment, adds Money Talk. Downgrading your car to a less expensive model can add thousands to your down payment.
On the financial side, sell taxable investments like stocks, bonds and mutual funds. Do not, however, sell tax-deferred accounts like an IRA or 401(k) or you’ll pay a penalty, unless you’re retired, says Money Talk.. If your employer has a program to help employees with down payment, take advantage of it, or ask relatives to contribute.
ReMax Real Estate Concepts
120 N 2nd Avenue West
Newton, IA 50208