Getting a loan for your first home might be easier than you think.
One of the biggest initial expenses homebuyers face is the cost of the down payment. That’s the amount of money you pay out of pocket toward the cost of the home. The rest is what you’ll need to take out as a mortgage loan that will be paid off over time – usually 15 or 30 years.
The bigger the down payment you can make, the less you’ll have to borrow. And borrowing less will mean lower monthly payments and less interest paid over the term of the loan.
But not everyone has a lot of money to put down – and that’s OK.
Some loans will require a down payment of only 3 to 3.5 percent or more, depending on the lending program.
That means if you’re looking at a $200,000 house, a 3% down payment would only be $6,000, and the loan amount would be $194,000. But if you can afford a bigger down payment – say 20% – you’d only have to borrow $160,000, which would lower your mortgage payments and reduce your interest costs.
When considering buying a house, lenders will work with you to see if you qualify for a loan. Among other things, they’ll factor in how much you earn, how much you owe on other loans, and what your monthly expenses are.
The size of your down payment could make a big difference.
That’s why if home ownership is your goal, you should consult a lender to see what your options are and what you’ll need to do to make it happen.
Planning ahead can be a huge help and we’re here to advise you in any way we can – from ways to save for that down payment to what your mortgage choices are.
Talk with us about how you might be able to save for a down payment that can make your home-buying dreams a reality.