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The Pros and Cons of a Large Down Payment When Buying a Home

If you are in the market for a new home, one of the considerations you will need to make is how much to invest in your down payment. Let’s take a quick look at some of the pros and cons of making a large down payment when buying your next home.

A Large Down Payment Has Its Benefits

If you have the funds available, you may find a bit of an advantage in a large down payment. The following are a few potential benefits that you may realize.

You Can Afford More ‘House’ – if you are aiming for a large, luxurious home a significant down payment can help you get there. As long as your credit is in line with your needs, a large down payment leaves more room in your mortgage.

You May Pay Less Interest – conversely, if you don’t need to carry a big mortgage you can choose a shorter amortization period for your mortgage. A shorter loan period means that you are likely to pay less in interest.

You Might Not Need PMI – if you can afford to invest more than 20 percent of the home’s value in your down payment, you may not be required to purchase private mortgage insurance.

A Few Of The Downsides

Of course, there are some potential downsides to using a large portion of your available cash as a down payment:

Do You Have The Money? – a large down payment doesn’t make a lot of sense if your finances can’t tolerate that hit right now. If you have your down payment and little else, you might want to reconsider.

You Will Be Less Liquid In The Short Term – keep in mind that once you sign the closing paperwork, your down payment cash is gone. This will leave you a bit less liquid in the short term since you would need to sell your home to get that cash back out.

You Can’t Invest That Money Elsewhere – you won’t be able to use these funds for other investment purposes. Of course, real estate is an investment itself so this may be less of a concern.

Still Have Questions? Get In Touch

Choosing the right amount for a down payment is a decision best made with professional help. Contact your trusted mortgage professionals and we will be happy to share our experience and insight.

Buying in 2018? Get Your Down Payment Ready Now by Tapping These Helpful Sources

Are you in the market for a new house or condo in 2018? With the new year just around the corner, now is the time to get all of your financial details in order. As you may know, buying a home is a significant financial transaction. But it all starts with your down payment, which is the lump sum that you invest in order to purchase the home. In today’s blog post we will share a few sources of funds that you can tap into for help saving up your down payment.

Peer Into Your Financial Future

A helpful first step is to map out your financial future. Do you have any lump-sum payments such as an annual bonus or a tax return coming up? If so, those are excellent sources of funds to help build up your down payment.

Put A Stop To Unnecessary Spending

Anytime you want to save money, an obvious step is to cut as much unnecessary spending as you can. Invest the time in creating a strict monthly budget which includes setting money aside for your down payment. Be sure to watch for any daily habits that are eating away at your savings, such as high-priced specialty coffees or eating out regularly.

Research Local Homebuyer Assistance Programs

Don’t forget that you’re not alone in your quest for home ownership. There are numerous federal, state and municipal homebuyer assistance programs that offer financial help when buying a home. Your local real estate professional will be happy to share some insight.

Check In With Your Employer

Finally, don’t forget to check in with your employer to see if there are any home ownership grants or subsidies. Down payment and home-buying assistance programs are becoming more popular with companies as an extra perk to offer employees. Send a quick email or stop by the human resources department to let them know you’re in the market for a home and to see if any programs are on offer. If your workplace does have a program like this, it’s the perfect time to take advantage.

Having your down payment funds ready will make the buying process faster and show your mortgage lender that you’re prepared for home ownership. For more information, contact your trusted mortgage professionals. We’re happy to share some amazing listings that perfectly suit your needs.

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In these days of low interest rates, it can be a great idea to get into the real estate market and invest in a home. However, if you don’t have the funds saved up to buy a home outright, it may seem like more of a burden than it’s worth. The good news is that you might qualify for a mortgage loan, which tend to come with more favorable terms than a traditional bank loan. Here are three reasons why a mortgage might just be the best money you ever borrow. . . . → Read More: Thinking About a New Home? 3 Reasons Why a Mortgage Will Be the Best Money You Ever Borrow

Forget About the Bank of Mom and Dad — Here’s How You Can Save Your Own Down Payment

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3 Ways to Earn Some Spare Cash to Help Pay Your Mortgage Down Faster

A mortgage is one of the most expensive purchases you’ll make in your life, and for many the idea of being indebted to it for years can seem like quite a burden. However, while you won’t necessarily be able to pay off your home with instant savings, there are ways that you can pay it down more quickly. If you’re wondering how to drum up some extra money for your mortgage, you may want to consider the following options. . . . → Read More: 3 Ways to Earn Some Spare Cash to Help Pay Your Mortgage Down Faster

Student Loans vs. Down Payments: 3 Ways You Can Manage Both and Buy a New Home

The idea of paying off your student loans and buying a home at the same time can seem like an impossible feat given the impact on your Debt-to-Income (DTI) ratio. However, there are ways it’s possible to have enough funds and good enough credit to make your dream of home ownership come true a little more quickly. . . . → Read More: Student Loans vs. Down Payments: 3 Ways You Can Manage Both and Buy a New Home

Buying a Home This Autumn? 4 Unconventional Ways to Save up for Your Down Payment

Autumn is a popular time for new home buyers to start looking for their first house or condo. But with that down payment looming, everybody could use a bit of help saving up to make that bulk payment a little less intimidating. . . . → Read More: Buying a Home This Autumn? 4 Unconventional Ways to Save up for Your Down Payment

Mortgage Myths: Here’s Why You Don’t Need a Full 20 Percent Down Payment

If you’re just getting into the real estate market, you may have heard that 20% down is the ideal percentage in order to lower your monthly payments and get your mortgage application approved. However, while 20% is often suggested, many people struggle to come up with this amount of money. . . . → Read More: Mortgage Myths: Here’s Why You Don’t Need a Full 20 Percent Down Payment

How to Calculate Your True Cost of Living and Determine How Much of a Home You Can Afford

If you’re in the market for a house and are wondering how your income will stack up against the rest of your expenses, here’s how to determine a home cost that’s reasonable for you. . . . → Read More: How to Calculate Your True Cost of Living and Determine How Much of a Home You Can Afford

Buying a New Home? Learn How the ‘Conforming Loan Limit’ Might Affect Your Purchase

‘Conforming loan limit’ may be a less familiar real estate term than the rest, but here are some things you’ll need to know about it and what it could mean for your biggest investment. . . . → Read More: Buying a New Home? Learn How the ‘Conforming Loan Limit’ Might Affect Your Purchase