For many homebuyers in Orange County and across the United States the term “down payment” is something that they know but very few homebuyers are aware of how much of a down payment they have ready when buying a home.
Should a homebuyer put down five, ten or twenty percent on a home? For best results with buying a home, anywhere, a down payment of no less than twenty percent is what every home buyer should go with and here’s why:
Great Chance Of Getting Approved For A Mortgage
The real estate market in 2013 is not what it once was five or even 10 years ago. Back then a homebuyer could get a mortgage and put nothing down, or as little as three and a half percent down. But in today’s world, most banks will not approve a buyer unless they are prepared to put down at least 20 percent thanks to changes in the market over recent years which have tightened lending standards.
The Buyer Is Ready To “Play The Game”
Banks have always loved seeing home buyers who are prepared to put 20 percent down because, to the lender, these buyers are serious about buying a home and will be prepared for all of the responsibilities that come with the home over the lifetime of the mortgage. In addition, it it shows the bank that the owner is willing to put more of their own skin in the game, so if things to bad, they won’t just walk away like in years past.
Reduced Mortgage Payment
Which is better? Having a higher mortgage payment over the lifetime of the mortgage loan or a lower monthly payment? Paying 20 percent down means that a homebuyer will of course be borrowing less and this also means that they will have a smaller mortgage payment to pay off during the lifetime of their mortgage loan.
Low Interest Rate
Buyers who are prepared to put down 20 percent can also expect to pay a lower interest rate on a mortgage loan compared to those buyers who put down less money.
To learn more about the benefits of putting down at least 20 percent or to view the latest Orange County homes for sale, contact Fred Sed & Associates today at (949) 272-0125.