Buying a new home can be fun, exciting and pressuring. Keep in mind, one of the most essential parts of the process of buying a new home is the down payment you’re about to provide. Most of the lenders who deal in the conventionally financed loans need some kind of an up-front down payment right before they give you their approval for a mortgage. There is actually a range of down- payment for which lenders expect to receive and that range rises and simply falls depending on the factors like your credit, your income, so as your lending program.
Knowing More of the Average
Research says that the benchmark figure for a down payment is about 20 percent of the home’s price. Additionally, the Home Buying Institute already estimates the range for an average down payment to be from zero to 20%. Making use of those figures as your barometers, it will give you an average down payment for a home will be about 10%. The only thing is that, there are no official statistics on the average down payments.
Should You Pay More or Pay Less?
Whenever your credit is not in a good shape, your lender will surely ask you for a large upfront down payment, which could be about 20%. A credit score of 660 up to 680 is simply the range in which the lenders will let the lower down payments. Whenever your credit score is below such rank, your down payment will be higher. On the other hand, if you have a good credit score, you’ll surely get better rates of interest, meaning that some lenders may only ask you a less amount of down payment upfront. Agreeing to pay the mortgage insurance is a good way. This insurance will simply protect the lender in case that you default on your loan. However, you have to pay the premium. The bad side of this is that, mortgage insurance will simply increase your loan payment every month. However, it will not last for long.
Know What You Need
Saving money is simply a good way for you to accumulate the money you need in order to get the amount of the down payment for your new home. If you don’t have any goal, surely, you don’t know how much you should save for a span of time. One good thing for you to do is to determine the 28% of your monthly income. This is actually the recommended percentage being used on your whole house payment.
You can be very successful in buying a new home, but knowing the right average down payment that you should pay is essential. You don’t just want to jump into something for which you’re definitely not ready, right?
So, what are you waiting for? Should you want to get a new home now? Take the tips mentioned above, learn from it and get the right help you need.