Home buying tips, 20% down payment

The busiest season for home buying will soon be here. Many potential buyers will hit the market by the thousands during the spring and summer months. Will you be one of them?  If so, I have some tips to explain by you should consider putting down 20% on your mortgage.

Putting 20% Down on a Home

Mortgage Approval – When you show a mortgage company or bank that you can put down 20% on your mortgage, it shows them you are a serious buyer and it increases your chances of getting the loan. Those loan programs that allowed 0%, 5% and 10% down are nearly gone.  Many loan companies just won’t do it anymore; however, if you really need that, there are still some around.

Less Payment – When you put 20% down, you will have a smaller amount mortgage to pay on.  This will give you a more affordable mortgage that will be easier to pay each month.

No PMI – When you put down 20% on a home, you can avoid paying Private Mortgage Insurance. Avoiding the PMI will also save you thousands.

Rule Change – The rules in the mortgage game have all changed for a new Qualified Mortgage by the Consumer Financial Protection Bureau. Through the new rules, home buyers will have to meet a 43% debt-to-income ratio before they will even be considered for a loan.  The debt-to-income ratio means once you add up all your debt like mortgage, property taxes, insurance, credit debt, other loans, etc, your debt has to be 43% lower than your income. That means only $43 of debt for every $100 of income.  Putting 20% down will drop your mortgage payment and help your debt-to-income ratio.

Lower Rates – In most cases putting 20% down will save you thousands of dollars on interest payments.  That’s huge savings the longer you keep the home. When you keep the home 7 years or more, you start to pay even less on interest. It’s a win, win situation.

Quick Equity – You will build instant equity on your home when you put 20% down. This will also help protect you in a down real estate economy.

This information provided by: Erika Rogers – Your guide. Serving St. George UT and surrounding communities.

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