Mortgage - Home Mortgage

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Home Mortgage Down Payment

The down payment can be the action that can helps a person qualify for a mortgage so they can buy a home.

A down payment is simply an amount of cash money that a person pays upfront when they get mortgage. Historically mortgage lenders required a down payment of ten percent before they would give a mortgage to an average person. In more recent times down payments have been much lower because mortgage principals have been higher.

Having a large down payment available can help a person qualify for a mortgage. A mortgage lender might be willing to overlook a low credit score if a buyer comes up with a large down payment.

How a Down Payment Can Help You

Making a large down payment can be the best thing you do when you take out a mortgage to buy a home. A down payment can reduce the principal of the mortgage and your monthly mortgage payments as well as your interest rates.

A down payment might also help you qualify for a larger mortgage and a mortgage on a much better house. Individuals who are willing to make larger down payments are often able to qualify for larger homes and homes in better neighborhoods.

This means that it is a good idea to start saving money for a down payment when you start thinking about getting a mortgage. The more money you have for a down payment the better deal you might be able to make with the mortgage company.

Advantages to Down Payments

Individuals who have bad credit or low credit scores will probably have to come up with a down payment in order to qualify for a mortgage. The lenders want a down payment because it decreases the risk they’ll take by giving such a person a mortgage.

A down payment shows the mortgage lender that you’re capable of saving money and financial discipline. It also demonstrates that you’re willing to cover part of the principal for the mortgage with your own funds.
It goes without saying that a large down payment can reduce the mortgage principal and the amount of mortgage debt that you’ll have. This will make it easier to pay off the mortgage in the long term and reduce your debt.

Sources of Down Payment Money

There are a number of excellent sources of down payment money available to home owners. The best source of down payment is obviously money that you can save up. Saving money can help an individual come up with the down payment for a home.

Opening a savings account is probably the first step you should take when you start thinking about a mortgage. Start putting money aside now for the down payment and keep doing it until you’re ready to try and buy a home.

Another source of down payment money you should look into is a tax refund. The federal government some times offers tax refunds of several thousand dollars to home buyers. Such a tax refund can serve as a down payment to a person who can’t normally afford one.