The Down Payment WILL Save You Money! The down payment basically decreases the amount of money you will need to borrow from the bank. This may be the difference between qualifying for a mortgage or not.
However, the benefits of making a large down payment are much more far reaching than simply a smaller mortgage. As the buyer pays month after month, year after year, on that mortgage, the $20,000 down payment translates to a lot more money because it means less money in interest is being paid out on that mortgage. Interest does you, the home buyer, very little good. Interest paid is just money out of your pocket with no return, ever. Think of interest payments like taking your money, and putting it down the garbage disposal.
That example doesn’t apply to many traditional conventional loans which require a 20 percent down payment. Taking that into account, your $200,000 home with this larger down payment of $40,000 would mean a $160,000 mortgage. At a 5 percent interest rate on a 15 year mortgage, that translates to about a $7,000 savings in interest alone. Consider you’ll also be paying about $100 less on a monthly payment basis, and your big down payment will soon pay for itself. $100 each month doesn’t sound like much, but that could pay your cell phone or cable bill-and everybody likes to save money. In other words, the bigger the down payment, the better off the home buyer will be years down the road.
Usually home buyers who already own a home have equity in the current home to use as a down payment for a new home. So, these second time home buyers utilize conventional loan products tailored to owners with equity. Some of these loans may only require a 5 to 10 percent down payment. However, as you can see, it is to the home buyer’s best interest to bump that up whenever possible.
Of course, many first time home buyers are young people who have not had the time to save up such a large down payment. For these home buyers, there are loan products available that are more conducive to a smaller down payment. These unconventional loan products include well known names such as the FHA or VA loans. Many of these loans have down payments as low as 3 percent. There are also community and state programs that make it their business to sell the idea of home ownership as a way to add value to the region. These loan programs make it easier for a first time home buyer to come up with a down payment. Improving the value of property throughout the community is the strategy behind these unconventional loan programs. However, even these programs better serve the home buyer who has a larger pot of their own money to put down.
Talk to a loan officer about all your options regarding a required down payment, then choose the program that is best for you. Your ultimate goal is to save the most money when the mortgage comes to a close. Work out the figures and you’ll agree the bigger the down payment you can afford, the more you’ll have in your pocket when you burn those mortgage papers.
Realtors, why not make it easy for your clients. You should have a mortgage calculator on your website-but can your clients use this great tool while they are at the showing? Most don’t bring their PC, but they do have their Smartphones and tablets. So the question is, can they use your calculator tool on their device? Many realtors don’t provide this tool. http://valleymobi.com specializes in giving professionals tools that make their clients lives easier-which makes the entire sales process less painful. If your Realty company hasn’t went Jetson Age yet, contact http://valleymobi.com TODAY! From MOBIminute Professional