How much do yo put down on a new home purchace?
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Answers:
As much as you can. The more you put down, the lower your mortgage payments will be and the easier it will be to make extra payments and pay it off early.
As much as you want. The least amount is 5% if you are a US citizen, plus closing cost.
3% down if u can get F.H.A. loan
Nothing if u can get a veteran loan
10 to 20% if it is a conventional loan
fha is the best way to go!
good luck, friend.
You earn points based on your down payment. 10% = 1 point. Mortgage companies also require you to have additional insurance if you have less than 2 points or 20% of the price of the home. You pay for this extra insurance until you reach that level in equity in the home. Depending on the price of the home, loan duration, etc this could run into the thousands. You can also cut several years off of your note, and additional thousands by making your first payment the day you sign your contract.
That depends on the country you live in. There are two ways of looking at this.
One way is to put as much as you can afford down as a deposit, thus you borrow as little as possible to keep your interest costs down. In other words, if you put a 50% deposit your repayments will be much lower than if you put down a 10% deposit.
In some states of Australia the banks prefer you to pay a minimum deposit of 20%. However you can go as low as 10% deposit if you pay mortgage insurance of about $1000. The first thing you need to do is establish what your preferred lender wants as a minimum deposit.
Even so, when you put down a low deposit your interest bill is higher, and it will be even more difficult to make repayments if the interest rates go up a lot.
Calculate how much is the maximum you can afford to pay in loan repayments (including a theoretical 10% interest rate in case rates go up), and then you can work out if you can afford to make repayments on a particular loan sum.
You can use a free online mortgage calculator and change the interest rates for different borrowing scenarios. You can do this for various loan amounts.
In this way you can see what you need to ideally put down for a deposit.
However if you already have a good amount of equity in one property it is possible to use that property as collateral for a second property and borrow up to 105% of the purchase price which gives you some money left over for legals. However you will find the interest bill will be quite hefty.
So if you are just starting out, I would suggest you use all your available funds as a low deposit and legal costs, and buy the best house you can afford.
Remember that the main value is in the land, and that the land increases in value, while the buildings decrease in value.
Think about this old saying " buy the worst house in the best street".
Dont forget to buy near good facilities like shops transport and schools.
Also remember, anything you really hate about the house, will make it hard to sell later on.
Also very important is that the banks will value the house you make the offer on, and if they value the house higher that the purchase price, you can sometimes borrow more because of the equity. But if the bank values it lower than the purchase price, you might have to come up with a bigger deposit.
So always make the offer conditional "on approval of finance from a lender of the purchasers choosing". Be sure you write that in the offer or they might find you some loan shark to finance the purchase.
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