Real Estate - Deciding on Your Down Payment Amount

When purchasing real estate you will need to decide on your down payment amount. The down payment that you select will have a large effect on your mortgage, and your future financial life as a whole. Here are a few things to consider when deciding on your down payment amount.

Lender Requirements

The first thing that you will have to look at is what the lender requires of you. Many times, they will have a minimum that you have to put down regardless of what you want to do. In order to qualify for the loan, you will have to come up with what they require. The amount required will vary from bank to bank.

Budget Constraints

Another factor that will help determine how much of a down payment to put down is your budget constraints. If you have some money saved up, it might be to your advantage to make a large down payment. The more you pay up front, the lower your monthly payment will be. If you can put up 20% of the purchase, you can even avoid the private mortgage insurance premium that you will have to pay otherwise. This can amount to a large monthly savings over the next 30 years.

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