Buying A Home – Why You Should Put Down A Big Down Payment
When you purchase a home, you’ll be required to place a significant amount of money towards a down payment. This amount will depend on how much money you’ve saved, the type of loan you apply for, and the price of the home you want to buy. In today’s market of Tustin homes for sale, you’ll have a much better chance qualifying for a loan if you can put down 20% of a home’s purchase price. Here are some benefits to placing a large down payment:
-Avoid PMI. With a 20 percent down payment, you won’t be required to cover the cost of private mortgage insurance, or PMI, which banks normally require of homebuyers who place less than 20% down on the value of a home.
-Lower monthly loan payments. By borrowing less money, your monthly payments will be lower.
-Reduced interest. When you borrow less money, you’ll pay less in total interest costs.
-A secure investment. Regardless of the real estate market, investing cash in your property is a low risk way to make money over time.
-Qualifying for a lower interest rate. By placing a larger down payment, you’ll avoid taking out large mortgages, also called jumbo loans, with higher interest rates.