One of the very first things that you need to remember when applying for a home mortgage is your down payment. Most lenders would require put down at least 20 percent of your total loanable amount as a down payment. However, there are other alternative options nowadays that would let you apply with less than 20 percent.
Beefing up your savings just in time for a down payment is difficult. You would have to start saving up for a down payment several months before you even apply for a home mortgage. There are other ways of coming up with a down payment however. You may try cutting off some of your expenses, get a part- time job, or even ask your friends or loved ones for a gift. However, just make sure that you do declare them as a gift or it might look suspicious to a lender.
Coming up with a down payment is essential for home mortgage application. All lenders in every state mandate the homebuyers to pay the down payment in order to process their mortgage application. Your down payment will then be deducted from your principal balance as soon as the payment has been made. So the higher your down payment is, the smaller your monthly mortgage payments will become.
However, there are some lenders who would actually let borrowers pay at least 3 percent, depending on their eligibility. That's why most real estate agents often advise their clients to look for other mortgage companies and not just settle for what's currently available. Having several mortgage companies to choose from helps borrowers get the best home mortgage plan that's suited for them.
FHA or the Federal Housing Administration supported loans allow borrowers to get a loan even without paying the 20 percent down payment. This home mortgage plans aims to help buyers who can't afford to come up with a huge amount of funds for their loans. However, a private mortgage insurance or PMI is required by all lenders if in case you won't be able to pay at least 20 percent of your total loanable amount. The PMI is made to protect the lenders for any loss if in case the borrowers won't be bale to continue paying their loans. That's why most homebuyers consider the PMI as just an added expense that makes homeownership possible for them.
Try to coordinate with your real estate agent and lender to see if there are other alternative ways on how you can get a loan without having to pay for PMI. It's important that you have enough funds to come up with this kind of payment if in case anything comes up.<< Back to the list.
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