Affordable in Today’s Market?
Set a house purchasing budget
This translates into simply how much will the monthly house payments be? Once your concrete budget is set with your (P.I.T.I) you are ready to go shopping for that new house.
How Much House Can I Afford?
Allow your Sales Representative to work with you and trust that they know exactly how much house you can afford.
What is the source of your down payment?
Are you getting your down payment from a savings account, parent power, or the sale of a home?
What Type of Loan
Home Equity- Some parents use the equity they have built up in their home to assist their children in purchasing a home. This can be presented as a gift from parents to children.
Shared Equity/Profit-Sharing-By part of the down payment the lending party will share in the profit or the net equity of the house when the home is sold.
Stocks & Bonds-If the market s is good or stable and does not warrant you selling your stocks or bonds you may be able to secure a bank loan using your portfolio as security.
How to Reduce Your Down Payment
Your mortgage insurance can reduce your down payment. With a conventional loan, you may be able to put down 5 or 10 percent. If you go through a lender you will be required to purchase private insurance (PMI). PMI insurance protects the lender in the case of default, and it also allows the lender to approve a substantial mortgage amount.
You can expect to pay an initial amount at closing. Then, add your monthly payment for your mortgage, you will pay an additional amount of the mortgage balance. It is important for you to remember this payment will continue until dropped at the discretion of the lender unless there is a stop date indicated in the deed likes accumulating 20% equity. So ask your lender for the specifics of any loan. And make sure you have a clear understanding about the amount of mortgage insurance and how it can vary by the loan type.
Down Payments and Monthly Payments
The larger your down payment means the less money you will have to borrow, which means the lower your monthly notes will be. However, don’t forget in your down payment you will need to add in closing costs, appliances, closing costs, family emergencies, household setup, and various other things that will arise.