What is a down payment?
Define Down Payment...
Down payment, is an initial up-front partial payment for the purchase of expensive items such as a car or a house. It is usually paid in cash or equivalent at the time of finalizing the transaction. A loan of some sort is then required to finance the remainder of the payment.
Have you Saved A down payment?
Additional Information
Most lenders won’t lend you the full price of a home.
They want you to come up with some of the money yourself. That money is called a down payment.
It can be hard to save up a down payment. But a large down payment can help you get a mortgage and reduce the interest rate you pay.
The smallest down payment is usually 3.5 percent of the price of the home.
Many mortgage lenders want you to put at least 5 percent down.
For example, imagine you want to buy a home worth $100,000
A 3.5% down payment is $3,500
A 5% down payment is $5,000
A 20% down payment is $20,000
If you can’t afford a down payment of 20 percent, your lender may ask you pay for mortgage insurance. That increases your monthly costs.
While having a down payment seems overwhelming in the end it will benefit you!