Reasons to save for a larger down payment
Being over eager to buy a home may not be in your best long term interests, there are a few reasons to delay the purchase and save up more so that you can apply a larger down payment to the purchase. Most buyers will need New York home loans to finance the purchase; the down-payment is that which determines the amount that has to be financed through a mortgage. Conventional mortgages, either fixed or variable interest rates usually require at least 20 percent of the price of the home as a down payment, but the more you put down the better off you will be for a number of reasons.
Smaller mortgage payments:
The more you put down the smaller the monthly payments will be, this often is very important if the couple have yet to start their family and their financial needs will increase. Just as important as having a more controllable budget is the fact that you will save on the amount of interest that you would pay over the life of the loan.
Lower rate of interest:
New York Home Loans are often available at a lower interest rate when the down payment results in a lower loan to value ratio. The higher the down payment the lower this ratio becomes and a low ratio reduces the risk that the lender takes by granting the mortgage. A lower interest rate can save considerable money over the life of the loan.
Eliminate mortgage insurance fees:
Any down payment less than 20 percent will usually require that you procure mortgage insurance which protects the lender in the event of default. The cost of private mortgage insurance is quite steep, easily running upwards of one percent of the value of the home annually. This can easily equate to several thousand dollars a year. By putting down a full 20 percent or more, you can eliminate this cost completely.
Less risk of an upside down mortgage:
If the market happens to have taken a down turn when you need to sell your home, it is possible that the amount owed on the mortgage is more than what the house will sell for, this is called an upside down mortgage. If you had originally put a substantial down payment when you purchased the home this is less of an issue.
A larger down payment can save you thousands of dollars over the term of the mortgage.
New York home loans are available from Members Mortgage Corp. As a member of a union, you will be excused from all fees that are normally part of a mortgage application.