We all know that having a down payment when you are buying a home isn’t always possible. But, when you have a down payment when you are applying for a home loan, there is a couple of benefits you will have. Benefits are making having a home and paying off a home loan so much easier. These are the top three reasons why you need to have a down payment before you are applying for a home loan or mortgage loan.
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The lower monthly premium on a home loan
The higher your down payment is going to be, the lower your monthly premium will be. And, this is a huge benefit. You are paying the home loan for at least 15 to 20 years. And, if you have a huge down payment, you will benefit for the next 15 years.
However, not everyone can put down a large down payment. But, you need to try to save up as much as possible. The more you have, the more you will save.
The interest rate can be lower
Lenders that are approving your home loan for you will see you as a low-risk when you have a down payment. And, buyers that are low risk will not have to pay as much interest as other people.
This means that your premiums will also be lower. The overall amount that you will pay which includes the interest rate will be lower than other people. And, if you have a good credit score as well, it will just be more beneficial to you. This alone makes it worth saving until you have enough for a down payment.
Better chance in a multi-offer situation
It does happen a lot that there is more than one offer on a home. And, even if you have a pre-approved home loan, you might lose the home, because of the offer price you have put in. But did you know that even if your offer price is lower, but you have a down payment, that your offer might be accepted?
A homeowner that is selling his home will rather accept the offer from someone with a down payment than from someone that doesn’t even have an approved home loan yet.
There are many reasons why you need to consider saving for a down payment before you are buying your first home. Paying lower premiums, having a better chance of you getting the home offer, and lower interest is just three of the benefits. One thing that you always need to remember is that the higher your down payment, the more benefits you will have.
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