What You Need To Know About Down Payments!

What is a down payment? A down payment is money that the buyer of a home puts toward the purchase of a home at closing or before closing. Earnest money is the portion that will be given before closing. This is about one percent of the purchase price of the home, given once a contract is accepted. This money is held in an escrow account, considered as a deposit. It shows that a buyer is serious about the purchase of the home. The down payment given at closing is the amount decided upon by the buyer and the mortgage company.

After knowing exactly what a down payment is, many people ask the question, how much is needed to put down? The minimum down payment amount you could be asked to put down is around 3 to 3.5 percent. This amount is always agreed upon between the buyer and the mortgage company. But with a lower down payment PMI is required, private mortgage insurance. This is not the same as if you put 20 percent down.

Putting 20 percent down lets you avoid mortgage insurance. Private mortgage insurance is a way for the mortgage company to cover themselve just in case you are unable to pay your mortgage in the future. When buying a home consider what you can put down. If you are able to put down 20 percent I would suggest you do so.

This is some basic information about down payments. If you have any further questions please feel free to reach out to me at 317-650-5898 or email me at ermusleh@gmail.com

Elaina Musleh