If you have been planning to buy a house, you may have come across various kinds of suggestions regarding the size of the down payments which are required to be made. Sometimes a person can secure a deal without making any down payment while during other times he may be required to put 30% of the home value as the down payment. However various factors govern the actual payments that are required to be made. Number of times, home buyers can also come across different loan types that will not penalize them for putting lower amount of money down.
A down payment can be described as the amount of money which a person is willing to pay when the home loan contract is finalized. It helps in reducing the amount being financed which in turn means that the person stands to gain the loan at beneficial interest rates. However it differs from the earnest money which can be described as the amount of money which is put forward in a home offer. Earnest money is often seen as a sign by the seller which helps him to differentiate a serious buyer from a person who is not really in the need of a house.
The loan to value ratio while buying a house is usually based on the loan amount which is left after paying the down payment. The more a person pays as the down payment, the lower would his loan amount be which would automatically lower the ratio. The value in the loan to value ratio symbolizes the actual value of the property, the price at which a person would be buying the house. Various financial institutes give loan at preferential rates to those home buyers whose loan to value ratio is lower than 80%.
A homebuyer might be required to pay for private mortgage insurance if less than 20% of the property price is paid as the down payment. This is because a person whose loan to value ratio is high is considered as a risky borrower. This is one of the easiest ways for a financial institute to prevent risks. However people who have exceptionally well credit score can qualify for down payment that may be as low as 5% of the property’s value. Various banks are likely to give loan to such people.
If you are really interested in buying a house for your family, it would be a wise decision if you can pay a hefty down payment, this would not only decrease you loan amount but would also help you to make easy monthly payments. Before signing a deal, talk to your financial institute or lender and tell them about your financial condition. Consult an experienced lender as he would be the only person who can give you the best advice.
Remember to buy a house depending upon your financial status. Do not delve in a property which you really can’t afford. Larger down payments can help you to secure the mortgage at a faster rate and at lower interest rate. So remember to save money before you plan to buy a house.
Be it finding your own living space or a commercial office, Sunny Enclave offers an environment that can truly impress any investor. So if you have been planning to Buy commercial property, how about making an investment in this township? Visit apartmentsmohali.com/buy-property.php to know more.