Finding the perfect home for your family is indeed an overwhelming task. But even after that, the process is not over. The next big step in acquiring the house is putting down the initial payment, which is confusing.
To lessen this stress, here is a helpful guide about down payments with updated information. Especially if you have chosen from Discovery Ridge townhouses for sale, it is imperative to keep reading below.
Are Larger Amounts Preferred as Down Payments?
Investing a significant amount in down payment is better if you want to borrow as little as possible for your mortgage. Besides, the higher is the down payment; the lower are the interest rates irrespective of the payment term length.
But with a smaller amount upfront, your monthly mortgage payments will be higher. Furthermore, the repayment period may also be longer.
Shelling out more dollars initially also means you can get a bigger loan amount against the existing equity. Suppose you need to renovate the home or incur medical expenses; a second mortgage against the home fetches you more value.
Professionals often recommend potential buyers choose one fromDiscovery Ridge townhouses for sale that is way below their budget but satisfies their needs. This left-over amount can be used to undertake emergency repairs, a paint job, or upgrades.
Is a 20% Down Payment Mandatory?
Down payment is the sum you pay towards the home purchase. It is not the deposit, which is a separate amount that goes to the seller while making an offer and gets included in the down payment as the sale closes.
However, there is no obligatory 20% rule, but the minimum amount will depend on the price of the home. Many times, your down payment can be far lower. However, self-employed persons and people with bad credit may have to pay more than 20%.
The down payment is removed from the purchase price, and the mortgage covers the remaining. But when you put down less than 20%, you will need to get mortgage loan insurance or mortgage default insurance that protects the lender. Generally, the insurance premiums lie between 0.6% and 4.50% of the mortgage.
Calculating Your Down Payment for Discovery Ridge Townhouses for Sale
Below is the minimum down payment requirement for purchase prices of homes:
•If the house value is less than or equal to $500,000, you should pay not less than 5% as the down payment.
E.g., For a $300,000-home, the minimum down payment is $15,000.
•If the purchase price is less than or equal to $999,999 but greater than $500,000, the first $500,000 has a 5% down payment and 10% for the other portion.
E.g., Home purchase price is $800,000. 5% of the first $500,000 is $25,000, and 10% of the rest ($300,000) is $30,000. So, in total, your down payment is $55,000.
•For homes worth $1 million or more, buyers need to pay a 20% down payment.
It is worth noting that you cannot get a mortgage loan insurance policy for the priciest homes on the above list if the down payment is less than 20% of the purchase price. On the other hand, mortgage loan insurance is compulsory in special cases even if buyers put down 20%.
No matter how much you pay, your choice ofDiscovery Ridge townhouses for salematters the most. Check out the RareBuilt Homes website for our latest townhome projects, or call us for a private appointment today!