{"id":32059,"date":"2021-12-13T14:43:52","date_gmt":"2021-12-13T19:43:52","guid":{"rendered":"https:\/\/www.marimarkmortgage.com\/?page_id=32059"},"modified":"2023-07-12T14:11:14","modified_gmt":"2023-07-12T18:11:14","slug":"down-payment","status":"publish","type":"page","link":"https:\/\/www.marimarkmortgage.com\/mortgages\/down-payment","title":{"rendered":"What is a Down Payment?"},"content":{"rendered":"
<\/p>\n
Buying a home is one of the most significant investments individuals or couples will ever make. Since purchasing usually requires the prospective homeowner to initiate a mortgage loan, the lender may ask for a down payment or a substantial amount of money to be paid in advance.<\/p>\n
Typical down payment amounts for a primary residence may range from as little as 0% to up to 20% of the total purchase price.<\/p>\n
Because mortgage lenders take on the risk that a borrower may default, they often ask for a \u201cdown payment\u201d representing a certain percentage of the purchase price.<\/p>\n
Suppose the borrower defaults sometime later, at which point the lender regains full ownership of the property. In that case, they naturally want the return from liquidating the property to meet or exceed the original mortgage amount.<\/p>\n
For example:<\/p>\n
Should the borrower default, the lender will expect to liquidate or resell the property to recover at least the unpaid balance of the original loan.<\/p>\n
However, lenders often accept a smaller percentage down payment under certain conditions than the traditional 20%.<\/p>\n
Homebuyers experience both advantages and disadvantages when paying a lower down payment.<\/p>\n
A higher down payment:<\/p>\n
A lower down payment:<\/p>\n
To determine the differences in the principal and interest payments, prospective buyers can discuss terms with their lender or look for any online mortgage calculator to determine the cost differences.<\/p>\n
To calculate various scenarios, you will need to enter the following:<\/p>\n
But, when determining the impact of the new mortgage debt on your monthly finances, you (and your lender) will also need to address the corresponding:<\/p>\n
Lenders may demand that these costs be included with the principal and interest in the monthly payment and placed in escrow until they are due.<\/p>\n
One of the lifetime benefits granted to Honorably Discharged Veterans of the US Armed Forces is the automatic qualification for VA (Veterans Administration) Loans<\/a>. These benefits, initiated toward World War II, were developed to reward returning veterans by making homeownership easier. Since then, millions of veterans have taken advantage of the no-down-payment<\/strong>-required and fully insured loans to purchase their homes, farms, and even businesses.<\/p>\n FHA (Federal Housing Administration) Loans<\/a> are also an option for homebuyers who choose to proceed with less than 20% down payment. Lenders will require the buyer to pay an FHA mortgage insurance upfront and annually to protect against losses from a default.<\/p>\n FHA loans are, however, often beneficial by offering more competitive mortgage rates, lower closing costs, and credit requirements.<\/p>\n Besides being the most significant investment in most people\u2019s lives, a home purchase is often the highest returning financial investment they will ever incur. In recent years, the combination of low interest rates and rising home buyer demand have resulted in record returns for many homeowners. While this situation is not likely to last forever, history shows that a well-thought-out homebuying plan pays off in many ways.<\/p>\n Prospective buyers should consult with one or more lenders to determine the right balance between the purchase price, down payment percentages, mortgage rates, cash flow, and capital preservation before making any quick decisions. In the current historically low-interest-rate environment, locking in a mortgage loan can be an excellent decision as long as buyers do not overburden themselves.<\/p>\n Marimark Mortgage is based in Tampa, Florida, and serves the mortgage needs of homebuyers, homeowners, and investors in Florida, Virginia, and Pennsylvania.<\/p>\n We specialize in mortgages for first-time homebuyers, conventional home mortgages, refinance loans, reverse mortgages, and FHA, VA, and USDA mortgage options. In addition, we\u2019ve worked extensively with cash-out refinancing and help clients to lower their monthly mortgage payments.<\/p>\n To get started with a mortgage to buy your next home, please fill out our\u00a0Quick Mortgage Application<\/a>\u00a0or\u00a0contact us<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":" Buying a home is one of the most significant investments individuals or couples will ever make. Since purchasing usually requires the prospective homeowner to initiate a mortgage loan, the lender may ask for a down payment or a substantial amount of money to be paid in advance. Typical down payment amounts for a primary residence […]<\/p>\n","protected":false},"author":1312,"featured_media":28874,"parent":30361,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"yoast_head":"\nFHA Loans<\/h2>\n
Performing Due Diligence<\/h2>\n
Marimark Mortgage<\/h2>\n