Home Loan Determinants > Making a Down Payment
As part of our article series of factors that affect home loans, we’re going to cover the most popular feature: down payments. While this chunk of change was formerly expected to be 20% of the home’s price tag, there are other options now for buying a home. The more money you have saved, the more your interest rate will fluctuate. We’ve already covered some other factors that affect your home mortgage loan, including your credit score and how much debt you’ve accumulated, and now it’s time to cover the most important feature of them all. Whenever you find the right home, protect it with a Wright City Home Insurance policy.
Find out how much you’ll need to save.
The more you can save, the better, but that’s easier said than done. Your mortgage broker will tell you how much you ideally will have saved and how much house you can actually afford. The 20% down payment isn’t required, but it helps to score a better interest rate.
You’ll need to factor in these additional costs when determining how your down payment will affect your mortgage:
- Private mortgage insurance
- HOA fees
- Home Insurance
- Real estate taxes
- Closing costs
According to Money Under 30, as a rule, you should not save money in risk-type investment vehicles (such as stocks, real estate investments, and trusts). Instead, you should save your money in super-safe vehicles such as a savings account or a certificate of deposit.
Make room in your budget to save money by either creating additional sources of income or cutting back on expenses. Depending on what’s doable for your lifestyle, you might consider both. However, taking a look at the big picture and cutting corners where you can means more money in savings, and putting more money down on your dream house in the near future.
Last, consider adding money to an emergency fund from the start. This way, if there are unexpected car repairs, medical bills, or the like, you won’t have to draw from your home savings account.
About Sine Insurance Group
At Sine Insurance Group, we want to ensure that your belongings and your dwelling are protected. Our custom-tailored rental insurance policies are crafted specifically to meet your needs and provide peace of mind. For more information about our products, contact us today at (636) 947-1177.