What About The Down Payment? (Click Here)
A common question and misunderstood aspect of the real estate transaction is Down Payment. Standard down payments range from zero for a Veteran to 20% for a typical conventional loan and everything in-between. A major difference, is that the loans with less than 20% down have PMI (Private Mortgage Insurance), that traditionally runs 7/10 of one percent of the loan amount per year. To translate: A 200k loan at 1% would be $2,000 x 7/10 of that divided by 12 would be $116.00 a month. This private MI (Mortgage Insurance) enables lenders to loan to home-buyers without having to put 20% down (It protects the lenders from loss). One additional item on MI, FHA requires 1.5% of the loan amount, is added to the closing costs.
The typical down payment for the first time home buyer is 3-10% of the sales price. The foregoing is a great reason to have a good honest Realtor(R) and a honest lender. It will take the anxiety and guesswork out of home buying or selling. A good Realtor(R) and Lender can guide you each step of the way towards home ownership.
Remember: Real Estate is the only natural resource, with no alternate resource available.
As a general guideline, Down Payments run between 3 to 20% of the Sales Price. If I can answer any additional questions, or help you figure out a specific situation give me a call or e-mail: Larry Robertson (909) 983-2892