Navigating a house purchase isnt easy, especially when it comes to financing.
The first variable in that long equation is the down payment.
There are lots of factors to consider about a down payment.
The most pressing: How much do you need?
Heres our handy guide to down payments for first-time home buyers.
What is a Down Payment?
The remainder of the purchase price is then provided as a loan via a mortgage.
A larger down payment reduces the monthly mortgage payment.
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How Much Down Payment Do I Need?
And while this is a good goal, its by no means a set rule.
Thats simply not the case some people dont even have a down payment at all.
That depends on the bang out of mortgage loan you get.
Some require no down payment and others require a percentage of the mortgage amount.
Yes, and, so long as it’s possible for you to afford it, that is wise.
What is PMI?
PMI policies protect lenders in case you default.
The thinking is that the less you put down, the more you might be willing to walk away.
So how do you go about deciding what you might afford for a down payment?
If the interest rate seems high, you might need to spend some timeimproving your credit score.
Closing costs generally run between 2% and 6% of the home purchase price.
Consider opening up ahigh yield savings accountfor your house fund, and find creative ways toautomate your savings.
Contributor Larissa Runkle specializes in finance, real estate and lifestyle topics.
She is a regular contributor to The Penny Hoarder.
Kent McDill is a veteran journalist who has specialized in personal finance topics since 2013.
He is a contributor to The Penny Hoarder.
