Subject: Mortgage Down Payments

It's the one question that pops in our minds every time we think
about purchasing a home.

Where are we going to come up with the down payment? Most people
don't have twenty percent for a down payment sitting in their bank
accounts.

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Those who do are probably already sitting pretty in a nice home. So
where does the average Joe come up with a down payment and why is it
so important.

Well down payments are important because it shows a lender you are
serious about the investment you are about to make.

The larger the down payment, the better your interest rate in
theory.

The borrower is more likely to pay the monthly mortgage on a home
that he has invested several thousand dollars in.

A down payment is viewed as a borrowers insurance on the
borrowed money.

The fact that this decreases the chances of the borrower defaulting
on the monthly payments, makes the loan less risky and banks
therefore “reward” the borrower with a lower interest rate.

Down payments also decrease the amount of money that needs to be
borrowed.

Because interest will be accrued on a smaller principle, the
borrower can significantly lower the monthly mortgage and total
interest paid with a down payment.

This is all great, but where do we come up with the down payment?
Some ideas would be to set up a monthly electronic draft to where
the money is automatically drafted from your checking
account into your savings.

This way you will budget for it and it won't be as tempting to use
the money toward something else.

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Another idea is to save money from tax returns, bonuses, or other
extra sources of income to help finance a down payment.

Also, some investments allow investors to dip into their
investment accounts to help finance buying a home with little
or no penalty.

There are no quick solutions. Preparing to buy a home takes
planning and preparation.

But these ideas are a few ways to effectively save for a down
payment.

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Thank you,

Max Taylor
http://taylor-marketing.blogspot.com