Mortgage Down Payment?

Question

I am interested in an anwer to this question. When you buy a house, do you have to pay a downpayment?

Answer 1

Over the last 20 year the "Down Payment" concept all but went away. You can get into a house today with no money down. Most buyer even write into the contract that they want the sellers to pay their closing cost (loan oringation fees, etc) However, this doesn't mean that you shouldn't have at leat $1000 -$1500 set aside. There are expenses involved that you will have to pay if you want to put in a bid on a home...
1. Earnest money (typcially around $500; could be more) It's what the seller will ask for in order for them to take their house off the market while you get your financing and other things in order....this wil be given back to you if you close on the house...if you deciede you dont want the house, you could lose it to the seller.)

2. Title search fees ( I believe anywhere for $75 - $150)

3. Home inspection ($250 - $ 350)

4. Termite inspection ($50 - $100)

If your not putting down a least 20%, it's MAYnot be worth it because it doesn't change your monthly payment that much.....it just depends on how long you think you will be in the house, and if you are buying down points on your interest rate....talk to a realtor or loan officer....but again.....in most cases it's not required anymore to put money down.

Answer 2

It really does depend on the circumstances. Purchasing a house does take some money out of your pocket.

Typically, you will put a deposit on the house in which you intend on buying (usually $250.00 or up, depending on the seller's requirements). Your deposit will get credited back at the time of closing (i.e. deducted from the amount of money you will need to bring).

After that, you can request that the seller pay money towards your closing costs. Say you are purchasing a house that is on the market for $150,000.00. If the house's value can take it, your realtor may be able to get the seller to up the price to $155,000.00 and pay $5,000.00 of your closing costs. This works out so that you can finance 100% of the purchase price ($155,000.00). Typically, the closing costs will not exceed $5,000.00 (plus you still have your $250.00 deposit to be credited). By the way, the realtor's commission is paid for by the seller in most states.

You must be careful when financing 100% of the purchase price. This is where mortage insurance (MIP) kicks in. Mortgage insurance gets tacked onto your payment each month when you have more than 80% of the value of the house financed. Some lenders, depending on your credit, do not require MIP, so be sure to ask. Sometimes, MIP is not extremely high and it will work out to your benefit to pay it for a year and then refinance, as the house increases in value (depending on the area in which the house is located). Also, some lenders will give you a "combo loan", which is actually two loans. One would be for 80% of the purchase price and the other would be 20% (the smaller loan will be a higher interest rate). There is no MIP on combo loans.

The best way to find out for certain, is to talk to a friend and get the name of a mortgage broker/lender they would recommend (or speak with the local bank that you deal with). All of this depends on your credit score and the individual programs that are offered in your area. There are many government programs set up to help, but there are way too many to discuss.

Answer 3

No. That is up to the seller, and the Mortgage company. However, the more downpayment you make, the smaller your actual payments may be.
Also, by making a significant down payment, you will have more leverage in asking for a lower interest rate.
Good luck to you, and Happy New Year!

Answer 4

If you are not concerned with being able to keep that house, you don't. Fannie Mae and Freddie Mac do have 100% programs that DO require you to have some money into the transaction.

MOST subprime lenders also require 2 months of reserves...not necessarily used in the transaction on 100% financing. There are a couple lenders who will allow 100% without reserve requirements.

My advice is: If you don't have the discipline to save at least 5% down, you don't have the discipline to make your mortgage payments. Wait until your savings demonstrates you're ready.

Answer 5

Generally yes. There are some cases of 100% financing but in my experience very rare. Downpayment amounts can range from 5% to 35% depending on the type of property and the underlying credit rating. The typical amount is 20% down.

Answer 6

Well, there are usually closing costs associated, but other than that, a down payment is not a necessity though, it will save you money in the long run. Putting 20% down on a house, will save you from having to purchase mortgage insurance (which can be 100's of dollars depending on the cost of a house). Most lenders will not require a down payment as long as you carry mortgage insurance. But once you have paid off 20%, you can remove your mortgage insurance.

Answer 7

I don't think it's a good idea. She needs to work with her bank to get the down payment covered (this is possible). Sure, she has the money for the normal mortgage payments, but if she doesn't have the down payment, is she really ready to buy a house? Getting involved now could lead to further hand outs later if she lands herself into trouble. Just because you have money, it does not make you obligated to give it to family. I mean, if she's starving on the streets, give her a hand, but with this, it sounds like she needs to get herself sorted before she makes any big time comittments. Don't feel pressured just because it's family. i've seen my dad sink himself deeper and deeper into debt because he's always helping out family. They never pay him back and always come asking for more.

Answer 8

It depends on a few things. Good - excellent credit, value of the house vs. cost, interest rates ,etc.

If your credit is good many banks will give leeway. It the house is appraised higher than the selling price, e.g.: $125,000 appraised value selling for $100,000, the bank will jump on the opportunity to loan money. Many times if you do not have a down payment your interest rate will be higher than someone who has 10% or more.

With all the competition in the lending industry, most of the time, you do not need a down payment, in fact many will lend up to 125% of the value of the house. It simply makes your payments higher. Good luck.

Answer 9

most banks want 10% down some will finance 100% but they will screw you on your rate and closing costs. be sure to add up all payments to see what you are really paying for a place over the life of the mortgage it is comm on to pay double the original price when all payments / interest are added up 70000 for a 35000 dollar house.

Answer 10

Depends on where you get your loan from. A lot of places require a down payment. You need to make sure you shop around for the best place to get a loan from.