Downpayment FAQs for First Time Home Buyers

If you are buying your first home, you likely have many questions, a few of which, no doubt, center on financial issues. One common question is how large a down payment do you need on your home. The good news is that the best Santa Monica realtors will be able to guide you through the process and answer many of your questions. When it comes to concerns about down payments, here are a few common questions first-time buyers have.
How Large a Payment Is Needed
How Large a Payment Is Needed? The average down payment is 3% to 6% of the price of a home. This equates to about $6,000 to $7500 for a $300,000 dollar home .For a million dollar home a 3% down payment would amount to $30,000.

What Happens if the Down Payment is Less Than 20%? In the past, many lenders have required a down payment of 20% of the price of a home. This has changed a bit over the years. If you are getting your mortgage through an FHA loan, the down payment rate is often 3.5%. With a conventional lender, though, you often must pay private mortgage insurance, which adds to your monthly payment.
What Are the Benefits of a Larger Monthly Payment
What Are the Benefits of a Larger Monthly Payment? The larger a payment you can afford to put down on real estate means you already have that much equity in your home. Secondly, it will mean a smaller monthly payment. Thirdly, if your down payment is 20% or more of the home value you will not have to pay PMI. Finally, you may also get better loan terms, which means you pay less.

If you are a first-time home buyer looking for Marina del Rey real estate, it pays to come up with a down payment that meets your needs. While a bigger down payment is often preferable, this factor must also be balanced by you desire to find the right home for you and your family. Contact a real estate broker to learn more about your options.