Your down payment is the core of your mortgage. It affects:
* The lender's decision
* Your loan amount and your closing costs
* Mortgage type
* The size of your monthly payments
* Your mortgage interest rate
* Your amount of available cash
* Whether you'll pay mortgage insurance
The more you put down (the bigger your down payment), the less you'll have to borrow. That means lower monthly payments and lower overall mortgage costs. You'll start out with more equity in your home and have an easier time convincing a lender that you're a good risk.
A smaller down payment can cost you substantially more in the long run, but it will increase your current cash flow. If you don't have much money saved but expect to increase your future earning power, it might be the best way to go.
The benefits of putting down less
In today's market, there are a variety of mortgage options available for those who:
* Have strong current income but not a lot of savings
* Are first-time homebuyers whose high rents have left them strapped for cash
* Have low-to-moderate incomes and few cash reserves
* Are "move-up" buyers looking to buy a larger home without large cash reserves
Even if you already have a nest egg, there are many sound reasons why choosing a no or low down payment makes sense. A no/low down payment:
* Keeps your assets where they are - in higher-yielding investments or current lifestyle expenses (day care, tuition payments, recreational activities)
* Potentially gives you a larger tax deduction (Consult your tax advisor for details)
* Lets you buy right away and start turning rent payments into future equity in a home
* Frees up cash for other home buying expenses such as furniture, moving and closing costs
Recommended loans
Wells Fargo Home Mortgage offers several mortgages with low or no down payment. Click on the links below to go to our mortgage site, or use our Home Loan Workbench® to get home financing packages, estimated closing costs, and much more in an easy-to-understand itemized fashion.
* FHA Mortgage - Allows all qualified buyers to take advantage of a low down payment with flexible qualifying guidelines.
* VA Mortgage - Permits qualified veterans, reservists, and active servicemen and women to secure a loan up to a specified amount with no down payment and flexible qualifying guidelines.
https://www.wellsfargo.com/home_center/buying/articles/cis_hc_atcl_financinglowdown.jhtml
