Looking in to Low Down Payments for a Mortgage
When you think about down payments for a home loan you should consider that the lower your down payment is, the more it will cost you in the long run. Is it worth putting down a low down payment? Find out below.
Putting down a low down payment costs you more because of the interest accrued throughout the years of the loan. Not only will you have to cover the principal of the loan but the actual interest as well. In the long run, you could be looking at spending tens of thousands purely based off of interest.
Today’s interest rates are low which is appealing to many home buyers. Factor in insurance premiums for down payments less than 20% of the loan, and the whole excitement of hearing the words “low interest” goes down the drain.
You have two different options when it comes to mortgage insurance. You can take out an FHA loan which allows you to receive the money through private lenders with the government playing the insurer role. With this loan there is an upfront fee for the loan that can range from a couple thousand to almost two-hundred thousand. There is also the route of going with a conventional mortgage where you pay private mortgage insurance but without an upfront fee. Depending on your financial situation, you can choose what is right for you and your family.