As the housing market continues to improve, low down payments are once again being offered by lenders, especially those backed by governmental organizations. Both first time homebuyers and current homeowners may be enticed to settle on a low down payment on their future home, but it’s important to know the affects of this decision. Low down payments very rarely lead to a longer term, therefore you are more likely to have larger monthly payments caused by:
A low down payment leads to a higher loan-to-value ratio, which is determined by the loan amount divided by the appraised value of your home. The higher the loan-to-value ratio, the higher the Kansas City mortgage rate. Interest rates may vary from lender to lender, so be sure to find a Kansas City mortgage company that’s right for you.
If you provide a down payment that is less than 20% of your home’s value, you are required to pay private mortgage insurance, or “PMI,” regardless of the type of loan you receive. Since your lender assumes more risk from a lower down payment if you default on your loan, PMI protects them from any discrepancies.
Higher interest rates combined with private mortgage insurance leads to a larger monthly Kansas City mortgage payment. If you’re not able to make your monthly payments, this can lead to foreclosure. While some people can temporarily reduce or permanently reduce their Kansas City mortgage rates, this can lead to extensive paperwork and they are not always successful. Before settling on a lower down payment, talk to your loan officer about the amount of money you’ll pay over time to ensure you can afford it.
Putting a home into a trust may seem like an option reserved for older homeowners who have paid off their mortgage and have accumulated an estate, including assets such as a home, motor vehicles, various investments, boats, rental properties, furniture and even a vacation home. However, having a home that’s owned outright is not necessary […]
The start of a new year is often seen as the time to make major changes in life. While many people resolve to start hitting the gym, losing weight, reading more, or making a career change, others may decide to buy a new home in the coming months. That’s a great goal, one that can […]
Buying a home is one of the most exciting events in a person’s life. A new home can mean a new direction, a major step forward, the beginning of a family or just a fun opportunity to live in a new state, city or neighborhood. It’s also a complex task that involves several important steps. […]
