When it comes to buying a home in
Glencoe, Winnetka, Highland Park, Deerfield, Northbrook, Lake Forest, Wilmette, Evanston, Glenview, Riverwoods, Bannockburn, and other North Shore communities, there are many
options for mortgage loans! North Shore homebuyers can shop around for a
mortgage loan and see what works best for them and their finances.
As your
North Shore real estate agent, I’m here to offer you
some general information on your down payment options. There are many programs
out there now that allow to you put down as little as 3 or 5 percent on a North
Shore home. With VA loans for veterans, you don’t need any down payment.
These programs are wonderful for families who do not have 20
percent saved for a home, as they can start building wealth sooner as North
Shore homeowners. However, if you do
have a large sum of money saved for a down payment, or you can save one soon,
it might be worth it.
Here are some benefits of the traditional 20 percent down
payment:
1. You don’t have to pay private mortgage insurance (PMI),
which may be the biggest benefit of all. With less than 20 percent down, PMI is
usually required as an insurance policy that protects the lender if you’re
unable to pay your mortgage. This monthly fee is combined with your mortgage
payment, making the amount you pay each month increase until you pay it off.
This is not money you see again, so if you can avoid it, it’s best.
2. Your interest rate will be lower. If you put down 20 percent
on a home, your loan is seen as less risky than a loan with only 3 or 5 percent
down. Therefore, you will most likely be offered a better rate, which means
less money that you have to pay over time. This also means lower monthly
mortgage payments over the life of your loan.
3. You’ll pay less for your home. All of this combined means
that the more you put down initially, the less you’ll pay over time, and the
lower your monthly payments will be. The less you put down, the more interest
you’ll be paying, and the higher your payments will be.
4. Your offer will stand out. It’s a competitive market, with
inventory of homes for sale lower than average. This means that having a higher
down payment will make you stand out to sellers, as they will have more
confidence that the deal will go through because your financial situation is
positive.
As you can see, if you can make a 20 percent down payment,
you should. Usually current homeowners can use 20 percent from the sale of
their current home for the purchase of their next home. For first-time buyers,
it’s harder and not uncommon to put less than 20 percent down.
Every buyer situation is different, so your best bet is to
meet with a local mortgage lender and discuss your options! When ready to buy
in the
North Shore real estate market, give me a call! As your
North Shore real estate agent, I can help you find the home of your dreams that fits your
budget!
Local Expert... with National Connections!
