Mortgage Down Payments and What is Typically Expected
A Chicago mortgage down payment is the same as any other mortgage down payment, with it representing only a part of your target home’s total price. A mortgage down payment should be paid up front and it could be something like 20% of the whole purchase price, if you were securing a conventional mortgage.
Chicago mortgage lenders say that under conventional Chicago mortgages, the down payment of 20% redounds to the benefit of the home buyer, this type of mortgage is actually the best as there would be no added fees. These additional fees usually have to do with insurance – insurance against default in payments.
However, to be realistic, a lot of home buyers these days cannot come up with such a huge amount as a 20% down payment right away. This is why there are many other payment schemes out there that reportedly try to make acquiring a home easier—at the outset.
There are Chicago mortgage lenders who offer very low down payment insured mortgages, like 5%. This low down payment was made possible by the government which is only trying to help the home buyers. However, many home buyers do not realize that a very low down payment causes the Chicago mortgage lenders to include an insurance premium onto the total price.
The Chicago mortgage lenders will only be following the law, as the law requires that low down payments should be insured against delays or defaults in payment later on.
If you were considering buying a home through a Chicago mortgage lender, it is important to know what the deal really is when it comes to giving the down payment for your chosen home. All you have to remember is that paying a higher down payment will lower the subsequent amounts you pay for your home later on. On the other hand, a very small down payment translates to higher subsequent monthly payments in the future due to the carrying costs.
Ask your Chicago mortgage lender to show you the savings you will make in the long run with higher down payments.
Deciding on getting a Chicago mortgage is not task you should take lightly. So, before you plunge into the whole mortgage process, make sure you do your homework. Calculate your mortgage budget in advance before you even call your Chicago mortgage lender.
This usually entails finding out how much your house-to-be-acquired costs. Afterwards, determine if you can afford to apply 30% of your regular monthly income to the monthly payments you will be making on your mortgage. Most home buyers have a partner – usually their spouses – when applying the 30% rule to their combined income.
When that is settled, work on how to raise the money for your down payment. Although, there are Chicago mortgages that require only 5-10% down payments, strive for the higher 20% down payment for the obvious benefits it will have for you down the road.
And as always, be ready for surprises here and there. The home-buying process is rather complex and is subject to any or all of the following: home insurance, mortgage insurance, taxes, interest rates, condo or home-owners’ association fees.
So, always be prepared for a little extra.