HAPPY NEW YEAR! HOUSE UPDATE: THIS 5% DOWNPAYMENT IS A SCAM
HAPPY NEW YEAR!
Today, I'll be going through the steps you should take when deciding how much money you should put down on your first home. Most people get scammed into believing that all you need is 5% but that is not always the case.
Here are some things to think about-->
1) Income
Income is a huge part of getting approved for a mortgage, the higher the income (and other factors) the more likely you are to be approved for a higher mortgage. For example if you get approved for $500k but the homes you want to buy are all $600k you will have to put more than 5%. It won't matter if you are a first time homebuyer you will have to put down more money in order to get your $600k home.
2) Monthly Mortgage Payment
The less money you put down the more your mortgage payment will be. If you put 5% down on a $600k home for example, your mortgage might be $2,500/month. On the other hand, if you put down 15% that mortgage payment might decrease to $1,900 a month. This might not seem like a big difference but most people don't make 2,500 a pay cheque which means you'll have to spend one pay cheque plus more to make your monthly payment for your mortgage (and that doesn't include utilities, car payments and more)
3) Mortgage Default Insurance
Homebuyers who put down 20% plus on their homes are excused from paying mortgage insurance which overall decreases the amount of your mortgage in the long run. Mortgage insurance varies around 2.80%- 4.00% of ones mortgage amount.
Hope this helps!
-Coll