Home Mortgage Options for Smaller Down Payments
View PDF | Print View
by: marciafreeman
Total views: 62
Word Count: 453
Almost everyone dreams of one day owning their own home. But for some aspiring home buyers, pulling together the "necessary to qualify" 20 percent home mortgage down payment can be more than a little difficult. For borrowers who are concerned about having a smaller down payment there are some mortgage options to consider. But as is true for pretty much every element in obtaining a home mortgage, each option has its pros and its cons. And whether or not lenders will be willing to work with your on the terms of the home mortgage and down payment depends heavily upon the condition of the market at the time you apply.
PMI (Private Mortgage Insurance)
Lenders usually like home buyers to put down at least 20 percent of the purchase price in order to qualify for a home mortgage with the most favorable terms. If you are unable to pull together that large of a down payment, you may be required to purchase Private Mortgage Insurance (PMI). If you find yourself unable to pay your mortgage, PMI protects the lender from losing money.
Private Mortgage Insurance generally costs 0.5 percent of the purchase price of the property you are buying. This means that, if you must purchase Private Mortgage Insurance, you will pay more for your home mortgage than you would without PMI. Fortunately, when you have gained equity in your home (youll need 20 to 22 percent) you can request that the PMI be cancelled.
Similar to this arrangement is an FHA loan, which is a loan insured by the government. With a government insured FHA loan, you may be able to qualify for a mortgage with a down payment of just 3 percent or more. Because FHA loans are insured by the government there are specific criteria for qualification that can vary by county. To find out whether or not you might qualify for an FHA loan, speak to a loan officer or a mortgage broker.
80, 10, 10 Home mortgages
Home buyers who do not wish to incur the expense of buying Private Mortgage Insurance have another option. This is called an 80/10/10 home mortgage. With this option, you will use a second home mortgage to finance part of the down payment. 80/10/10 works more or less like this: your first, larger mortgage will cover 80 percent of the cost of your home. A second home mortgage will pay for a 10 percent down payment. The rest of the down payment, another 10 percent, you will need to pay on your own. Related sites Mortgage refinancing Loans
About the Author
Similar stuff about refinance, visit Getsmart.com.
Rating: Not yet rated