When you reach that stage in your life where home ownership is something that you desire, then you have to start doing a couple of things; find the right house and find a mortgage lender. This is the time when you also have to decide how much money you will place as a down payment.
In many instances the type of New York mortgage loan that is available to you has a lot to do with the size of your down payment. This is one thing that must be carefully analyzed at you are talking about a long term commitment, as long as 30 years.
What’s a good number?
In the industry it has always been expected that a down payment of 20 percent would be made, this became known as the “magic number.” Lenders feel comfortable with this commitment, at a 20 percent down they feel the risk is minimal and the potential of default is less.
The obvious observation is that the more money the buyer plows into the purchase up front will give additional incentive to keep the mortgage payments current. With a large down payment, if you should go into default, the amount of money lost is considerable.
Lenders also see a 20 percent down payment as statement on behalf of the applicant for a New York Mortgage Loan that he or she knows how to budget their money. This is an intangible but mortgage lenders look for signs of stability in the applicant.
What are the advantages of a 20 percent down payment?
The less you need to borrow, the less you have to repay. As a mortgage repayment includes a portion of the principle and interest, the interest will be smaller if the loan is smaller.
As well as a smaller repayment, many lenders are willing to offer a mortgage at a better rate of interest to those with a larger down payment, this drop in interest rates can add up to significant savings over the 30 years the loan is in force.
A down payment less than 20 percent will call for private mortgage insurance to be taken out by the buyer with the beneficiary being the lender. In the event of default, this insurance is of benefit to the lender but costs the borrower considerable money in annual premiums.
If you are a union member and looking for a New York Mortgage Loan then you are invited to contact Members Mortgage Corp. Various mortgage schemes are available and there are no fees applicable.
