Key Benefits of a 20% Down Payment You Should Be Aware Of

If you are an individual who is looking at the homes for sale in Estes Park, then you are not alone. A huge part of the American dream is having your own home. Various things need to be taken into account when considering buying a home. The first thing that you will have to do is get a down payment. In the past, it was a requirement that you had at least 20% down to go towards the payment of your home, now things are quite different and several financial institutions will allow you to buy a home for just 3% to 5% down. If you are interested in a home, then you do well to consider some of the benefits of putting 20% down.

#1 You Will Pay Less for Your Home
When you only put 3% to 5% down for your home, you have to still pay 95%-97% of that amount to have your home free and clear. Even though that may not seem like a big difference from 80% in the beginning, it could really add up over the course of decades. When you pay 20% down for your home, you only have 80% left, and that means less interest, and it also means that you will have your home paid off sooner.

#2 Get a Lower Interest Rate
Banks will grant you interest rates based on your credit history and how much money you can put down. If you can show the bank that you already have 20% for the home, not only will you need to get a smaller loan, but you also show them that you are less of a credit risk, so you are more likely to get the loan with a lower interest rate.

#3 You Will Instill More Trust in the Homeowner
It is a competitive market when it comes to buying a home, so you want to be able to show the homeowner that you are a trustworthy option. A homeowner does not want to have to deal with a potential buyer who is not going to be able to get a loan. When the homeowner realizes that you already have 20% down, he or she will feel more confident that you will get a loan, and you are more likely to get your offer approved.

Patience Is a Virtue
Even though it is the American dream to have a home, it can become an American nightmare if you do not pace yourself and save. When you can put 20% down on your home, you expose yourself to less risk, and you also will have smaller monthly payments. It can be difficult to wait when you see other people buying homes, but remember that you do not know everyone’s financial situation. By being patient and saving up 20%, you will have more time to find your dream home, and you will have enough money to make a good down payment.