The Down Payment

The amount of your down payment has a big impact on the amount you need to borrow in order to buy your house. Making a healthy down payment of at least 20 percent of the home’s value will reduce the amount you need to borrow and therefore the amount you will pay interest on as well. It also means you will probably not be forced to carry private mortgage insurance, which can be expensive.

Option One Mortgage knows that consumers sometimes struggle to come up with a down payment for their home. In today’s economy, trying to save is more challenging than ever. However, with determination, you can do it.

Start by realizing that even a small savings can make a big difference. Encourage all your family members to “tighten their belts” in any way they can. Take a brown bag lunch instead of heading to the local burger joint, or start taking public transportation to work rather than your car. Choose cheap or free activities such as kite-flying or board games rather than expensive outings to the movies. Take this opportunity to teach your children the value of a dollar, and that “a penny saved is a penny earned”.

There are other options as well. You may be able to withdraw money from your individual retirement fund without a tax penalty to fund your down payment. While everyone’s situation is different, take the time to talk to your tax professional and find out if this is possible for you.

Option One Mortgage reminds consumers that a bigger down payment means more purchasing power, smaller monthly payments and a lower total interest cost.