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Mortgage Downpayment Comparison
(presented by www.refinance-refinance.net - mortgage lenders)



By Ben Afzal

Loan Factors

Here are some basic factors when comparing downpayments for a mortgage:

Property Value

This is the overall price of the property. The purchase price may change depending on how your loan is structured. For example, if you want to include your closing costs in your purchase the closing costs are usually added to the loan amount. This keeps the costs from being out of pocket costs.

Size of Downpayment

This is the amount of money you put down.

There are some thresholds that you cross when you put a certain amount of money down. This opens up the opportunity for you to have different loan types or better loan terms (lower rates).

It is important to note that 100% financing is available for many different people, different property types, and with different types of loans. The choices in loan types today are much greater today than in the past.

Loan Rate

This is the rate you receive on your loan. Generally speaking the more money you put down the lower your interest rate will be. This is because the lender’s risk goes down. With a large downpayment if you stop making payments on the property the lender can repossess the property and sell it and recover their money. If you purchase a property with 100% financing there is no equity for the lender to rely on in the event that they need to repossess the property. It makes the loan riskier.

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Loan Length

This is the loan term - such as 30 years or 50 years.

Monthly Payment

This is your monthly payment under different loan options.

Notice how a down payment of 5% or 10% does not significantly lower your monthly payment. For many borrowers it makes sense to keep their money rather than making a down payment.

Other borrowers want to begin the pr!
ocess of
paying the loan down by making a downpayment.

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This entry was posted on Wednesday, October 4th, 2006 at 2:13 am and is filed under Refinance. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.

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