If you're currently in the market to buy new home or condo then you better make sure that you have enough money saved up for a down payment. If you don't have enough cash set aside upfront to pay off a down payment then you won't be winning bids for the home of your dreams anytime soon.
Down payments are necessary when it comes to shopping for real estate as it shows the seller and mortgage lender how serious you are about purchasing real estate. Your real estate agent will tell you that the amount you should be putting aside as a down payment will be determined by a number of factors but you should be prepared to offer about 20% of the home's value as a down payment.
Of course some will tell you that the higher your down payment figure is the better the chances are of you landing the property you want to purchase. Not only does a higher down payment amount give you a greater chance of securing the home you want but it also helps you in terms of your mortgage. A large down payment amount decreases the monthly mortgage payments you have to make because of how much you paid upfront. That means less time having to worry about paying off a mortgage. It's a great feeling of freedom you get once you make that last mortgage payment. So why not try to make it happen quicker? You also shouldn't expect that just because you offered a high down payment that you will get the home you want or be approved for a mortgage. However, it does raise your chances of either one happening.
While we did say that 20% does seem to be the standard down payment figure if you are unable to pay that much money upfront then you still can land a piece of real estate and be approved for a mortgage. The only thing is that you might also have to pay for mortgage default insurance so that the lender doesn't have to worry about not getting paid in the event you default on your mortgage. As long as you have an idea of how the down payment situation works and can handle everything that comes your way you can start browsing real estate listings with confidence.
Once you have your mortgage pre-approval set up, your downpayment sorted out and your dream property discovered; your next step will be to secure an appointment for a home inspection to be completed. A detailed and thorough inspector will provide you with a summary of the condition of your property. Any agent will tell you that a proper inspection is simply a must. (this page was funded through one of our sponsoring partners - Cannect)