☰ Menu
×

House Shopping: Devise a Down-Payment Plan

Are you thinking about buying a house in the next year or two? Most Americans still believe that buying a home is a good financial investment, according to the 2017 National Housing Pulse Survey, conducted by the National Association of Realtors. Eight out of ten respondents feel that paying off a mortgage and owning a home by the time you retire was a primary motivation for buying a home, and they consider it a good way to build wealth and increase net worth.

How much do you need for a down payment?

Before 2008, many lenders offered zero-down-payment on mortgages to prospective homeowners. Then came the housing market crash and the Great Recession. As a result, lending guidelines became stricter. You still may find some zero-down-payment mortgages available from quality lenders. Just expect to pay a premium in the form of a higher rate on the loan and/or higher fees, says Tracy Ashfield, President of Ashfield & Associates, Madison, Wis., a mortgage consulting firm that assists credit unions.

“That’s why we stress so much to folks that it’s important to accumulate some down payment,” she says. “You’ll get a more competitive mortgage product that will help you keep your monthly payments down.” That will save you a lot of money in interest over the life of your loan. “Sit down with your lender as soon as you can,” Ashfield advises, “even if you’re a year or 18 months away from buying.” With your lender, you can go over your income, savings, other assets, and credit score. From there, you can figure out a reasonable down-payment goal. “Maybe you’ve accumulated a 5% down payment,” Ashfield notes. “Or maybe it makes more sense to pay 3% down and use some of your money to pay discount points to buy down your rate a little bit.” (Discount points are fees you pay a lender at closing to reduce your interest rate. A point is 1% of the amount borrowed.)

Your best strategy depends on your complete financial picture. Your lender can help you select a down payment and other mortgage features that best fit your financial situation. (Note: If your down payment is less than 20%, you’ll generally pay for private mortgage insurance, which protects the lender against losses. That adds to your monthly mortgage payment.)

Where will you get your down payment?

Welcome to Empowered Living

Sooper Credit Union empowers members to take charge of their lives and to achieve their goals. You'll find both innovative thinking and tried and true strategies in our Empowered Living toolkit.

Open an Account

Related Posts

Financial Glossary

Should I Buy an Electric Car?

How Can I Save on Entertainment Costs?

At Sooper Credit Union, we are committed to providing a website that is accessible to the widest possible audience in accordance with ADA guidelines. We are working to increase the accessibility and usability of our website for all users. If you are using a screen reader or other auxiliary aid and you encounter difficulties using the website, please contact us at (303) 427-5005 or (888) SOOPER1 for additional assistance. Products and services available on this website are available at our corporate office located at 5005 West 60th Ave Arvada, CO 80003.

Sooper Credit Union Copyright © 2022

Insured by NCUA | Excess Share Insurance | Equal Housing Opportunity | NMLS# 422866

The ESI program provides up to an additional $250,000 of insurance once a credit union members’ balance exceeds the coverage provided by the primary share insurer (NCUA).

Attention

You are now leaving Sooper Credit Union’s website. Although Sooper Credit Union has approved this as a reliable partner site, the linked site is not owned or controlled by the credit union. The credit union is not responsible for the availability, content, or security of the linked site. The credit union is not responsible for any claims related to any goods or services obtained from the linked site, and does not represent you or the third-party in transactions conducted via this linked website. The linked site’s privacy policies may differ from those of the credit union and the credit union is not responsible for compliance with those policies.

OK Cancel