For most people, buying a home means applying for a mortgage. Unless you can buy in cash, you will need a mortgage to make your dream a reality. There are hundreds of lenders that offer mortgages, and you will find out soon enough that some are better than others. Before you begin to shop for a mortgage you will want to get a good idea of how much money you can afford to put down. This is something the lender is going to want to know before they can offer a loan and let you know what rate you qualify for.
How much money do I need? In the past, you may have been able to get away with 100 percent financing. But in today?s world the economy is bad and the real estate market is struggling. For this reason, lenders are no longer offering this deal. Instead, they are asking for at least 5 percent and in most cases more.
To be safe, you should have 20 percent for a down payment. Not only will this give you instant equity, but it will also allow you to avoid private mortgage insurance. If you don?t have 20 percent to put down you have two options: you can wait to buy and continue to save, or you can attempt to find a lender that will offer a good deal with less than 20 percent down.
Don?t be afraid to shop around for the best mortgage. Lenders offer different rates, and depending on your down payment you may find your pool of options getting smaller.