Does a down payment get you a better interest rate on your Mortgage?

We are in the market for our first home. We found one we like, but aren't sure we want to put anything down on it. The house is on the market for $204,000. Would we get a better interest rate on the mortgage if we put a down payment or do they not really look at that?!

Yes and if you can put down at least 20% you can avoid paying the required private mortgage insurance which can add between a half to 1 percent or your loan amount each year. Still I do not reccomend you do so if paying a large down payment will leave you cash poor to cover the other expenses that come with home ownership , your life in general or that provides you with a cushion for harder times when there is less income due to illness or injury. Always consider the big picture!

The size of your down-payment has a HUGE impact on the interest rate of the loan (or loans - less than 20% down usually leads to TWO loans; one with a very high interest rate!). 20% down gets you the best deal, and saves you an enormous amount of money in interest payments.

With no down payment, you generally have to pay for PMI (private mortgage insurance), which alone makes your total payment (as a % of the amount owed on the mortgage) more. Making a down payment of at least 20% allows you to avoid this.

generally yes , it's called buying down the rate
however it also depends on your credit score
if you have a high score and already qualify for a good rate a larger downpayment may not change things

No and yes, I put 80% down on my home and my rate was sitll 6.2%, What I did was bought my rate down all the way to 5.5%.It cost but in the long run it was worth it.

yes, they do look at it. Yes, generally you can get a lower rate with a bigger down payment. But for the details and specifics consult a mortgage broker.

Higher down payment = Lower interest rate. If you put nothing down, you could walk away from the house and not be out anything except for a hit on your credit report. If you put 20% down, you are a lot more likely to stick it out.

Generally speaking yes to an extent since it all depends on the amount and your credit. If you have crappy credit than a larger downpayment will give you a smaller rate however a person going for the same loan amt with excellent credit might not make a big difference if they put more $$ down since they are probably already getting the best rate. Obviously any No $ down loan (IF U QUALIFY) is going to cost you more than one where you do put money down regardless of your credit because you're a bigger risk to the bank. Usually after 20% down you don't see any decrease in rate only payment because it's a smaller loan amt. Sometimes it's better to invest your $$ elsewhere where you will get a better yield.

Great question!

As a retired Mortgage Banker, I would love to answer it. There are SO many people hungry for answers such a great question, that addressing them one at a time is SO ineffective. I have a free report available that anyone can access to get educated about all the "dirty little secrets" of this business and HOW we as a society ended up in such a mess.

It bothers me greatly that so many people, young AND old, have been taken advantage of and NEED answers to prosper financially and not become a foreclosure victim. If you DON'T get educated BEFORE making a decision, you're next in line to be ripped off. Count on it.

I've been posting answers under numerous aliases onYahoo! because I have to keep creating a new account to do so. It seems the "establishment" prefers to keep the public in the dark when it comes to exposing the truth about anything which could actually help them avoid catastrophe. When faced with a serious choice about something in your past think about what you should have been made aware of by someone in "authority", but weren't. If you knew what "they" knew, wouldn't you have made a better decision?

Whether you're a first time buyer, moving up, refinancing, buying a foreclosure, short sale or trustee sale or auction, you're going to need financing in place. First. Doing it ANY other way is wasting your time and a professional real estate broker won't even LOOK at you or your offer unless your financing is in place. Don't believe me? Try it.

If you're interested in learning about the industry from the inside, visit my website. I can't type the internet address here or I'll be creating yet another Yahoo! account. I'll spell it for you. MortgageSelfDefense[dot]com. Type that into your web browser as you would a regular internet address and you'll get there.

In addition to the information you'll receive on the site, if you decide to be a free subscriber, you'll receive tips, techniques and advice on regular intervals along with my personal contact information to ask questions.

I look forward to helping you.

P.S. I'm also a Real Estate Broker in two states (CA & NV) and have been since 1981. Having been so gives me a unique perspective on the industry.

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