The bigger the down payment the smaller the mortgage payment….

The idea is to put at least 20% of the cost of the home on the table as your down payment.  The reason for this is that anything below that 20% means you’ll need to pay “Mortgage Insurance” to the lender until you meet that 20% figure.  The reason for this is so that should you default on your payments, the lender can recoup at least a portion back.

So…… Put down at least 20%….. more is better because the more you can put as your down payment, the lower your monthly mortgage cost per month (for the length of the loan).  So this is clearly better.

Remember, once your mortgage figures are set…. principal and interest….. those figures will not rise (or lower) as time moves forward.  Your real estate taxes and insurance may fluctuate a bit each year (these figures aren’t set by the lender).  The whole payment is PITI …. principal, interest, taxes, insurance…… and mortgage insurance if your down payment was below 20%.

Once your loan is established, you can always put extra money towards your principal only. This will not only pay your loan off quicker, but it will save money in interest payments as well.  So this is a very good idea.

You can also pay bi-weekly (every 14 days), which is free to do (just a phone call to your lender to set it up, and it will save at least 2 1/2 years off the length of your loan, but also save you thousands of dollars in interest payments…… a no brainer!  The extra full payment each year goes in it’s entirety towards your principal payment…. this includes the TI (taxes and insurance) part of your payment.

Any time you’re paying extra towards your principal, always tell the lender to put the payment towards “Principal Only”.