Your monthly mortgage payment depends on many factors,
including the size of your down payment, your credit score and the
number of discount points you pay. A down payment of less than 20%
will require that you must pay for PMI, get a piggyback loan or pay
a higher interest rate.
Your credit score is an accounting of your credit
history - if you pay bills on time, how much debt you have, how much
you earn and the types of debt you hold. Before you apply for a
mortgage, you should check your credit reports so that you can
correct any errors or prepare explanations.
When you are unable to put 20% down on your mortgage,
you will have to pay a higher interest rate and take out PMI. There
are ways to avoid paying PMI, including piggyback loans. Borrowers
with little or not down payment savings can find mortgages through
FHA and VA programs. They can also get contributions from down
payment assistance programs. There are also zero-down mortgages that
come with higher interest rates.
You can reduce your interest rate by paying discount
points at closing. The point is equal to 1% of the loan amount. You
should only pay points if you plan on owning the home long enough to
make up for the out-of-pocket expense of paying the points up-front.
This usually takes several years.
Interest rates depend on the secondary market where
your lender sells its mortgages. You can watch the market to see
when is the best time to take out a mortgage.
Equal Housing Opportunity (c) Copyright 2008 RateTake.com