So you’ve finally decided that you’re ready to purchase a home. You’ve even been pre-approved for a loan. However, there’s still one challenge awaiting you: How to come up with enough money to make a down payment.
The Importance of the Down Payment
As you probably know, most people need to use a mortgage in order to purchase a home. When you take out a mortgage, you put down a certain amount of money and then the bank pays for the rest. You’re then responsible for paying back the loan over a period of many years.
The money you put down is known as a down payment. The bigger the down payment, the lower your monthly payments. While some loans only require as little as 3.5 percent down, savvy financial advisors will always suggest putting down 20 percent.