The reality is…YES, you can put less than 20% down on the purchase of your new Edmond, Oklahoma dream home. Yes. Yes, you can. But before you do, let’s first take a quick look at the pros and cons for putting less down:
- Your interest rate will be a little bit higher than if you were able to put 20% down, raising your potential monthly payments
- Your lender will require you to carry private mortgage insurance (PMI), also raising your monthly payments
- By putting less down you are borrowing more, increasing the principal of the loan and in turn your increasing your monthly payments
- Putting less down means you are able to save your down payment quicker, and in turn to move into your dream home sooner than if you have to wait until you save the 20%
- Getting into your new home gives you all the benefits of your new location like, for example, a new shorter commute to work, or having your children in their new school district. Maybe you can now have that garden you always wanted, or even a dog. Maybe it’s the kids being able to have their own bedrooms for the very first time.
The pros and cons of putting less money down on a purchase of a new home really come down to money and time. Can you afford to put more down? If so, maybe you should. It will save you some money on monthly payments and total payments over the life of the loan. If you don’t have 20% and you really wanted to get into a new home before the new baby is born (another great example), then go with the smaller down payment. It all comes down to what you’re comfortable with, and the best way to determine that is to consult with a professional mortgage lender you trust and get pre-approved for a loan. They will help you determine how much you qualify to borrow, what interest rate you will be looking at, and what your monthly payments will look like.