You’re in the market for a home and you’re one of those lucky home buyers with enough cash to make a 20 percent down payment. Should you? It all depends on your financial situation, of course, but there can be a number of benefits to making a down payment of at least 20 percent of the purchase price of a home. Here are five of the most important:
- It can help increase the odds of being approved for a mortgage and getting the most favorable terms.
- The bigger your downpayment, the lower your mortgage payment.
- You won’t have to pay Private Mortgage Insurance, or PMI. Mortgage insurance premiums are rolled into your monthly mortgage payment.
- You’ll start the homeownership experience with a substantial amount of equity.
- You’ll pay less interest over the life of your loan.
For more information about making a downpayment of at least 20 percent, check out this article from Forbes magazine.