Down Payment Options: Which are Best?

The home mortgage process is a long, winding road. Fortunately, it has a great ending; Your own, beautiful house.

One of the bumps along the way, however, can be understanding the importance of your down payment. How much should you set aside? What options are there?

We hope these questions and answers shed some financial light on the subject:

- Would you prefer getting instant equity in your home and lowering your monthly mortgage payment? Then putting down 20 percent may be best.

- Are you unable to come up with a 20 percent down payment but want to avoid paying PMI? You may wish to consider a 80/10/10 piggyback home loan.

- Can you only come up with a 3 percent or 5 percent down payment and don’t want to wait to buy a home because you are concerned about rising house prices? Perhaps a government-insured FHA loan would be a good answer.

- Do you have no savings at all but are so eager to enter the real estate market immediately that you are willing to pay the extra costs involved in a no-money-down mortgage? Provided you are able to handle the required payments and are confident your financial situation will enable you to mortgage refinance with better terms in the future, it could be the way to go.

The important thing is to evaluate your circumstances carefully before you decide how much to put down on a home. We can help.