When it comes to buying homes, the larger the down payment you’re able to plunk down the better. Finance experts advise you to aim for saving up at least 20 percent of the total purchase price, and the number isn’t arbitrary. There are very real benefits to making a hefty initial payment.
A Trulia blog post identifies several reasons to do so:
* Improved odds of approval. Banks are impressed with large down payments, and many lenders require 20 percent down to give you a loan.
* Avoid private mortgage insurance. Without 20 percent down, lenders will tack on an insurance fee to your monthly payment. It will stay with you until you gain enough equity and refinance.
* Lower payments and less interest. The less you owe on the house, the lower your payment will be and the less money you’ll waste on interest every month.
Seven Reasons To Put 20 Percent Down [Trulia]