Your Lake of the Ozarks Mortgage Lender: How Much is a Down Payment on a House?

Some people stress about the amount of cash they will need to become homeowners at Lake of the Ozarks. Depending on where you get your loan, you will see anywhere from 3.5% to 20% down payments. You will need to consult with a lender to evaluate your individualized Lake of the Ozarks mortgage loan options, but before doing that, you should consider these pros and cons of various down payment scenarios laid out by Realtor.com.

Larger Down Payments are Ideal for Lenders

A mortgage lender at the Lake of the Ozarks' job is to make an educated guess about whether you will manage to repay your loan responsibly by evaluating your credit profile, your debt-to-income ratio, your job history and your assets. With a 20% down payment, you are investing a significant amount of your own money in your home and therefore the lender's risk is reduced.

Buyer Advantages of 20% Down

Private mortgage insurance provides insurance to the lender in case you default on your loan. If you put down 20%, you eliminate the need to pay for this insurance. Other advantages of a 20% down payment on your new home at the Lake of the Ozarks include:

A 20% down payment will qualify you for a slightly lower interest rate than a borrower who makes a smaller down payment.
You'll be borrowing less which will make your monthly payments lower.
You will instantly have 20% equity in your home, which you can borrow against in the future or get back as part of your profit when you sell.

Keep in mind though, that 20% of an average home could be around $40,000. It can take years to save that amount of money and you will need additional cash for closing costs, cash reserves in case of an emergency and moving costs. While you are working to save up that money, home prices and interest rates may have risen increasing the cost of your purchase.

Pros and Cons of Smaller Down Payments

If you make a down payment of 5-10%, you will be able to become a Lake of the Ozarks homeowner faster since you won't have to save as much cash. It's a smart idea to keep a robust savings account to cover emergencies and even anticipated expenses of home ownership such as maintenance and repairs. However, there are definitely some disadvantages to this option as well:

You will need to pay PMI to your lender, which increases your monthly payments.
Your home loan will be larger, so your monthly payments will also be larger.
Your interest rate will be a little higher than for someone who makes a 20% down payment.
In order to qualify for a mortgage at the Lake of the Ozarks, your maximum debt-to-income ratio must be 43% or less, so a smaller down payment will make it harder to qualify for a loan.

This decision depends on a variety of factors including home prices in your market and your personal income. As your Lake of the Ozarks mortgage lender, I will help you make the best choice in the context of your individual financial plan. When it comes to your financing needs, I'm committed to working with you every step of the way. I'll discuss financing options, offer competitive interest rates and back it up with the FIRST Class Service you deserve!

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