For lenders, whether it’s a bank, credit union, or other type of lender, a down payment helps offset their risk in making a mortgage loan because it means the borrower immediately has some skin in the game–an investment to protect. The more money you pay down, the less the lender stands to lose if you default on payments and the lender has to foreclose, especially early in the loan term. This is why borrowers who put less than 20 percent down usually have to get PMI, as it protects lenders by repaying the unpaid portion of the loan if the borrower defaults.
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In turn, the lender will use this info to decide whether or not to loan you money, as well as how much and at what interest rate. If a lender sees some late payments on your credit cards or other blemishes in your credit report, this can lower your odds of getting a loan with a great interest rate, or perhaps even jeopardize your chances of getting any loan at all.

Before contacting a lender, it’s smart to check your credit report. By law, you can get a free report once a year through Annualcreditreport.com. The report pulls data from the three major credit-reporting agencies: Equifax, TransUnion and Experian. Having the information in hand before you talk with a lender lets you dispute any errors in the reporting. Based on your credit report, Fair Isaac & Co. (FICO) assigns you a credit score ranging from 350 to 850. The higher your credit score, the lower the interest rate on your mortgage. Scores are based on:

Los Angeles, California: it's a city that needs no introduction, especially if you're hunting for a home. From its pulsating nightlife to its lively beaches, its star-studded events to its world-class attractions, the list of reasons to call Los Angeles home is extensive. You needn't look far to find entertainment in the City of Angels, either. There's the stunning architecture, lush gardens, and impressive art collection of the Getty Museum; Griffith Observatory's breathtaking views of both Beverly Hills and faraway planets; and the silver-screen excitement and thrilling rides of Universal Studios Hollywood, too.
If you are able to come up with a 20 percent down payment, you’d reap quite a few benefits. Putting that larger amount down lets you avoid paying private mortgage insurance (PMI), it can help you qualify for a lower interest rate (which can help you save thousands over the life of your loan), it’ll give you more equity faster, and it will result in a smaller monthly mortgage payment. Depending on where you’re looking to buy a home, a larger down payment might also help you be a competitive buyer and stand out to the seller if there are multiple offers on the home.
Paying off credit card debt isn’t always straightforward, though. Focus on your highest-interest debt first (debt avalanche method), even if that means putting as little as $25 or $50 extra toward your payment each month. As your high-interest debt load shrinks, you can move onto lower-interest credit card debt, and you’ll likely accelerate your progress toward a $0 balance. With lower (or no) interest charges eating into your spending and saving power, you can then direct your dollars toward your down payment fund.

Paying off credit card debt isn’t always straightforward, though. Focus on your highest-interest debt first (debt avalanche method), even if that means putting as little as $25 or $50 extra toward your payment each month. As your high-interest debt load shrinks, you can move onto lower-interest credit card debt, and you’ll likely accelerate your progress toward a $0 balance. With lower (or no) interest charges eating into your spending and saving power, you can then direct your dollars toward your down payment fund.


Los Angeles, California: it's a city that needs no introduction, especially if you're hunting for a home. From its pulsating nightlife to its lively beaches, its star-studded events to its world-class attractions, the list of reasons to call Los Angeles home is extensive. You needn't look far to find entertainment in the City of Angels, either. There's the stunning architecture, lush gardens, and impressive art collection of the Getty Museum; Griffith Observatory's breathtaking views of both Beverly Hills and faraway planets; and the silver-screen excitement and thrilling rides of Universal Studios Hollywood, too.
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Beautifully remodeled top floor unit in the heart of Tarzana. Updated kitchen with soft close cabinets, under-mount sink, and designer pull out faucet, stainless steel range, stainless steel dishwasher, and stainless steel microwave. Open floor plan. Master bedroom is spacious and bright. Quiet building with pool and controlled access. Unit has a private 1-car garage with storage. Located just minutes away from Pierce College, major restaurants, and shopping. Don’t miss this great opportunity!

Take as much time as you need to find the right home. Then work with your real estate agent to negotiate a fair offer based on the value of comparable homes in the same neighborhood. Once you and the seller have reached agreement on a price, the house will go into escrow, which is the period of time it takes to complete all of the remaining steps in the home buying process.
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Before you start looking for a home, you will need to know how much you can actually spend. The best way to do that is to get prequalified for a mortgage. To get prequalified, you just need to provide some financial information to your mortgage banker, such as your income and the amount of savings and investments you have. Your lender will review this information and tell you how much we can lend you. This will tell you the price range of the homes you should be looking at. Later, you can get preapproved for credit, which involves providing your financial documents (W-2 statements, paycheck stubs, bank account statements, etc.) so your lender can verify your financial status and credit.
The content on MoneyCrashers.com is for informational and educational purposes only and should not be construed as professional financial advice. Should you need such advice, consult a licensed financial or tax advisor. References to products, offers, and rates from third party sites often change. While we do our best to keep these updated, numbers stated on this site may differ from actual numbers. We may have financial relationships with some of the companies mentioned on this website. Among other things, we may receive free products, services, and/or monetary compensation in exchange for featured placement of sponsored products or services. We strive to write accurate and genuine reviews and articles, and all views and opinions expressed are solely those of the authors.
Updated, light and bright unit in the heart of Tarzana! Enter into a formal dining area with a step-down living room complete with a fireplace. The view from the balcony is of the courtyard with beautiful landscaping. The open kitchen features new countertops, dishwasher, and refrigerator. The very roomy bedroom also opens out to a private balcony and has new flooring. The bathroom is large and completely renovated. The whole unit has been freshly painted. The secure complex is quiet and features a huge lobby with an elevator to your unit. Don’t miss this great opportunity! Take a virtual tour now: https://bit.ly/2JAIjEn
Down payments also protect buyers from negative equity if the market suffers a downturn. If you put 3 percent down and the market value of the home soon falls by 5 percent, you’ll be upside down on your mortgage by 2 percent; you’ll owe more than what the house is worth. However, if you had put down 20 percent, then you’ll still have equity in the home. A substantial down payment to reduce negative equity risk is not only attractive to lenders, but is also helpful in the event that owners need to sell the home for some reason.
How you progress through a home buying transaction can vary somewhat depending on the real estate laws and customs where you live, but many steps are standard. You'll feel more confident about your home-buying journey when you understand the chain of events and what's required of you, as well as every other person who's involved in the transaction.
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