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When you decide to purchase a home, one of your first tasks is obtaining a mortgage loan. You also need to consider how much of a down payment you want to make. While some types of loans require you to put down a certain percentage of the sale price, others enable you to buy a home with a low down payment. We explore some of the pros and cons of the latter option below.
One reason people buy homes in the first place is to escape the increasingly high cost of renting. Since it can be difficult to save for a down payment while renting, home loans with a low down payment requirement can be advantageous. It also puts you on the fast track to owning a home without having to spend months or years saving the typical 20 percent down payment. These South Carolina home loans can help you avoid higher mortgage interest rates in the future as well.
It can be challenging to qualify for low down payment home loans. If you think you might want to try for this type of loan, work on keeping your credit score as high as possible and your debt-to-income ratio as low as possible. Building equity in your home takes longer when you make a smaller down payment. The term equity refers to the difference between how much you still owe on the home and its actual value. The lower your equity, the more you will pay in interest.
Midland Mortgage Corporation is available now to help you consider your mortgage options. Please complete this form to start the process.