April 4th, 2013 6:21 PM by Michael and Jill Kohler
Saving for a down payment might be tougher than it has ever been. After the housing crash a few years back, many conventional lenders increased their down payment requirements to 20%. Today the average down payment if 9%, as compared to 2004 when the average down payment was only 3% of the purchase and 42% of all buyers financed the entire purchase price putting no money down.
There are 3 reasons that it might be worth your while to save a little more for your down payment.
1) A lower rate of interest. With a lower dti, you’ll get a lower interest rate.
2) You’ll be protected if your appraisal is low.
3) You will pay less in the long run, having a lower principal balance, means you’ll pay back less interest over the years.