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Why Your Down Payment Matters?

new home downpayment

Down payment refers to the payment given by the buyer when a house is purchased on mortgage. It is usually fixed but can also vary in terms of their percentage to the whole payment for the house. For instance, in case of purchasing a home for $400,000, you might be giving around $80,000 to your seller. Usually, it is around 20% of the total price of the house. However, sometimes, it can be increased or decreased depending upon the seller or mortgage rules. It’s pretty important to consider that your down payment is definitely going to impact your purchase.

Large or Small Down Payment

Large or small down payments certainly have their own pros and cons associated with your financial status. For example, if you’re depositing a small down payment for your newly purchased home, you are most likely to take on a larger mortgage payment in the end i.e. it will increase the original sale price of the house. On the other hand, if you’re depositing a large down payment, you’re most likely to reduce the additional payment you’re going to pay in case of a small down payment. Exact figures can be quoted in practical instances only but this rule is often followed.
calculating down payment for home

However, there are also shortcomings associated with your large down payment deposit. For instance, once you have made a large sum deposited as you might not be able to get that back conveniently in case of any property dispute in future. This happens due to conversion of your down payment cash into a formal asset named as home equity. Home equity refers to the payment different of your home sale price that is written in documents and the price you still need to pay to get full ownership of the home. Home equity is not regarded as cash rather it is taken as a liquid asset, which cannot be demanded readily even in case of a property dispute between the buyer party and seller party.
However, if you’re an investor, this liquid asset factor will be beneficial for you more than when you’re moving in and making your down payment liquid assets. Being an investor, it is readily available to you.
This is one of most important reasons that the buyers don’t like to make a large deposit as down payment on home as their payment can be tied up for some time and that can stress out some buyers.saving down payment for a new home


Contributed by: Greg Clarke Top Royal lepage Kelowna Real estate Agent. If you have any questions about buying or selling your home contact Greg at 250-869-9119



Greg Clarke Kelowna Royal Lepage Realtor
#1-1890 Cooper Rd., Kelowna, BC,
Phone: 250.869.9119

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What a Team

Why Your Down Payment Matters?


Greg and his wife Sharon are an impressive business team: they are very charismatic, energetic, personable, easily approachable and strongly motivated to assist their clients in reaching their goal in a punctual and always professional manner. I have and will continue to recommend the Clarkes; a team who is sure to exceed anyone’s real estate needs and expectations!
Neal & Florence Klose

They put me at ease

Why Your Down Payment Matters?


As a young first time home buyer, I had no idea what I was getting into when I started looking for my house. Greg sat down with me to sort out what specifically I was looking for, then set out to find me that property. We started looking at some listings which gave us both a better feel for what I liked or disliked. From that point, by searching the MLS system and talking with other realtors, Greg found a home a little out of my price range but with everything I was looking for. We viewed the house and it was perfect. From there he helped me go through the process of putting in an offer and negotiating the right terms. Luckily, after some back and forth discussion, we were able to come to an agreement with the sellers just within my budget. I’ve been living here now for a year and still think it was the perfect choice. Thanks Greg!
Nathan Hokazono

Thank You

Why Your Down Payment Matters?


Thank you both so much for all your help in finding us this great home! We are really happy here and are loving the beautiful hanging baskets too so thank you. We really appreciate all you have done and will gladly recommend you!
Dave and Donna Blackmore

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