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A home purchase gives you personal benefits such as a sense of investing in your community and pride for achieving the dream of homeownership. There are some strong financial benefits as well, especially the tax savings you may enjoy. Interest payments on a mortgage are typically tax deductible (consult your tax advisor for more information). As you continue to make mortgage payments, you'll build home equity, as opposed to paying rent to someone else. If your home equity increases, you can borrow against this amount to:
• Make home improvements
• Pay for college
• Pay off debts
• Take a vacation.
With today's low-or no-down-payment options, a home purchase may be easier than you think.
Everyone's financial situation differs; it is important to recognize what you can comfortably afford to borrow. In general, the loan amount you can afford depends on four factors:
1. Your debt-to-income ratio, which is your total monthly payments as a percentage of your gross monthly income
2. The amount of cash you have available for a down payment and closing costs
3. Your credit history
4. The value of the property you are purchasing
For a better understanding of how much you can afford to borrow, use our Affordability Calculator or call us at 1-888-866-1212.
Your down payment requirements will depend on your lender, the type of home loan you choose and the type of property you are buying. Your required down payment can range anywhere from 3%-20% of the home's purchase price. Discover offers a variety of different loan programs, including low down payment options. Each of our loan programs has different rules regarding the down payment required. Down payments can also vary by the amount you want to borrow, as well as factors like credit history. To find out what options we have for you, contact one of our experienced mortgage bankers at 1-888-866-1212 for a no-obligation quote or click "Request a Call" to receive a call back.
There are several reasons that refinancing might be a good idea for you. You may be tired of making two payments: one for your first mortgage and another for your second. Perhaps it's time to reduce your current interest rate to a lower fixed or adjustable rate. You may also want to switch to a shorter term mortgage in order to pay off your mortgage sooner. Maybe you have an adjustable-rate that you want to convert into a fixed-rate mortgage. You may want to cash out some of your equity, or lower your overall mortgage payment. To talk about the possibilities, call one of our mortgage bankers at 1-888-866-1212 or Request a Call online.
A cash out refinance is when you take out a new home loan for more money than you owe on your current loan and receive the difference in cash. It allows you to tap into the equity in your home. Cash out refinancing makes sense:
•When you have the opportunity to use the equity in your home to consolidate other debt and reduce your total interest payments each month
•To pay for the cost of improvements that increase the value of your home
•When you are unable to get other financing for a large purchase or investment, or if the cost of other financing is more expensive than the rate you can get on a cash out refinance.
To learn more about cash out refinancing, read our Cash Out Refinance article.
With a cash out refinance, you can use the cash to pay down higher interest debt. You will still owe the same amount of total debt when all is said and done, but you will have swapped out high-interest debt for the lower interest rate on your new home loan. This can save you a lot of money in monthly interest payments. In many cases, you will also get the added benefit of deducting these interest payments from your taxes (consult your tax advisor for details). Use our Cash Out Refinance Calculator to see how you can consolidate your debt through a cash out refinance.