The down payment on a home affects many things — what home you can afford, loan size, financing terms and more. Getting some sense of the down payment you can afford can be difficult; people are quick to share advice from their experience, but conditions may have changed. In general, the higher the % of the purchase that you can cover in the down payment, the better the loan terms as a whole are likely to be. 5% of the home is currently the minimum down-payment amount. Keep in mind that any amount under 20% will generally require a mortgage insurance policy, which does increase borrowing costs. Keep in mind that the down payment is not the only sizable payment involved in buying a home. You will also need cash for closing expenses, moving, decorating, furnishing and possibly repairs. Check your credit history when youre sizing up down payment and loans; its also a vital part of the equation.

Picture your home loan on one side of a see-saw, and the home itself on the other. Thats a simplified version of LTV — "Loan to Value". Its one of the key ratios involved in setting loan amounts. Lenders frequently set LTV limits. If you know the ratio, you know the upper boundary of loan size, like this: "LTV on this $500K home is 80%." 80% x $500K = $400K max loan. Buyer would need at least $100K down for that loan. LTV also measures equity. If you put $100K down for the example above, you have $100K equity in the home. As a result, higher-LTV loans may require mortgage insurance. With an LTV greater than 80%, the risk of default is high because the homeowner has a lower "stake" in paying off the mortgage.

Laws to provide stable, suitable home financing created a category of loans and lending practices called "Qualified Mortgages." They provide guidance to help lenders provide loans that borrowers can repay successfully. Following the guidance and practices — and assessing each borrowers ability to repay—gives lenders additional legal protection. The Qualified Mortgage guidelines provide predictable and more-easily-understood loan features. They also rule out some loan terms and practices. Qualified mortgages cannot be: Interest-only loans Loans with terms >30 years "Negative Amortization" loans (increasing principal over time) Most forms of "balloon" loans with large payment partway into the loan period. These consistent practices help lenders and regulators provide consumers with objective guidance about reasonable debt. If you are buying a home, ask about your Qualified Mortgage options.

The interest rate on a mortgage has a large impact on payments and costs. Available rates change all the time, based on government policies, financial conditions and more. In the weeks-to-months required for a home purchase, rates could go up (or down). So most lenders offer mortgage customers options for a guaranteed rate — the common term is rate lock. The availability of rate locks, and the factors that are involved in a lock, also vary with market conditions. Of course, the buyers financial profile will affect availability as well: What is your credit score? How solid is your credit history? What is the LTV ratio of the offer on the property? Where is the property located? Rate locks are usually available for: An accepted offer, on a specific property, For a given combination of interest rate and points, For a set period of time, Whether market rates go UP or DOWN. The last point is key. Accepting a rate lock could mean slightly higher-than-market costs if rates go down after you have locked. At some point in the home-buying process, you may be offered the option of a rate lock. Are mortgage rates changing rapidly? Trending up, or down? Are there factors about the transaction, or construction schedules, that might matter? Deciding whether to lock or to stick with market conditions and "float" is a judgement call. Get advice, read and research, and then make the best decision for your situation.

Do high-tension power lines have long-term health impacts? Everybody uses electrical energy, and power lines are required to carry it. Rumors and notions about possible effects from high-tension power lines have been around for quite some time. However, as this video reveals, according to the HUD – the US Department of Housing & Urban Development— there are no conclusive research findings verifying that direct exposure to power lines leads to higher circumstances of illness or disease.

As this video explains, cash committed to demonstrate sincere intent to go through with a detail is called "earnest money." Conditions and (sometimes) local customs may play a role, but an earnest money sum between 1% and 5% of the purchase price is typical. This is regarded as substantial enough to demonstrate good-faith intent. If agreement is reached through offer and counter-offer, the earnest money generally becomes part of the down payment or transaction closing costs. If agreement is not reached, earnest money is returned. If you back out of the offer/deal, you may forfeit the earnest money. Ask your real estate professional for guidance.

Youre ready to buy a house; how do you "Make an offer"? There is a formal process, and the real estate agent(s) will assist you. The offer will involve: Price: how much are you offering? Under what conditions? Time: when do you want to close? Move in? Financial Terms: How much are you offering in down payment? What financing details might affect the offer? Contingencies. Does the offer depend on any other events, such as the sale of your existing home? Earnest Money: what amount are you committing to show that you are in earnest about the purchase? Deadlines: how long is the offer valid? An offer will include the complete legal description of the property, and a few other formal details. Keep in mind, it is "an offer, not a deal." Buyers will frequently provide a counter-offer that changes some of the terms to meet their desired outcome.

Make sure to check a few practical risks in the decision process for a new home, including: Natural disaster risks Is it in an earthquake-prone area? Is earthquake insurance available, and how much does it cost? Likewise, are hurricanes a risk? Tornadoes? How high does the property sit, and is there a risk of flood? (Watch the video on floods here on Video-Genius.) Are there hazardous materials in the area? Building Code compliance; the house should meet local codes. Local zoning and (if applicable) homeowner association rules can also play a big role in future changes. If you envision remodeling, making an addition, or other substantial changes, be sure you understand the regulations and permits that will be involved.

Buying a home and renting a home are quite different in the long run. Monthly cost is only part of the picture. Renting does not involve the long-term financial commitments of buying. Renters generally have less responsibility for maintenance. These short-term advantages can cost long-term leverage, though. Renters do not build equity (ownership); where part of each dollar a homeowner pays in a mortgage is coming back to them in equity, rent payments are purely an expense. Home owners also have tax advantages not available to renters. Individual situations aside, home ownership has historically been financially advantageous. The costs — insurance, taxes and upkeep — are generally outweighed by the freedom, security and stability of ownership over time.

Lending institutions consider your full financial situation in calibrating acceptable loan structure and size. Some of the key factors that will come into play: DTI — Debt to Income — compares your pre-tax (gross) income to your expenses and commitments. Non-housing expenses and commitments, especially long-term debts such as car loans, student loans, child support and alimony. Do you have the cash available for down payment and closing? What is the source of the cash? What is your credit rating? Are there any outstanding or concerning issues in your credit history? The Federal Housing Authority sets general guidelines about these ratios, which lenders will consider. These ratios may be adjusted up or down slightly over time. In the past few years, FHA guidance has recommended that monthly mortgage payments not exceed about 1/3 of gross income. Overall expense-ratio recommendations have been between 40% and 43%. All of these factors will be considered and verified in determining qualifying loan amounts.