Things You May Not Have Known About Down Payments
- Author: Bryan Miller
- Posted: 2024-07-20
Generally speaking, these are big-ticket items, most usually a home or a car.
However, down payments can also be put on items in a range of stores in order to put things on lay-away.
You can also put down payments on home improvement projects like new windows, a new roof, etc.
Basically, if an item is going to cost you a lot of money to purchase, the buyer may allow you to place a down payment on it.
The fact down payments exist is something everyone knows; this is in no way new news.
Although what you may not have known is that down payments are flexible, potentially lower than you might expect, and easier to come up with than you may realize.
To be clear, home ownership is far from the only genre where you may need a down payment.
If you have researched down payments at all on the Internet, the odds are good that huge mortgage brokers have taken up the first 50 pages of Google with home-related prose that's laden with keywords driving back to some mortgage lending site.
This piece here is general information for a range of down payments, not only a payment required to purchase a new home.
A Down Payment Can Be Negotiable
One thing you may not have known about a down payment is that you may be able to negotiate a lower price.
Depending on what you're buying, and who's selling it, you may be able to slide in with a payment for only a few percentage points of the price.
For instance, if you need to get something like fencing on your property, and the company building it for you requires a down payment in order to let you get this on credit payments, this is an example of a personal, private company that may actually negotiate with you for a lower down payment.
The same holds true here for a lot of different construction and landscaping projects, and you may also be able to negotiate for a lower down payment on things like used cars.
There is no guarantee that this will happen, but plenty of businesses out there are trying to remain competitive in a rough economy, and so it's more common than you may think.
Your Down Payment May Depend On Your Credit Score
For more expensive new cars, and especially for new homes, your credit rating is going to matter a great deal to the terms you end up getting.
Your monthly payments and your interest rates are going to be a lot lower if you have a decent credit score.
Though this also includes a down payment you have to put down.
For homes in general, the myth is that the industry standard is paying 20% of the home price for your initial down payment.
This isn't true at all, however. Only around half of people who pay a down payment on a home put down that 20%. Most of the rest of the people pay lower due to having a good credit rating.
In fact, if you have excellent credit, you can work it out with a mortgage lender that you can pay a very low rate, such as 3.5%. Of course, the company is going to try to get you to pay more, so they won't tell you that you can pay less.
So this is something you will have to bring up.
You Can Get Down Payment Assistance
Another thing you might not know is that there are a lot of companies out there that are offering assistance for your down payment.
You can get this a few ways, too, including getting a cash loan for the payment, or even having a company work with the other company in order to cover the payment.
A lot of people might tend to stay away from this option, as they do not want to be saddled with more debt than they need to.
Though it's important to note that these sorts of down payment assistance programs generally have very low repayment structures that are stretched out over longer periods of time than your typical loans. So it's not that large a burden for most.
Before you place your next down payment on an item, see if any of these tips will help you pay a lower rate or find the assistance that you need.
