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Despite signs of a slowdown in the housing market, house prices are still relatively high, leading to larger down payments.
Over the past year, average down payments in the country’s 50 largest cities have increased by more than 35%, according to a LendingTree Reportbased on 30-year fixed rate mortgage data from January 1 to October 10, 2022.
While high home prices and interest rates may push some buyers away, those still in the market may have “deeper resources,” particularly if they downsize, Keith said. Gumbinger, vice president of the mortgage site. SAS.
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Here are the top five subways with the largest installments.
5 Subways with the Biggest Deposits
In 2022, these five metros had the highest down payments based on LendingTree mortgage data from January 1 through October 10, 2022.
- San Jose, California: $142,006
- San Francisco, California: $131,631
- Los Angeles, California: $104,749
- San Diego, California: $98,593
- Seattle, Washington: $96,056
With average mortgages and higher annual household incomes, it’s no surprise that these metropolises top the list. And these installments make up a significant portion of annual revenue.
How a bigger down payment lowers mortgage costs
“In general, the more you can afford to deposit, the lower your end costs will be,” Gumbinger said.
A larger down payment means a smaller mortgage, which can “certainly help offset the cost of rising interest rates to some extent,” he said.
Although some types of mortgages allow down payments as low as 3%, you’ll have to pay mortgage insurance on loans with less than 20% down, and you could see higher interest rates, Gumbinger said.
The average interest rate for 30-year fixed rate mortgages of $647,200 or less is still above 7% for loans with a 20% down payment.
“More is usually better because it helps lower your overall costs,” he added.
In 2021, the median down payment was 13%, with nearly 4 in 10 using proceeds from a previous home sale, according to a report 2022 of the National Association of Realtors.
With high prices, many buyers find it difficult to deposit 20%
Despite drop in demandhome prices are still “significantly higher than two years ago,” with many buyers struggling to drop 10% or 20%, said Melissa Cohn, regional vice president of William Raveis Mortgage.
The median home sale price was $454,900 in the third quarter of 2022, down from $337,500 in the third quarter of 2020, according to the Federal Reserve. Data.
Many buyers are taking advantage of lower down payment options, she said, such as 3% or 5% for conventional mortgages or 3.5% for Federal Housing Administration loans.
“With a smaller down payment, it’s more expensive in every way,” Cohn said. “But for a lot of people, it’s the only way they can afford to get into their homes.”
Although smaller down payments mean higher interest rates and mortgage insurance, homebuyers could reduce those expenses in the future, she said. When interest rates drop, there may be a chance to refinance, and buyers can withdraw mortgage insurance once they reach 20% of home equity, Cohn said.
