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Mortgages 101, 3rd Edition by David Reed

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CHAPTER 4

Down Payments and How They Impact Your Mortgage

Down payments are in essence your very own “earnest money” in the deal. Your down payment tells a lender that you are serious about buying a home and that you’re willing to pony up some cash at the beginning to prove it.

4.1 WHAT EXACTLY IS A DOWN PAYMENT?

A down payment is your initial money into your purchase. A down payment is one of the risk elements lenders evaluate when making a mortgage loan, and it goes a long way in helping a lender make a loan. The more down payment from the borrower, the more risk a lender might take. The less down payment from the borrower, the less risk a lender ...

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