20% down...

[Anonymous]

Hey all you fab mortgage gurus!

If I am able to put 20% down, will it "grease the skids" (so to speak) ?

[Anonymous]

I don't know if it helps in other ways, but you don't need to pay for Mortgage Insurance if your down payment is greather than 20%.  It may also help for qualifying or establishing the risk....  It will be interesting to hear from the experts.

I wonder if there are any thresholds... i.e. - if 25% helps more than 23% or 20%?

[Anonymous]

In this mortgage market - yes.  Will also help rate (unless you are in the 350s).  The more 'risk' (i.e. your own money) you assume with the purchase the more at ease a lender feels.  It's when you have nothing (or very little) to lose that they get real persnikity.

[Anonymous]

Nope - not in the 300's - but I am in the mid-high 6's. I thought I had heard that having 20% was a good thing (as Martha Stewart would say). Thanks!

[sunrise]

It's a very good thing!

[Anonymous]

Also with your scores and 20% down - you will more than likely be approved via automated underwriting and probably have to hand over less documentation (1 month vs. 3-6).  DTI should be fine (assumption on my part) with 20% down.  You will be conventional if at  $417K or less and Jumbo over it - so start paying attention to those rates.

Fed meets the end of this month - I (and many experts) are expecting a 1/2% cut.  Bernake's speech the other day suggested they were going to be aggressive (more worried about a recession than inflation).

[ShanetheMortgageMan]

As has been outlined here, putting 20% down is considered a "compensating factors", so if other parts of your borrowing profile fall below standards (such as having a debt ratio higher than 45%, less than 2 months PITI in reserves after down payment/closing, or imperfect credit) it can compensate for those areas.  For example, a gal I was helping refinance back in 2007 had 550 scores, but had a good debt ratio (36%) and plenty of reserves (about 8 months PITI), the kicker was she had 50% equity in her home... so she was able to qualify for the lowest interest rates available at the time.  I fiddled around with the numbers in automated underwriting and just for kicks I put she only had 10% equity, and it got a lower level approval, thus the equity was the deciding factor in getting her those lowest interest rates.

[Anonymous]

Shane-

Thanks for your expert input. I REALLY appreciate it.

My scenerio is :

Gross income $35K

Married, but not putting spouse on loan ( His DTI is outta this world)

Purchase price $104,900

My DTI will be next to nil when my current home sells.

Can put 20% down and would have enough left over for 6+ months PITI.

My median FAKO is 613.

Whatchoo think?

[ShanetheMortgageMan]

Because of your real low debt ratio, great down payment, and 6 months PITI in reserves after the down payment... you'd have enough compensating factors to mitigate the risk that your lower credit score presents.  However what is leading to the lower credit score?  How are your last 12 months?