If you are looking to buy a home, you may be aware of the need to put money down prior to the sale closing. Depending on the type of loan that you want, the down payment could be anywhere from 3.5 to 20 percent of the home’s purchase price. Lenders ask for a down payment to ensure that both the lender and borrower have made a financial commitment to the property.

You Now Have Skin in the Game

When you have to let go of $10,000 or more of your own money at one time, you don’t want to see it go to waste. That is exactly what happens if the home were to be foreclosed upon. Therefore, you have a reason to make your payments on time or work with the mortgage company to make alternate arrangements if a payment can’t be made on time. Ultimately, this reduces the lender’s risk of a loan default.

You Have Instant Equity in the Home

In addition to not wanting to see your money go to waste, you don’t want to lose the benefits of having equity in an asset by defaulting on your loan. For instance, you could use the equity in the home as collateral for a loan to improve the property, start a business or consolidate debt at a lower interest rate. If you were to sell the home, any profits that you realize are taxed at a lower rate. Generally, you can wait to get the best deal possible when you own all or most of the home outright.

Lenders May Offer Down Payment Assistance

The best loan officers Las Vegas can make it possible to find a loan product that meets your needs. If you need help coming up with a down payment, there may be state or lender programs available to make it more affordable. In some cases, the down payment may be gifted by another party.