Lower Interest Rates for Smaller Downpayments

The general rule used to be that if a homebuyer did not put at least a 20% down payment on a house they would face the risk of expensive private mortgage insurance and higher interest rates.

Rules put in place by Fannie Mae and also adopted by Freddie Mac at the end of 2008 made it so that people putting down between a 20 - 25% downpayment were considered “riskier” mortgages to lend out than those who are in the 20% or lower range or than those above the 25% range.

People who put down below 20% on a house are usually required to pay for private mortgage insurance but received the same interest rate as those who put down 20%.  Whereas those who put down over 20% but less than 25% were considered a higher risk and were offered higher interest rates even as high as a whole percent higher than those in a different down payment class.

Fannie Mae and Freddie Mac representatives said that the reason they count them as a riskier investment is because they are they are at the lower end of downpayments that do not require private mortgage insurance.

If you are interested in purchasing a home in Staten Island or Brooklyn, New York or New Jersey contact Steven T. Decker, an experienced New York real estate attorney, at 718.979.4300 to discuss how we can represent you in the purchase of your home.

Steven T. Decker is an experienced real estate lawyer, author and speaker. With over 20 years of experience, Steven represents individuals and investors in the purchase of residential and commercial real property. Steven is the author of "The Five Myths that can Ruin the Purchase of Your Home" and he is the publisher of the "New York Real Estate Law Blog". If you are buying or selling a home or commercial property in Staten Island, New York City or New Jersey contact Steven T. Decker, Esq. to discuss the services that he offers and how his legal representation will assist you.

IMPORTANT DISCLAIMER: The information contained on this website is provided for general educational purposes only, should not be relied on as legal advice and does not serve to create an attorney client relationship. In utilizing this website you acknowledge that there is no attorney client relationship between you and Steven T. Decker, Esq. and that the information contained on this site does not and cannot serve as a replacement for the competent legal advice of a licensed attorney in your state. The content of this website is subject to the Copyright of its author, Steven T. Decker, Esq.
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