preparing for home ownership
Save As Much As You Can
There are lots of costs involved in buying a home, so it's best to begin saving long before you apply for a mortgage. If you only have enough money saved to make a small down payment, which of these is true?
You may end up paying a higher interest rate on your mortgage.
The lender will pay for personal mortgage insurance, or PMI, to cover any loss that may occur if you default on the loan.
The owner will pay for your closing costs, such as points, title insurance, appraisal, inspection, and attorney fees.
"A" is correct. If you put down less than 20 percent, you may be charged a higher interest rate and have to cover PMI for the lender. As the buyer, you are responsible for many closing costs as well as for future home repairs.