Dive Brief:
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Despite a willingness by mortgage lenders to accept lower down payments on fixed-rate home loans, borrowers continue to bring hefty amounts to the settlement table, a survey by online loan marketplace Lending Tree revealed on Wednesday.
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The average amount of a down payment on a conventional loan in the fourth quarter of 2014 was $47,585, or 17.59% of the loan amount, up from 16.01% in the fourth quarter of 2013, the survey said.
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Homebuyers in three California cities—San Jose, San Francisco and San Diego—anted up the most down-payment cash at settlement, averaging 21.29% to 23% of the loan amount.
Dive Insight:
The fact that homebuyers are offering to pay more than the required amount for their down payments indicates that borrowers are taking more responsibility for building equity and lowering risk. Also, a higher down payment can relieve the borrower from paying mortgage insurance, slightly reducing monthly payments.