If the trade-in is high enough, dealers don’t typically require an extra payment, such as a down payment. Some dealers may allow you to use the trade-in value of your old vehicle to cover the required down payment on a new one (assuming the old one holds enough value).
Deposits are either returned (depending upon terms) or converted into the down payment amount and/or closing costs. For example, if you put in a $3,000 good faith deposit on a $100,000 home, you would subtract this from the $100,000 to get $97,000.
Many mortgage lenders require 20 percent down on a real estate transaction, although you may be able to secure an FHA-backed mortgage requiring as little as 5 percent down payment. A lower loan balance results in less interest expense and the possible requirement of mortgage insurance. [2] X Research source A lower downpayment is expected on government- guaranteed loans such as FHA or VA because the lender has recourse to the Federal government in the event of default. For example, if you paid a 20 percent down payment on the $100,000 house purchase, which would be $20,000, you would subtract this from your total. Your good faith deposit may be applied towards your down payment. This means that the loan amount would still be the purchase price minus the down payment, which is $80,000 in this case.
For more information, see how to calculate interest payments.
Most financial planners suggest limiting house payments plus taxes and insurance to 25 to 28 percent of take-home income. For example, if your household net income is $7,000 per month, your total outlay for housing should be no more than $1,960 per month.
A good calculator for this purpose can be found at http://www. thecalculatorsite. com/finance/calculators/interest-rate-calculator. php.
