What is the backup?

The advance payment is part of the available money provided at the beginning of the loan to prove the obligation to purchase. It is often in cash, although in some cases it can be attached to an alternative credit line. This money is usually used only in sale that includes a large amount of money. Loans to buy home and land are the most common loans that require such payment, although car loans, boats and other luxury goods purchased on a loan can also require part of the total front costs. This payment acts as a kind of insurance for creditors, because debtors know that if they fail on their loan, they will lose not only the property they buy, but also the money they have postponed. The traditional backup house in the United States was 20%, which is the amount that is sufficient to bind most people to their loans. In recent years, however, the cost of real estate has made it difficult to save 20%, if not impossible, for many families.

various incentive programs and more complicated credit solutions that can reduce the deposit needed for nothing, now there are both buyers and veterans buyers. The 80-20 loan arrangement is an agreement that has become a relatively popular, in which the first 80% of the loan is discarded as the first mortgage and the remaining 20% ​​is discarded as the second mortgage, leaving the buyer without advance, simply less beneficial conditions than they could otherwise. Interest loans are only another way that can allow the buyer to pay significantly less than 20%-time to 3-6% of the total cost.

"Grants" backup also exist through non -profit organizations such as Nehemiah and Americidream. These organizations use a gap in US residential regulations that prohibits the seller to give money directly to the buyer and to grant money to the buyer-permanently with a slightly higher final price as a compromise. While traditional 20% seems to be for many Americans high, many daLarge developed nations have much higher average advances. Mexico has a diameter of 30%, Germany and 40%, and Italy is fully 50%of the final cost.