You might have already heard that it's a good idea to put at least 20% down on your next house, but you might now know why everyone suggests that number. You also might not know why so many people have suggested that you save up a certain percentage before you buy a house. If you've been wondering, "What are the benefits of putting 20% down on my next house?" is very common. There are several major advantages to putting at least 20% down at the time of purchase, including avoiding paying PMI. These are some of the other perks that you can expect when you have your down payment for your house ready.

Lower Your Interest Rate

When your lender trusts you, they're more likely to give you a lower interest rate. Your lender is more likely to trust in your financial stability if you're able to put at least 20% down instead of only 5% or 10%. Even though interest rates on houses are incredibly low right now, even a fraction of a percentage point over the long haul of a 30-year mortgage can add up to a lot of money.

You'll Pay Less in the Long Run

When you pay a significant amount of money down, you'll end up paying a lot less over the course of the loan because you're starting with a lower principal amount. Through this lower amount that you're putting on the loan, you'll also pay less in interest because you'll never pay any interest on the amount that you put down at the time of you buying your house.

Sellers Will Take Note

Whenever you're looking for a way to beat out any competitive offers without offering more money, you should try to show the sellers that you're serious about your offer. No seller wants to deal with a buyer walking out on them because they don't want to have to re-list the house later. Putting 20% down is one way that you can show the seller that you're serious and aren't going to walk out on the deal.

You'll Have No PMI to Pay

PMI is private mortgage insurance, and whenever you owe more than 80% on the original price of a house, you have to pay for this insurance in case you don't pay your mortgage. This insurance will help your lender recover their loss if you default on your loan. But when you have at least 20% invested into your house, you no longer have to pay for this insurance, which translates into savings for you.

When you're looking for homes for sale in Baton Rouge, make sure that you take note of what percentage you would be able to put down on the house if you were to buy it right away. Only buying a house that you can afford to put 20% down right away will save you big money over the long haul.