This is a YouTube video titled "🚨 Why are Down Payments Required? 🚨" containing an explanation about the importance of down payments in mortgage loans, including how they reduce default risk and the role of mortgage insurance. The content is a monologue or single-speaker explanation recorded on September 27, 2021.
Payments reduce the likelihood that a homeowner might default on their mortgage. That's why the government likes these on most all of their loan products. Let's use an example. $200,000 purchase price. Somebody's putting the standard 5% down of $10,000 of their money. They can't make the mortgage payments. They lose that money. So they have a skin in the game. They're going to make every last effort to make their mortgage payments. Why the government likes it. That's also why mortgage insurance exists. Let's use that same example. That'd be $190,000 loan amount. Let's say the bank had to take over and they only sold it for 180. They're $10,000 short. The mortgage insurance covers it, pays the bank back. But. But that's a good thing. It alleviates risk in the market. This is what keeps interest rates low.
