Chris  Schmidt
Chris Schmidt
Owner/Broker

Can You Change the Down Payment Amount Before Closing?

Not sure if you can change the down payment amount before closing on your new home? Whether you want to pay more or less, it’s definitely possible to change how much you put towards your down payment. However, doing so can have some consequences for your transaction.

In this post, Chris Schmidt and our Houston real estate experts at Your Home Sold Guaranteed Realty - Chris Schmidt Team will break down what steps are involved and what considerations you should make before deciding to change your down payment.

Key Takeaways:

  • In most cases, requesting a change to your down payment essentially restarts the loan process. If your lender requests them, be prepared to submit your financial documents again.
  • You’ll also need to notify the seller about the down payment change if it’s going to delay the transaction or push the closing date beyond the initial agreed-upon timeline.
  • Before changing your down payment amount, consider how changing the down payment will impact your interest rate and the need for private mortgage insurance. 

How to Change Your Down Payment Amount Before Closing

Communicate with Your Lender

As soon as you know you want to change your down payment amount, reach out to your lender. The lender will recalculate your mortgage loan amount, loan terms, and monthly payments based on your new down payment amount. 

Keep in mind that a change in your down payment could affect your interest rate, loan amount, and monthly payment amount. The lender will also need time to draft new paperwork outlining the new loan terms, which can significantly delay the buying process.

Provide Relevant Information

In most cases, requesting a change to your down payment essentially restarts the loan process. If your lender requests them, be prepared to submit your financial documents again. For example, if you’re planning to increase your down payment, you’ll likely need to share updated bank statements verifying that you have the necessary funds to cover the higher cost.

The lender might also need to re-evaluate your credit score to make sure you qualify for the revised loan terms.

Adjust the Purchase Agreement

You’ll also need to notify the seller about the down payment change if it’s going to delay the transaction or push the closing date beyond the initial agreed-upon timeline. In addition, you’ll also need to let them know so both of you can sign an updated purchase agreement that reflects the new down payment amount. It’ll also take time for your realtor to draft a new purchase agreement, which can further delay the closing process.

Sign an Updated Closing Disclosure

On the lender’s end, they’ll issue a revised Closing Disclosure after they’ve reviewed your financial information and calculated the new loan terms. The new disclosure will detail the updated down payment, closing costs, monthly payments, and other terms and conditions of the loan.

What to Know Before Changing Your Down Payment Amount

Consider New Loan Terms

Before changing your down payment amount, consider how changing the down payment will impact your interest rate and the need for private mortgage insurance. 

A higher down payment is generally better since it means you can qualify for a lower interest rate. A lower down payment, on the other hand, leads to a higher interest rate. Be sure to understand what the new rate is and whether the loan is still affordable despite the changes.

For private mortgage insurance (PMI), in most cases you’ll be required to purchase it if your down payment is below 20%. PMI is added to your monthly mortgage payments, which can increase your monthly expenses. It only goes away once you pay off a certain amount of the loan.

Work with your lender to understand their exact terms surrounding PMI and whether a higher or lower down payment is advisable for you. 

Adjust Your Budget

If you’re planning to pay a higher down payment amount, it’s important to reassess your budget. Make sure you can still comfortably afford the new down payment, as well as closing costs and future homeownership expenses like maintenance expenses, property taxes, and HOA fees.

Think About Timing

Changing the down payment amount can delay the closing process as the lender and other parties need time to update documents and approve the changes. Depending on the seller’s plans, this delay may or may not be acceptable to them and could lead to negotiations or the deal falling through entirely. 

Be prepared for delays and plan accordingly about how to handle them. It’s crucial to communicate and be proactive with the seller and their realtor throughout the entire process.

Call or Text Chris Schmidt Today to Get Your Mortgage Loan Process Started!

Your Home Sold Guaranteed Realty - Chris Schmidt Team. Can You Change the Down Payment Amount Before Closing?
Chris Schmidt

Chris Schmidt is the owner of Your Home Sold Guaranteed Realty - Chris Schmidt Team. Chris has 20+ years of experience in real estate and is deeply familiar with the Houston housing market. He’s a member of the Houston Association of Realtors and has earned the Graduate, Realtor Institute designation from the National Association of Realtors.

He began his real estate career in 2004, when he joined Coldwell Banker United as a broker associate. He worked as a broker associate for over 10 years before deciding to begin his own real estate and mortgage lending team.

If you work with Chris Schmidt and the agents at Your Home Sold Guaranteed Realty - Chris Schmidt Team, you’ll have nothing to worry about on your home purchase or sale of your home. We’ve received numerous 5-star reviews from past clients who loved working with us. Clients value working with our team because we always take the time to understand their real estate goals and learn about what’s most important to them. Call or text 713-322-5604 today!

Faster

  • Get pre-approved in minutes
  • Closings on average in 20 days or less

Cheaper

  • 1% and 3% down options
  • Borrower Assistance Programs
  • Savings that average over $9,400 versus large banks and retail lenders

Easier

  • User-friendly technology allows you to track the status of your loan throughout the process

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