I have a loan all set and ready to go, but I have a few thousand that I would like to put down. So instead of 10% it can be something like 11%. Is it possible without telling the bank first? Does it make sense to do? I want to lower the monthly payments as much as possible.
Yes, you may do this at any time before signing - but to make a change like this after the official loan documents have been drawn up will cost you extra fees. The typical redraw fee is around $200 in CA.
Does it make sense to do so? No, it does not. If you have an extra 1%, it would probably be better to use that money to purchase a lower interest rate. Here's an example:
Let's say you're buying a $200,000 house and your offered interest rate is 4.75% (just an example).
With 10% down you'd have a loan amount of $180,000 and a p&i payment of $938.97 per month. With 11% down you'd have a loan amount of $178,000 and a p&i payment of $928.53 per month.
Now let's pretend you buy your interest rate down to 4.375%. With 10% down you'd still have a loan amount of $180,000 but your p&i payment would be $898.71 per month.
Even though the last option gives you the best payment, if I were in your shoes I'd stick with the 10% down and save that extra cash in the bank for a rainy day. Buying a home comes with a lot of new expenses and many are unexpected.
Check to see if you can do this at this point.
When I was refinancing the mortgage on my last house, I put a sizable "extra" chunk down like you're planning to do, but the amount of the loan had already gone through the processing (for lack of a more specific term). My extra money went toward principal, but my payment was still the same as if I hadn't put any extra down.
If you find out that it's too far along in the process, not to worry: extra emergency fund isn't a bad thing to have.
As other people have said, a few thousand dollars isn't going to make any significant difference in what you pay - if you put an extra 1% down, and redraw all the documents accordingly, your payments are going to be roughly 1% less per month. So, for example, $1800 per month would become $1780 or so per month.
You're much better off keeping the money as an emergency fund: When you buy a house, there are a lot of things that can go wrong (as is the case with your car, if you have one, and with medical expenses, and helping out a relative, not to mention losing your job, and so on). It doesn't sound like you have all that much money, because if you did, you would have put 20% down and avoided Private Mortgage Insurance, saving yourself a lot more money than 1%. So having a few more thousand in the bank sounds like a good thing.