put down 10 or 20% on home?

[Anonymous]

-Thoughts on putting down 10% or 20% on home?
-Difference in monthly payment between 10% down and 20% down is aprx. $300
-With 10% down + closing costs, would have aprx. 45k left in savings
-With 20% down, more like 10-15k left in savings.
-I am anticipating that prices will not increase in my area for a while, and they may go down (area isn't declining, but interest rates are just going higher and higher, and location ain't North Arlington or any place like that)

[Anonymous]

10-15k in savings is kind of tight for a new homeowner. I would go with 10%, but then once your savings build back up, aggressively pre-pay to get to 20% and appeal to get rid of PMI.

[Anonymous]

Anonymous wrote:10-15k in savings is kind of tight for a new homeowner. I would go with 10%, but then once your savings build back up, aggressively pre-pay to get to 20% and appeal to get rid of PMI.

PMI would only be about $50 a month, so that actually isn't my concern (but should I be concerned you think?), concern is that I really won't be eating away at principle for a long long time, will be the case wth 20% down (given today's rates) right, but even much more the case with 10% down? Conceptually and realistically, does this matter for anything? This is my question.

[Anonymous]

20% nonPMI but right now any mortgage is too kuch

[Anonymous]

Get the home. Ten down, invest the other ten aggressively. Rent out basement or a room to a relative and/or get a second job.
Refinance once the interest goes lower.

[Anonymous]

Anonymous wrote:

Anonymous wrote:10-15k in savings is kind of tight for a new homeowner. I would go with 10%, but then once your savings build back up, aggressively pre-pay to get to 20% and appeal to get rid of PMI.

PMI would only be about $50 a month, so that actually isn't my concern (but should I be concerned you think?), concern is that I really won't be eating away at principle for a long long time, will be the case wth 20% down (given today's rates) right, but even much more the case with 10% down? Conceptually and realistically, does this matter for anything? This is my question.

The length of your loan is what determines the rate you are eating into principal. Not putting the extra 10% means you will be a) taking out a 10% larger principal overall, b) paying some amount into PMI.

But IMO it's worse if you have some emergency and have to tap into a credit line that has even higher interest rates. 10-15k just isn't very much liquid savings to handle much of anything and being a new homeowner often comes with a lot of unexpected costs.
So your choices are a) Wait to buy a house, b) Buy a house with 20% down and take your chances that no big costs come up or c) Buy a house with 10%, invest your savings in an account yielding 5%. If you don't want to wait to buy a house (and it's not likely interest rates are coming down any time soon), then I would go with c. There's a chance there will be another interest rate hike, but there's also a chance there won't. Prices don't seem to be appreciating too quickly (and in some places they are going down), so you could just keep saving and wait to buy a house.

[Anonymous]

10% down then make 1 to 3 extra mortgage payments a year or divide the total of 13-15 mortgage payments by 12 and pay that monthly to shorten the life of the loan.

[Anonymous]

If you are expecting to be against multiple bidders, I would do 20%. When we had our choice of buyers, we wanted the ones with the most financially sound offer and most likely to close.

[Anonymous]

Anonymous wrote:Get the home. Ten down, invest the other ten aggressively. Rent out basement or a room to a relative and/or get a second job.
Refinance once the interest goes lower.

..or just invest the down payment aggressively and rent. A second job and a cousin as your roommate all so you can have a money pit that will appreciate less than the stock market.

[Anonymous]

I object to PMI on principle so I did 20.

[Anonymous]

Anonymous wrote:If you are expecting to be against multiple bidders, I would do 20%. When we had our choice of buyers, we wanted the ones with the most financially sound offer and most likely to close.

Pshaw. You can write the offer for 20% as long as you have it and then just put down 10% when it comes time to do the actual loan. Happens all the time.

[Anonymous]

Anonymous wrote:If you are expecting to be against multiple bidders, I would do 20%. When we had our choice of buyers, we wanted the ones with the most financially sound offer and most likely to close.

I'm not sure why you think a 20% down payment is more likely to close than a 10%. The largest incentive to close would be the bid with the highest EMD. Without a credit report in hand, there's no way for you to assess the financial soundness of a 10% vs a 20% down payment offer.

[Anonymous]

Anonymous wrote:

Anonymous wrote:If you are expecting to be against multiple bidders, I would do 20%. When we had our choice of buyers, we wanted the ones with the most financially sound offer and most likely to close.

I'm not sure why you think a 20% down payment is more likely to close than a 10%. The largest incentive to close would be the bid with the highest EMD. Without a credit report in hand, there's no way for you to assess the financial soundness of a 10% vs a 20% down payment offer.

+1

Highest bid wins, or some combination of ALL CASH and the highest bid. I don't care 10 vs 20 when selling---but I would consider an all cash offer over someone needing a mortgage---all cash can close in 2 weeks at most 3 whereas a mortgage will take longer and more chances for issues to occur

[Anonymous]

20% would give you a somewhat lower rate and no PMI and no mandatory escrowing for taxes and homeowners insurance

[Anonymous]

Anonymous wrote:

Anonymous wrote:If you are expecting to be against multiple bidders, I would do 20%. When we had our choice of buyers, we wanted the ones with the most financially sound offer and most likely to close.

I'm not sure why you think a 20% down payment is more likely to close than a 10%. The largest incentive to close would be the bid with the highest EMD. Without a credit report in hand, there's no way for you to assess the financial soundness of a 10% vs a 20% down payment offer.

NP and in theory a 20% down buyer would be less susceptible to the appraisal coming in low and would have more cash to make up the difference. Obviously this wouldn't apply if the buyer had a lot of cash but just didn't want to put 20% down but that's not often the case.

OP what is your savings rate? How long would it take you to replenish those savings?