Reply to put down 10 or 20% on home?

Forum Index » Money and Finances

Reply to "put down 10 or 20% on home?"

Subject:

Emoticons





More smilies

Text Color: Font: Close Marks

[quote=Anonymous][quote=Anonymous][quote=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.[/quote]

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.[/quote]

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.

[/quote]

Options

	Disable HTML in this message
	Disable BB Code in this message
	Disable smilies in this message

Review message

Search Recent Topics Hottest Topics