Quote:
Originally Posted by NekkidFish
Sorry guys ... I must not have worded it right, because I didn't get my point/question across right.
The point of the post was would you rather put down the $200K knowing it makes you a stronger buyer, and you'll have a smaller mortgage payment?
Or, put down a much smaller down payment, knowing that you might get passed over several times before finding a house you like ... but you will put the extra $$$ in the bank should the market go down and you're in a screwed situation on the house?
For those that don't know the market out here (as well as other areas of the country) there were people that bought houses out here in 2006 for $800K and now they barely appraise for $500K. A lot of those folks make their mortgage payments and stay because they have no choice, and they put down a huge chunk of cash to get into their homes. As well as, they might be locked into higher interest rates, with no way to lower their payment. And, with the new law ... unless your mortgage was with Freddie or Fannie, you cannot refinance to try and get your payment down, because these are considered jumbo loans.
I'm just trying to figure out from a financial point of view, which one is the better strategy. 
HUGz! Jules |
It depends...
Are you getting the same interest rate/points with 20% down vs. less? If not, is the difference worth it to you to have more flexibility with your money? I can think of a lot of reasons it might be worth paying a small amount of PMI to have the flexibility of $100k sitting in the bank.
How competitive is the market? In some places 5% down with a pre-approval from a reputable bank may be considered just as strong as 20% down.
Is the seller is concerned about the ability to close of someone with a smaller downpayment? You could provide proof that you have more funds but that you are choosing to make a smaller downpayment for strategic reasons. In other words, you may not get "passed over" on places or have to offer more if you choose to go with the lower down payment if you can show you have more than enough money in the bank.
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