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ok, I can actually pay off a home that we like, but that will mean I'll have little money in my account. but then our monthly bill will be less to none if I put more down and we'll not have so much financial stress and pay less interest to the bank in a long run, also will be able to save our future income due to less bills. However, if an earthquake happens and the townhome crashes, there's go our money. also if the value ever decreases to less than our cash in the home, that's not good either. so then we thought of putting down 50-80%..what would you do in this mkt? what advice do you have in terms of tax, cash flow..etc..thanks.
Well...I would DEF put down 20% so you have no PMI. How much money are you talking? Personally, we put down 30% on our home that we bought in January. Yes, the home has depreciated, but we are in it for at least 10 years, so I am not worried.
You have to do what you are comfortable with. I would say:
put at least 20% down
have one savings (or more) for retirement
have another account for home repairs
have another for emergencies (I would have 6 months to a year padding in this account in case you would lose a job or something...the more in this account the less stressed you will feel if something should happen)
Any other money left over, consider putting it towards more of a downpayment...maybe yo will be able to put 40% down if not more.
good luck
ps: I am no financial expert. But my husband is a CFP and this just seems like the kind of things we like to do. We put down 30%, have an account where our car payments are drawn from every month, have retirement funds, and have a decent amount of cash in the bank just in case he would ever lose his job.
If you can make more interest by investing the money (compared to the mortgage rate) than keep more money, if not then put more down. I would do at least 20-30%, but it depends on the actual amount of money involved. You can always pay more in at any time, although that won't reduce your monthly payment amount, but you can pay the whole thing off over 3-5 years.
If you can make more interest by investing the money (compared to the mortgage rate) than keep more money, if not then put more down. I would do at least 20-30%, but it depends on the actual amount of money involved. You can always pay more in at any time, although that won't reduce your monthly payment amount, but you can pay the whole thing off over 3-5 years.
What would you invest in today that would make more money ?
I'm asking because I'm in the same position as the OP..I can afford to put up to 80% down.
I would suggest consulting a financial analyst. We recently hired one, and she moved our money around so it would grow more than it has. They have all the facts and figures to make the most of your money, and for us it was a smart move for investing.
I am not a big fan of putting all your eggs in one basket. While yes, you would have a very small payment it would wipe out your savings. I am a big fan of debt free living when possible, but don't put yourself in a bind. I would put down 20-30%.
Then I would talk with a financial planner. If it makes sense...buy some other real estate for rentals (cough), invest in stocks (cough..cough..), and figure out how to diversify your funds. You can always aggressively pay down the mortgage later.
I agree with the advice against buying your house with all cash. I would suggest doing some research on what financial planners say, which should be relatively painless. I think you'll see that for most people, it is not recommended to pay your house off immediately. But in other cases it might be.
I would recommend searching the archives of columns by Scott Burns, who is a financial planner and recently semi-retired columnist for the Dallas Morning News. He is a straight shooter and has answered this question in several prior columns, usually going through the entire analysis so you can follow his reasoning.
What would you invest in today that would make more money ?
I'm asking because I'm in the same position as the OP..I can afford to put up to 80% down.
This is tricky, because most investments have risk, at least those with a moderate or larger return. Look at high dividend stocks of stable companies. For a few years that may be good. Some of them are paying dividends over 6% relative to their cost (especially now that the market is down). That would at the least keep up with the mortgage interest, then any appreciation would go on top of that. But you have to judge the risk.
I purchased a home recently and definately made at least the 20% down payment , this will help the monthly mortgage payment and also eliminate the PMI...with at least 20% down ....Good luck...
If you are looking to stay in the home for some time put down as much as you can. If this is a investment house and not a home use the banks money. But if its your home use your cash! Just insure the home!!!!! You wont get a return on your money as high as you will pay on the interest of the loan.Why pay 1200 a month if you can pay 200 and save a 1k each month. investments are a risk! wait for the banks to become stable. But you will be living in the home and saving cash each month on the cost of living. If the home is 190k put down 150k and mortgage 40k. You can get a loan on it if you need it. Your cash can be pulled in a lawsuit but not your home! Keep a small mortgage on the home and save the cash each month from the mortgage. Let your money work for you. Good luck.
Last edited by firemed; 10-13-2008 at 03:11 PM..
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