Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I was looking at property to live in. The cost is around 175K, I could get a loan and pay 20%.
I could also pay for the entire property and not have a mortgage at all. My question is how much money should I put down? Is it financially smart to just pay the whole thing, or get a mortgage and invest the rest of my money?
Rates are low at ~5% so what is the best solution? Is there a rule of thumb for this.
When it comes to "investing" everbody has different needs. I tend to agree with VictorBurek considering todays economy. But another option is to put half down, that way IF you had to rent the house out for any reason you'd make a profit monthly and still benefit from tax breaks etc
I was looking at property to live in. The cost is around 175K, I could get a loan and pay 20%.
I could also pay for the entire property and not have a mortgage at all. My question is how much money should I put down? Is it financially smart to just pay the whole thing, or get a mortgage and invest the rest of my money?
Rates are low at ~5% so what is the best solution? Is there a rule of thumb for this.
THanks!
Hartford,
Money is cheap right now. If you are buying this property as a primary residence, you could get a mortgage at 4.25% 30-yr note with 20% down. Therefore, I would not advise that you buy this property outright. You may need your cash in the future, and it may be difficult to get it out of a fixed asset in case of an emergency.
The govt is trying its best to kill the value of the USD, but I agree with your responses... Put down 1/3, keep 1/3 in cash funds, and keep the other 1/3 in gold?
It depends on if this is all your cash. If it's all of it and you no savings left, then I'd just put 20% down. But if you still have a couple hundred thousand left after paying it off, then I'd purchase the home in cash.
I've been asking myself this question too. I have the ability to buy a home all cash and have plenty left over in savings. However, it's not fun to commit so much money to an asset that may not move much for the next few years and the money will be stuck there as long as you live there(assuming no HELOCs). One thing that makes me want to buy all cash is the fact that if you take out at 30 year mortgage you will end up spending 2-3 times the value of your loan if you pay off the loan through the whole 30 year term. I've had countless people tell me "but you can deduct interest on your income taxes". True, but you can only deduct your effective tax rate which would be like 30% in my case. There's still 70% of the interest that you would still be throwing away. Plus most of the interest is charged in the first few years of the loan. However, if inflation is high in the next few years, having the mortgage would be a great move as the fixed payments further into the future will be a lot cheaper to pay off. I guess it comes down to personal preference.
The other thing I was thinking of was the "points" on the mortgage.
For a 150K loan the points amount to about 3-4K dollars.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
