Should I put down 20% or 10% on my first home to keep more reserves and invest?

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  • #97075 Reply

      First home purchase question:
      —To put down 20% OR intentionally under 20 (let’s say 10%) to have more reserves and also invest the difference you’re not putting down ?

      Debtating between putting down a full 20% down payment, obviously creating a nicer monthly and avoiding mortgage insurance, but leaving only 40k liquid left.

      I’m tempted to intentionally do under 20, probably 10%. Would be able to invest more of the difference and feels nicer to have more reserves. Monthly payment then goes up $650.

      I feel like the common advice is to put down 20, but I don’t understand why this is so common. Sure it gets rid of mortgage insurance but that’s really not that much extra and you would make more in the long run by being able to invest the difference that you’re not putting down up to the 20 percent on the house….. so why do so many swear by 20% then. All thoughts appreciated!

      #97076 Reply

        I’d put the 20% down. You pay x amount in interest either way. With less then 20% down they typically add on a “fee” for not putting 20% down. Its interest for 10-15 years is what the fee is.

        Mortgage insurance-I’m assuming you mean home owners insurance? That’s not something I’d want off of a house. Electrical fires, natural disasters, storms etc.

        #97077 Reply

          You can shop around for pmi. Mine is only $56/ month!

          #97078 Reply

            I don’t like paying for things I don’t need and it’s basically money out the window. I avoid PMI at all costs.

            #97079 Reply

              20 percent down to avoid pmi, have more immediate equity and be able to paying less interest over the long-run.

              #97080 Reply

                With 20% you have that much more in equity. With PMI, you get nothing for what you are paying. When you hit 20% after payments your pmi stops, so how long will it take you to reach 10% more in equity to remove that payment?

                #97081 Reply

                  Have you looked at today’s interest rate? After accounting for tax on your brokerage gains, plus and the current high interest rates, you’re pretty much breaking even at best.

                  #97082 Reply

                    Personally, I’d just wait till I have more liquid and still be able to do 20% down.

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