WHICH DOWN PAYMENT STRATEGY IS RIGHT FOR YOU

Dated: December 2 2017

Views: 210


You’ve most likely heard the rule: Save for a 20-percent down payment before you buy a home. The logic behind saving 20 percent is solid, as it shows that you have the financial discipline and stability to save for a long-term goal. It also helps you get favorable rates from lenders.


But there can actually be financial benefits to putting down a small down payment—as low as three percent—rather than parting with so much cash up front, even if you have the money available.

THE DOWNSIDE



The downsides of a small down payment are pretty well known. You’ll have to pay Private Mortgage Insurance for years, and the lower your down payment, the more you’ll pay. You’ll also be offered a lesser loan amount than borrowers who have a 20-percent down payment, which will eliminate some homes from your search.

THE UPSIDE


The national average for home appreciation is about five percent. The appreciation is independent from your home payment, so whether you put down 20 percent or three percent, the increase in equity is the same. If you’re looking at your home as an investment, putting down a smaller amount can lead to a higher return on investment, while also leaving more of your savings free for home repairs, upgrades, or other investment opportunities.

THE HAPPY MEDIUM


Of course, your home payment options aren’t binary. Most borrowers can find some common ground between the security of a traditional 20 percent and an investment-focused, small down payment. Your trusted real estate professional can provide some answers as you explore your financing options.

http://www.breakthroughbroker.com/img/site_specific/uploads/crop_sm_Bp4.jpg


Ted M. Daigle

www.337homesearch.com

337-945-6763

Blog author image

Ted Daigle

About Ted Daigle – Realtor Growing up in Church Point, LA instilled values of hard work and dedication, which has carried over into every aspect of his life, including real estate. This Lafayette r....

Latest Blog Posts

How to Get More Natural Light in Your Louisiana Home.

How to Get More Natural Light in Your Louisiana Home.There are plenty of benefits to natural light, from improving the mood in your house to getting more vitamin D and making your home a more

Read More

How to Not Regret the Paint Color You Choose for Your Home

How to Not Regret the Paint Color You ChooseThe secret? It’s all about the lighting. Here’s how to get it right. ReadVisit houselogic.com for more articles like this.© Copyright

Read More

How to Pick your Lender for your First Home or Refinancing in Acadiana

How to Pick your Local Lafayette Lender for your First Home or Refinancing Your local Lafayette lender is one person that can make or break you with finances towards your home. Before you become

Read More

Finding The Right Local Realtor In Lafayette

Finding The Right Local Realtor In LafayetteIf you know your situation, have an idea of what you want for a home, and know what you need, you don't want to be the only one that knows.  Finding

Read More