Down payment on a home - how much is too much? | TigerDroppings.com

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Powerman
LSU Fan
Corpus Christi, TX
Member since Jan 2004
120715 posts

Down payment on a home - how much is too much?



Say I wanted to put more than 20% down

Is this a bad idea? Is there some rule of thumb that states that the down payment is excessively large and stupid?

25% too much? 30%? Or is any amount over 20% considered too much?







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notiger1997
Member since May 2009
23495 posts
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re: Down payment on a home - how much is too much?


There really is no wrong answer.
I would only do 20%. This gets you out of paying PMI. With interest rates being so low, I would put whatever extra money you have to other uses.






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Civildawg
Mississippi St. Fan
Member since May 2012
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re: Down payment on a home - how much is too much?


If you got the cash laying around and you plan on staying at this house awhile put atleast 22% to get rid of PMI





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OnTheBrink
Alabama Fan
TN
Member since Mar 2012
3826 posts

re: Down payment on a home - how much is too much?


There is no probably no right or wrong answer...

IMO if you can put 20% down comfortably and avoid PMI, while still having enough cash for emergencys, etc., then I would do 20%...






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NaturalBeam
LSU Fan
Member since Sep 2007
13113 posts

re: Down payment on a home - how much is too much?


Not a bad idea in theory at all - but could you do something more productive with that extra money over 20%? Pay down student loans at a higher %? Invest/save elsewhere?





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Vols&Shaft83
Tennessee Fan
Member since Dec 2012
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re: Down payment on a home - how much is too much?


Well, I'd say putting down anymore than 100% is too much.





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jmtigers
Southern Miss Fan
1826.71 miles from USC
Member since Sep 2003
3633 posts

re: Down payment on a home - how much is too much?


quote:

Invest/save elsewhere?


If we can't make more than 3.5% investing elsewhere... god help us.






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dustinm27
LSU Fan
Member since Oct 2008
2694 posts

re: Down payment on a home - how much is too much?


with interest rates right now, I would invest the money elsewhere and make money





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ItNeverRains
LSU Fan
Franklin, TN
Member since Oct 2007
6574 posts

re: Down payment on a home - how much is too much?


quote:

If you got the cash laying around and you plan on staying at this house awhile put atleast 22% to get rid of PMI


If you put down 20% you don't need 22% equity. You never have PMI to begin with. Need a dedicated MT admin as of late.

Put down 20%. Go conventional. Secure sub 4% money for 30 years. Parlay that extra money you could put down into other investments that historically have made a higher return yearly that equity in your home.

/thread






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rmc
LSU Fan
Zachary, LA
Member since Sep 2004
22559 posts

re: Down payment on a home - how much is too much?


Whatever you need to put down to avoid PMI is all I would put down. They've got 15 year rates under 3% right now or you can do the 30 year in the mid 3s% right now. If you itemize I guess that means you may be effectively paying interest around 2%.


This post was edited on 2/22 at 8:30 am


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Powerman
LSU Fan
Corpus Christi, TX
Member since Jan 2004
120715 posts

re: Down payment on a home - how much is too much?


quote:

Pay down student loans at a higher %? Invest/save elsewhere?


I don't have any debt and don't expect to have any other debts at time of purchase

I'm thinking I need to make sure I have enough money set aside to keep funding IRAs but I'm not sure what to do with any extra cash I might accumulate after that.






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C
LSU Fan
The Woodlands, TX
Member since Dec 2007
21793 posts
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re: Down payment on a home - how much is too much?


Some banks offer special loans to those that have 30% in equity or a lot of assets with the bank that would limit the banks risks in a foreclosure. So ask around.





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Powerman
LSU Fan
Corpus Christi, TX
Member since Jan 2004
120715 posts

re: Down payment on a home - how much is too much?


Good to know thanks

Is there any downside to a 15 year other than the higher note?

I've heard some people say that you should always go with the 30 year because you can pay off early if you want

Can you not pay off the 15 year?






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C
LSU Fan
The Woodlands, TX
Member since Dec 2007
21793 posts
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re: Down payment on a home - how much is too much?


Yes you can pay off almost any loan early without penalty. The 15 year as a lower interest rate so if you intend to make more principle payments go with that.





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AutoYes_Clown
Alabama Fan
Baton Rouge, LA
Member since Oct 2012
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re: Down payment on a home - how much is too much?


I spoke with broker last week about this. I was surprised at how little the rate advantage of 15yr vs 30yr for me. Because of this, we are going to go with a 30yr but plan on paying 41% more per month (close to what the 15yr min is). For the sale price and down we are looking at, it would be a 17yr payoff. Not as good of a rate as 15yr but we have option of lowering payment in case wife wants to stay at home, we have life changing event, etc





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NaturalBeam
LSU Fan
Member since Sep 2007
13113 posts

re: Down payment on a home - how much is too much?


quote:

I've heard some people say that you should always go with the 30 year because you can pay off early if you want Can you not pay off the 15 year?
you can. What they're referring to is if you get into a financial bind and can't make the 15-yr note payments which are higher. They're saying take a 30-yr note, then pay it as if its a 15, but allowing yourself the ability to pull back if you get in a crunch. If you can pay even extra on top of the 15-yr note, more power to you.






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Powerman
LSU Fan
Corpus Christi, TX
Member since Jan 2004
120715 posts

re: Down payment on a home - how much is too much?


quote:

you can. What they're referring to is if you get into a financial bind and can't make the 15-yr note payments which are higher. They're saying take a 30-yr note, then pay it as if its a 15, but allowing yourself the ability to pull back if you get in a crunch. If you can pay even extra on top of the 15-yr note, more power to you.



This makes sense

I'm a single guy so I'm not planning on a huge house with a huge note

I'm hoping to have my note be about half of one week net pay






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tygerfan1
LSU Fan
Member since Aug 2008
758 posts

re: Down payment on a home - how much is too much?


Would you take out a loan to invest? That's basically what your doing if you invest instead of putting it on your house





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notiger1997
Member since May 2009
23495 posts
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re: Down payment on a home - how much is too much?








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ItNeverRains
LSU Fan
Franklin, TN
Member since Oct 2007
6574 posts

re: Down payment on a home - how much is too much?


quote:

Would you take out a loan to invest? That's basically what your doing if you invest instead of putting it on your house


No, it isn't.

Yeah, put and extra 20k down on a 300k house at 3.5% to knock 60 bucks off monthly mortgage. There's little hope of making $720 a year off that 20k over 30 years.

DRI (Dave Ramsey Idiot) copyright 2013



This post was edited on 2/23 at 11:02 am


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