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tigersint
New Orleans Saints Fan
Lafayette
Member since Nov 2012
3371 posts

20% down on a house or save your cash?

What is the boards consensus when it comes to purchasing real estate at these low interest rates?

20% down?
15% down?
3-5%

Depends on your situation?


jimbeam
US Army Fan
University of LSU
Member since Oct 2011
75703 posts

Depends on PMI. Mine is $25 a month. I put down 10%. Invested the rest i had saved up. Did pretty well over the last 1.5 years in that regard…


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173
ItzMe1972
Member since Dec 2013
7325 posts
 Online 

"What is the boards consensus"

Doubt there is a consensus. An argument could be made for each of those three.


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143
SDVTiger
Hawaii Fan
Cabo San Lucas
Member since Nov 2011
60826 posts

Save the cash


Waterloo
LSU Fan
Texas
Member since Mar 2020
48 posts

Yes, depends. Nuts and Bolts: If you're saving more than PMI and generating a return on those savings above your interest rate, it's viable. Personally, despite low interest rates, pay that shite down as fast as possible and tap on a HELOC if you really need the cash down the road.


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15
Teddy Ruxpin
LSU Fan
Member since Oct 2006
37872 posts

quote:

Depends on your situation?


I say this one. Market went up about 30% in a year. I think you would have been far better off with whatever down payment you had than waiting. Other markets maybe not. What's the long term trend, etc.


tigersint
New Orleans Saints Fan
Lafayette
Member since Nov 2012
3371 posts

PMI is like $20 in this case


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02
Hamma1122
Member since Sep 2016
15869 posts

I put down 20 percent don’t regret it


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91
dat yat
LSU Fan
Chef Pass
Member since Jun 2011
3869 posts

20% down is best to have a lower note and save on PMI.

If you prefer to keep the funds invested you can always re-appraise a year or two later and cancel the PMI if LTV is 80% or lower.


LSU1018
LSU Fan
Baton Rouge
Member since Feb 2007
7077 posts
 Online 

I would do 20% and save the remaining.


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61
Paul Allen
California Fan
Montauk, NY
Member since Nov 2007
70930 posts
 Online 

quote:

Save the cash


oneg8rh8r
LSU Fan
Port Ludlow, WA
Member since Dec 2003
2258 posts

Zero down is the perfect scenario......assuming you can get away without paying PMI (VA loan, etc.) PMI is a real drain on your monthly payment, so the answer is what ever the minimum is for your to meet your 80% loan to value. If you find a house that has enough equity in it when you buy it, you SHOULD be able to get away without paying PMI. If you look at the Principal, Interest, Tax and Insurance breakdown and then add PMI (~ 1% of loan / yr) to the mix you will be horrified by how little is applied to the principal monthly. The only saving grace currently is the interest rate.

I personally, am against having money / equity tied up in a house. That isn't everyone's philosophy, but it is mine; I want that cash working for me and not in equity (effectively cash buried in a jar in the yard).


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04
Auburn1968
Auburn Fan
NYC
Member since Mar 2019
11476 posts

With interest rates so low and inflation running hot, a long term fixed loan is like printing money.


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50
Drizzt
LSU Fan
Cimmeria
Member since Aug 2013
9194 posts

I would do 20% down, save the PMI, and invest what you are saving on your monthly payment.


lynxcat
Rutgers Fan
Member since Jan 2008
22944 posts
 Online 

I would think about the PMI being an “addition” to the expense ratio on whatever fund you are wanting to invest the cash. It really just comes back to how much leverage you want versus market exposure versus cash on hand. There isn’t a right answer.

Personally, I like the hedge a mortgage gives against inflation in the environment today.


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