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re: How much down payment would you put down?
Posted on 6/12/24 at 9:14 pm to Thundercles
Posted on 6/12/24 at 9:14 pm to Thundercles
quote:
If you were buying a property for 500k. Have 100k cash on hand, no other debt. Make enough money to where the payment wouldn't be too much of a burden either way.
VA Home Loan lets you buy with no money down without incurring PMI. Would you put 0 down, 100 down, or somewhere in the middle?
Why not put $0 down so that you have the flexibility? If you want to make extra principal payments early, then that's your option. You didn't say what the rate is, but you're likely borrowing at a real 4% rate. I'd try to do as much of that as long as possible.
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Posted on 6/13/24 at 8:15 am to lsuconnman
There seems to be a lot of casual advice to pay very little down. I generally disagree. We don't know much about the OP. If the extra liquid funds he would retain by paying very little down is "gone with the wind" by spending it , then this approach is likely a mistake. It depends on his financial discipline and what he does with the money that would be his down payment.
Also, the down payment lowers the origination fee, which is typically 1% for the average borrower.
Also, the down payment lowers the origination fee, which is typically 1% for the average borrower.
Posted on 6/13/24 at 9:14 am to KWL85
quote:
If the extra liquid funds he would retain by paying very little down is "gone with the wind" by spending it , then this approach is likely a mistake. It depends on his financial discipline and what he does with the money that would be his down payment.
Mostly a thought experiment with some broad numbers. I have been leaning toward zero down and keep the cash, just wanted a sanity check.
I have gotten past the absurd spending years of my life and am now firmly in the savings world. Intent would be to keep that 100k in short term securities while also growing retirement funds. Then eventually if I got to a point where I was ready and within range, do a large payoff or something. But that's 20-30 years away so the second part of the plan could change.
Posted on 6/13/24 at 3:35 pm to Thundercles
The big question is will a down payment improve your interest rate? If not, then 0 down is the answer, right?
Posted on 6/14/24 at 9:29 am to Thundercles
quote:
How much down payment would you put down?
Pay for it with cash. What is this down payment shite?
Posted on 6/14/24 at 9:33 am to lynxcat
quote:
10 yr? Extreme Dave Ramsey over here. Even if you wanted to pay it off in 10 yr, get a 30 yr mortgage to give optionality on cash flow if you get tight for whatever reason (.e.g, laid off, personal issues, etc.)
100 percent this. Do not get a freaking 10 year mortgage and give yourself no option of flexibility. The percentage difference will not be enough of a difference to have ability.
Posted on 6/14/24 at 10:27 am to Thundercles
Everything all depends on these considerations.
1) How long are you planning on staying in the home? Because if you were to sell within 5 years, you're coming out of pocket paying for realtor fees/closing costs because you're paying more on interest than principal with no equity if you were 0% down. 5-6% is been average. Find a monthly payment you're willing to tolerate.
2) Would you need any portion of this cash for emergency purposes regarding the home or personal life events? Park your funds in a high yield savings to accrue interest while fighting current inflation. Any retail bank savings with 0.01% APY is basically losing value of your money day-by-day.
I'm a mortgage broker licensed in the southeast. I can run through scenarios with you over the phone or video call and see what path you want to take. 706-223-0322
1) How long are you planning on staying in the home? Because if you were to sell within 5 years, you're coming out of pocket paying for realtor fees/closing costs because you're paying more on interest than principal with no equity if you were 0% down. 5-6% is been average. Find a monthly payment you're willing to tolerate.
2) Would you need any portion of this cash for emergency purposes regarding the home or personal life events? Park your funds in a high yield savings to accrue interest while fighting current inflation. Any retail bank savings with 0.01% APY is basically losing value of your money day-by-day.
I'm a mortgage broker licensed in the southeast. I can run through scenarios with you over the phone or video call and see what path you want to take. 706-223-0322
Posted on 6/14/24 at 11:05 am to Dh337225
quote:I don't understand the connection you're making here between fees/costs and level of down payment. Won't the fees be the same no matter what the equity?
1) How long are you planning on staying in the home? Because if you were to sell within 5 years, you're coming out of pocket paying for realtor fees/closing costs because you're paying more on interest than principal with no equity if you were 0% down. 5-6% is been average. Find a monthly payment you're willing to tolerate.
Posted on 6/14/24 at 5:04 pm to Big Scrub TX
There's a multitude of things to consider for down payment which is the starting equity in the home as it's valued.
Down payment is one factor that weighs into how an interest rate is priced along with loan amount/credit score/eligible loan programs/deciding on waiving origination and lender fees.
Down payment can and more than likely will appreciate over time. Let's say you start a 100% financing and being forced to sell within 5 years. You're coming out of pocket when selling rather than using the equity that would've grown if you've made a down payment of at least 6-8% at closing that can at least cover realtor fees/closing costs with property taxes and attorney fees.
Down payment is one factor that weighs into how an interest rate is priced along with loan amount/credit score/eligible loan programs/deciding on waiving origination and lender fees.
Down payment can and more than likely will appreciate over time. Let's say you start a 100% financing and being forced to sell within 5 years. You're coming out of pocket when selling rather than using the equity that would've grown if you've made a down payment of at least 6-8% at closing that can at least cover realtor fees/closing costs with property taxes and attorney fees.
Posted on 6/14/24 at 5:36 pm to Dh337225
quote:The bolded seems nonsensical to me. If the value of the house goes up, then the owner builds equity, regardless of if they started with equity or not.
Down payment can and more than likely will appreciate over time. Let's say you start a 100% financing and being forced to sell within 5 years. You're coming out of pocket when selling rather than using the equity that would've grown if you've made a down payment of at least 6-8% at closing that can at least cover realtor fees/closing costs with property taxes and attorney fees.
If you say it's possible to actually have fees waived based on size of down payment, that's one thing. But in the example you gave of a forced sale in year 5 when you are trying to avoid the buyer "coming out of pocket" - they are having to come out of pocket on Day 0 to put in equity at close, so it's just a financing question around timing.
Posted on 6/14/24 at 6:40 pm to SDVTiger
quote:
Especially when there is a 0% chance you will ever pay it off
Our house will be paid off in 8 years or so. I'm 46.
Posted on 6/14/24 at 7:34 pm to Thundercles
If you're eligible for VA funding fee waiver, zero down or whatever you choose.
If not, put down at least enough to get the most VA funding fee reduction.
If you have the $100k sitting uninvested better to invest it in home or market but I wouldn't just keep it in savings if you have an emergency fund in addition.
If not, put down at least enough to get the most VA funding fee reduction.
If you have the $100k sitting uninvested better to invest it in home or market but I wouldn't just keep it in savings if you have an emergency fund in addition.
Posted on 6/14/24 at 7:39 pm to Big Scrub TX
You're leveraging only equity built from making regularly scheduled payments and the difference between future sale price vs purchase price at 'x' date built from the home's sale price to cover the remaining principal/realtor fees/misc closing fees/taxes if you started with nothing. You may not have any cushion when selling within the first 5 years because you're paying mostly interest rather than principal depending on what the home sells for. Any downpayment gives you a better cushion to not come out of pocket if it's anyway upside down and it grows with the appreciation of the home.
Down payment size doesn't affect FHA/VA loans. Only conventional loans. 20% down to not pay PMI, generally, any 5% increments higher than 20% down get better rates. Incomes that are within a zip code's area median income (AMI) limits are eligible for interest rate reductions (conventional only).
Waiving upfront lender fees (underwriting/processing/etc) or origination fees will get baked into the interest rate in exchange for fewer closing costs at the table. Consumers just don't see what's behind the screen when a loan ofifcer is pricing the loan.
Down payment size doesn't affect FHA/VA loans. Only conventional loans. 20% down to not pay PMI, generally, any 5% increments higher than 20% down get better rates. Incomes that are within a zip code's area median income (AMI) limits are eligible for interest rate reductions (conventional only).
Waiving upfront lender fees (underwriting/processing/etc) or origination fees will get baked into the interest rate in exchange for fewer closing costs at the table. Consumers just don't see what's behind the screen when a loan ofifcer is pricing the loan.
This post was edited on 6/14/24 at 7:53 pm
Posted on 6/15/24 at 9:28 am to Dh337225
With 0 down your note would be at least 3700 a month when you include taxes and insurance.
That’s a pretty big note every month for a 500k house. If you could actually afford that comfortably it seems like you would have a lot more saved than 100k.
I know I didn’t answer the question but the first thing I see is your situation.if you can afford 4k a month, then you should be able to save an extra 4k a month as well. I would save for 2 more years and put and extra 200k down.
That’s a pretty big note every month for a 500k house. If you could actually afford that comfortably it seems like you would have a lot more saved than 100k.
I know I didn’t answer the question but the first thing I see is your situation.if you can afford 4k a month, then you should be able to save an extra 4k a month as well. I would save for 2 more years and put and extra 200k down.
Posted on 6/15/24 at 5:42 pm to Thundercles
quote:
I fully intend on paying my house off as quickly as is reasonable.
This is what the wife and I did. 20 year mortgage. Great feeling when we got the letter that the loan was paid off.
Even better feeling when we sold the home and could pocket the proceeds.
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