Best Down Payment Strategies

Dated: February 1 2018

Views: 2400

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.


Let me help you figure out the best strategy for you!

Call me now - Alana Stephens, M.B.A.

305-928-5478

Want to Advertise on this Site?

Latest Blog Posts

I Am A Knock Certified Agent Buy Your New Home Before Selling Your Home

I have exclusive access to a program that empowers you to buy a new home before you even list this house for sale—providing funds for prepping your listing for sale, for your new home down,

Read More

Upsizing To A Larger Home Low Interest Rates Make It Possible

Unfortunately, our homes don’t always grow with us. What may have initially worked fine for a single person, a young couple’s starter home, or a family with a newborn can quickly become too

Read More

Staging Tips OR Just Ask For My Help It Is That Easy

STAGING STRATEGIES FOR YOUR HOMEStaging your home is all about putting the best foot forward for potential buyers. By highlighting its most desirable features, you can draw more interest for your

Read More

9 Ways To Celebrate Halloween Amid COVID

9 Ways to Celebrate Halloween Amid COVIDI’ve been seeing some great ideas on the internet for ways to celebrate Halloween this year. Some of them are for safe trick or treating, while others are

Read More