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- Thread starter SoapyCy
- Start date
If no pmi is required in option B, go with that, assuming you can pay the monthly payment. Take rest of your money and invest. That's what I'd do.
Mortgage opinions are like ********....everyone has one.
That being said I would personally put as little down as possible and either hold the $50k as a cash cushion or look to invest the money. Low interest, tax deductible money is a good thing in my book.
If I put the $50k in the house I'll have to sell in order to get my own money back...and pay an agent to do it (or refi at a later date) It's a math question. How long will you be there? What would you do with the money? Which plan saves you more.
I'm on a 15 yr 3% mortgage currently. I plan on being here at least 5 more years.
That being said I would personally put as little down as possible and either hold the $50k as a cash cushion or look to invest the money. Low interest, tax deductible money is a good thing in my book.
If I put the $50k in the house I'll have to sell in order to get my own money back...and pay an agent to do it (or refi at a later date) It's a math question. How long will you be there? What would you do with the money? Which plan saves you more.
I'm on a 15 yr 3% mortgage currently. I plan on being here at least 5 more years.
What mortgage product allows you to put 2.5% down without having PMI or pay it up front? VA Loan?
It all depends on your opinion and what you believe. I would have chosen option A. I would rather not be in debt the the majority of my life. Don't buy into the tax deduction for a home loan. Its makes no sense to have a home loan or a higher home loan for a better tax deduction.
Iowa finance authority first time home buyers program. 3% and no PMI. We bought a house before so we don't qualify but it's seems like a no-brainer.
Opinions are like a-holes but...
Money is so cheap right now, I'd put as little down as I could without PMI being required. If you invest the remaining you were going to put down, I think in 10 years you'll be glad. Unless the whole economy burns down in the next few years, which is possible, but in that case we're all screwed anyway.
Money is so cheap right now, I'd put as little down as I could without PMI being required. If you invest the remaining you were going to put down, I think in 10 years you'll be glad. Unless the whole economy burns down in the next few years, which is possible, but in that case we're all screwed anyway.
Gotcha. But keep in mind by getting that product you're also taking a higher interest rate on the mortgage. So there is a bit of a trade off. (PMI vs higher rate) The answer to that one depends on how long you think you'll live in the house. My personal preference is going with the 20% down option. (Assuming you have no other debt, otherwise pay that off first)
At 3% I have to think that money washes out the interest as long as it's invested somewhat wisely. That's how I'd look at it. Having said that, if I could, I'd put the 50 down because i hate debt.
Agree if you have the discipline to actually invest that money you didn't put toward home.
I am a believer in 15 year as I hate debt and want to owm it sooner.
Its not really the lenders, its the government. Its a government first time home buyers program. In this case the state of Iowa has not learned its lesson.
Ummm...not basically...you ARE taking a loan out from the bank.
In most cases, everything else you say is true. In the OP's case it is not, necessarily. He's got the money. And if he is disciplined enough to invest it wisely, it CAN be a sound and even very profitable financial decision.
That said, this is coming from a guy who paid off his house early after swearing he never would so...
You left out some unknowns regarding rate and length of term. If someone knows those items, it's simple math. I'm looking at how I can pay off my house in the shortest amount of time without crippling my monthly budget and being able to live the life I want to.
So let's just make up some numbers here for fun. 3.5% and 30 year loan.
50K down - $700 (add $200 per month on the principal. I mean, you have it in your budget since you think the $900 is a better deal. I know, it's an assumption)
Paid off in 19.9 years. Paid $58,398 in interest. Total amount - $208,398.
5k down - $900
Paid off in 30 years. Paid $121,462. Total amount - $318,462
My conclusion.
I like to save $110,000 and pay my house off in an quicker amount of time. My real advice is get a 15 year loan and save even more money.
So let's just make up some numbers here for fun. 3.5% and 30 year loan.
50K down - $700 (add $200 per month on the principal. I mean, you have it in your budget since you think the $900 is a better deal. I know, it's an assumption)
Paid off in 19.9 years. Paid $58,398 in interest. Total amount - $208,398.
5k down - $900
Paid off in 30 years. Paid $121,462. Total amount - $318,462
My conclusion.
I like to save $110,000 and pay my house off in an quicker amount of time. My real advice is get a 15 year loan and save even more money.
All very valid points, however, paying off a 3% mortgage early is the equivalent of investing your money at 3%. If you can borrow the money at 3% and invest the difference at 10% (very possible over the long term) or even 8%, you might pay your house off even SOONER.
But it's all a matter of the borrower's/investor's comfort level with debt and/or investment risk.