Which Down Payment Strategy Is RIGHT For YOU

Dated: September 10 2019

Views: 298

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.


Still not sure which fit is best for you? Contact me, I'll help you connect with the perfect lender FOR YOU!

Victor Madrigal, Realtor

210-288-2054 (Direct)

www.iCloseSA.com (Web)

Image title

#iCloseSA #sanantoniorealestate #realestate #sanantonio #realtor #findyournewhome #househunting #investmenthome #buyandhold #flipthishousesa #buyhome #texasrealestate #realtorlife #sanantoniorealtor #handymanspecial #buyersagent #nextproject #rentalopportunity #cashcow


Blog author image

Victor Madrigal

Victor Madrigal, from a young age, witnessed his father invest money, time, and labor into real estate. It was these memories that encouraged Victor to become a Realtor in 2009. After successfully obt....

Latest Blog Posts

THE DIFFERENCE BETWEEN HOME WARRANTY HOME INSURANCE

When purchasing a new home, it’s important to do in-depth research on all facets of the homebuying process. One thing you’ll need to understand is how to best protect yourself and your

Read More

Apr 5 2021 61087 1

7 Tips for Saying Goodbye to Sentimental Belongings NAME 7 Tips for Saying Goodbye to Sentimental Belongings COPY When I work with clients who are downsizing to a smaller home, one of the

Read More

The Dos And Donts Of Accent Walls

Accent walls are in style and aren’t going away anytime soon. You have unlimited options for your accent wall color, and can even add texture! Accent walls should be just as special as you, and

Read More

Rookie Agent

What a journey this has been this far!! I’ve got a few more clients under contract . Closed on my 5th property with my 3rd client. This business venture is way different than what I thoughtS I’m

Read More