Bigger is Better When it Comes to Down Payments, Right?
By Liz Keuler, Editor – Readynest by MGIC
It seems like a no-brainer, but the answer is actually, “Sort of – it depends.” I know, that’s not the quick answer you’re looking for.
A bigger down payment usually means more equity in the house right from the get-go, along with a smaller monthly mortgage payment. But while saving up for a large down payment is an admirable goal, there are many considerations to weigh when deciding how much is enough and when to buy.
You could save $5,000 a year for 40 years to buy a $200,000 house outright. No mortgage and no interest payments – after only 40 years of blissful renting (and rent increases), helping other real estate owners build their equity. Hooray! (Also, I’m not feeling great about how much house you’ll be able to buy for $200,000 in 2059.)
Of course, most people don’t take such an extreme approach to saving. But depending on how much you already have saved, waiting even just a few more years to buy can have financial implications beyond lost equity opportunities.
One example: appreciation
Home prices are likely to appreciate while you’re saving and waiting, and that could affect you in 2 ways: higher home prices and lost appreciation. keep reading
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