I am looking to buy a home and have a couple of mortgage options 10% down at 2.87 or 20% down 2.62%, 7/1. Difference in downpayment is nearly 100k. If I decide on 10% down, is it reasonable to expect 6-8% returns on 100k investment over 7-10 years to cover for differences in closing cost and interest? If yes, what would be a good way to invest this money to cover for volatility? Currently, I have the money in liquid form as I was looking to invest in a home.
- Slack pbiX28Check if the 10% down requires PMI (private mortgage insurance). While the rate might be decent, PMI can push that way up until you pay down 20%.
- Yelp brt123Not when 30 years is historically low and the difference isn’t even 1%. It’s a small price to pay to preserve optionality.
If you hit a market downturn and you have to hold on to the property, you will wish you had a longer amortization schedule and a predetermined interest rate.
- Samsung statarbI couldn’t help but laugh when you said you have money in liquid form. As much as I had a good laugh, it threw me into an introspection as to what money really is. To me it’s an abstract construct. Wonder what money means to others here.
- Do 20% down - otherwise you will be throwing away loads of money on PMI (unless home value is with 10% more then you are buying it for, since PMI happen when loan is more then 80% LTV.
- Can’t believe this much low interest rate at this point in US real estate market ? How is that possible with < 20% down . The average is close to 3.5-3.75% minimim , nothing less than that even if you give more than 20% down payment
- Southwest Airlines deviladvoJust FYI, you are better off asking this question in BiggerPockets. Blind is great for work advice, terrible for most anything else, especially when it comes to investments of any form. I cringe at the bad financial advice I see here all the time.