100k down or invest?

Dec 7, 2019 37 Comments

Hi,

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.

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TOP 37 Comments
  • Slack pbiX28
    Check 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%.
    Dec 7, 2019 4
    • Facebook Instаgrаm
      Holy shit, no PMI on <20% down payment! We’re approaching another 2008.
      Dec 7, 2019
    • Microsoft wkemdnqbr
      Which bank says no PMI for 10% down ? When its a jumbo loan
      Dec 7, 2019
  • Facebook Instаgrаm
    Who gives you that rate for an over 800k loan?
    Dec 7, 2019 8
    • Facebook Instаgrаm
      Because in 7 years you’re most likely gonna refinance or move. 7/1 is smart.
      Dec 7, 2019
    • Yelp brt123
      Not 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.
      Dec 7, 2019
  • Samsung statarb
    I 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.
    Dec 7, 2019 3
    • Nutanix Lintcoder
      Although I don’t get what Samsung is saying, I had a good laugh when started curved screen TVs . Wonder what that means to others here.
      Dec 7, 2019
    • Netflix alphacoder
      Money is a promise given by a computer
      Dec 7, 2019
  • Twitch 1life
    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.
    Dec 7, 2019 3
    • Twitch 1life
      Interesting, how is is possible to get that rate at 10% LTV and no PMI? What lender is this? Maybe I need to refi, lol.
      Dec 7, 2019
    • New
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      Stax, Wolters Kluwer
      finance-gkmore
      No PMI on less than 20% AND for more than $800k (jumbo loan category). This sounds extremely fishy. Is this a commercial loan? Is it ARM?
      Dec 7, 2019
  • McKinsey TrolBhgvan
    Do it twice, one for 10% for your home and another loan at 10% down for investment property.. rent it out.. you’re at least making 4% and maybe more in Bay Area
    Dec 7, 2019 0
  • OpenTable Meliodas
    Why would you do an ARM when interest rates are low?
    Dec 7, 2019 1
    • Cisco sYWM76
      OP
      Fixed is 0.5-0.75% higher
      Dec 7, 2019
  • Splunk sagetry
    OP is doing a 10 year 15 year or ARM
    Dec 7, 2019 2
    • Twitch 1life
      Oh, boo.
      Dec 7, 2019
    • Indeed YsQD63
      They said 7/1 right? Still not sure how you could get those terms tho...
      Dec 7, 2019
  • Intuit FlyHigh007
    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
    Dec 7, 2019 2
    • Jet kjui6
      I got an 10/1 ARM @ 3% Jumbo
      Dec 7, 2019
    • Intuit FlyHigh007
      You mean 10 years loan ?
      Dec 7, 2019
  • Southwest Airlines deviladvo
    Just 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.
    Dec 7, 2019 1
    • Cisco sYWM76
      OP
      Thanks
      Dec 7, 2019
  • Microsoft xIdC37
    Unless you are trying to pay of the mortgage do 10%. At rates today it’s free money. Invest the extra 100k and you probably will cover any difference
    Dec 7, 2019 0

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