Would it best to put the largest down pymt on a house or only put 20% and save the rest of the money I have?

Answer 1

You're blessed to be in that position, to be able to decide either way. If I were you, I'd put 25% down because it satisfies the popular "20% down" and the extra 5 percent satisifes your desire to put a larger chunk down. I would not do more than that for these reasons:

1. Whenever you move, especially into a house, there will be expenses: utilities might require a deposit, cable installation, maybe you need extra phone jacks in the house, vehicle stickers for your municipality, etc. You need cash on hand for that.

2. I've read articles that suggest the housing bubble has reached its bursting point, so I wouldn't put all my eggs in that basket right now.

3. If I chose putting all my eggs in the basket, I'd rather do it for something that will increase resale value, like slightly remodeling the bathroom, updating light fixtures or appliances, etc. Don't remodel the kitchen completely if you plan on selling the house in a year because you'll never get a 100% return on that investment. So you'd at least want to enjoy the renovations for a while.

I don't think most middle-class Americans are in the position to put 20% down, so assuming that's your status, consider yourself truly blessed and good luck with your decision.

Answer 2

It depends -- There is an unwritten rule among mortgage lenders that if you do in fact put 30% down, then there is no credit check and you'll qualify for the best rate available. But if your FICO scores are already above 720 or so, might not make a difference. In which case, if you actually invested the extra cash (and not spend it), you would likely be better off with the smaller down payment -- unless the house loses value after you buy it, in which case you want less leveraged debt. See what I mean by "It depends" ...

Answer 3

To me, the answer would depend on the following:

1. Do you have any other debts (credit card/car)? If so, better to put 20% down and pay the rest of the debts off with that money.

2. Do you have an emergency fund (4 months of your expenses)? If not, better to put only 20% down and put that money away as an emergency fund.

3. Otherwise, better to put as much down on the house as you can. Get that house paid off as quickly as you can.

Another way to look at it is this--if your house was completely paid for, would you take a mortgage out on the house to put money in savings? From a balance sheet perspective, this is exaxctly the same question as the question you posed.

Answer 4

Both could be a good thing and have their own advantages, it would depend on what the house needs in the way of repairs/remodel. You would have to look at the interest you would have to pay & do you need the tax write off more then you need the investment? I would concider your age and retirement when making that call. You can save money by buying down your mortage but you can use the money in the bank to your advantage in money management, to invest in other money earning investments that you can rely on later. I would suggest you sit down with a investment broker and a real estate professional...then compare the to peices of advise. "sorry I could not help!"

Answer 5

Putting down 20% is great in that you avoid PMI (in the US). Whether or not you should put down more depends on your financial condition and whether or not you itemize your deductions, not to mention where you might invest the cash that you are not putting down on the house. Be sure to leave yourself with 3-6 months of cash to cover living expenses in the event you get sick or disabled. Also consider if the extra cash you'll put in the house will be needed for anything else in the next few years. It would be a real hassle and possibly a costly problem if you had to go and borrow - and maybe pay fees - to get the cash that you already had.

Answer 6

If you're buying a house put as much down as you can. You eventually have to pay it anyways. Would you take a loan out on the house just to put into savings?

By not putting the money on the house that's basically what you are doing.

Answer 7

Definitely put the 20% down to avoid PMI.
The remainder is a math choice . . .
What is the % rate on your loan ?
What % could you get on an investment ?
If the investment return will be greater than the % saved on the mortgage, do the investment.

Answer 8

A larger down payment will get you a better mortgage rate, and will save you money in the long run.