Is 20% too much down !!?

Question

I want to buy a house for around $100k to $120K and put 20% down. Is this a good thing or bad thing for a first time home buyer? Also I want to use a big down payment so my monthly payments are low. But is this the wrong way to look at buying a houes?

Answer 1

I have a problem with putting any money in real estate at all. I do not discourage others if that is what they want to do however.

There is a saying in the real estate industry is that you are equity rich and money broke.

Most of the monthly payments you pay in the first five years of a mortgage is interest. You will not start paying any principal worth counting until after your fifth year.

There are many lenders that will allow you to get a loan at 100% and if you word your purchase contract right you can get the seller to pay all your closing cost.

Now look at it this way, You will have a house with no money out of your pocket.Yes your payments will be slightly higher and I mean very slight.

Now if you leave your 20% down in the bank and something go so very wrong like you get ill or you can not work for some reason, which would be better to give up a house with no money in it ansd still have your money in the bank or give up a house where you have put 20% down $24,000.00 on a $120,000.00 house and you are losing the $24,000.00

With the $24,000 in the bank or other interest bearing instruments and the house where you ae making payments on you ae now more wealthy than you were.

You decide a house with $24,000 in the bank or a house without the $24,000 in the bank?

Contact a mortgage broker, find out if you even qualify for a 100% mortgage or not. After filling out an application and running a credit check he/she will be able to tell you, the loan programs you are qualified for.

There will be some documentation he will need so be prepared for awhile as the loan application take awhile to complete.

Talk it over with this person and come up with a solution that is best for you.

I hope this has been of some use to you, good luck.

"FIGHT ON"

Answer 2

it is NOT too much down to put 20% against your home purchase.

As a first time home buyer in the US, to get the best interest rate on your mortgage, you want your mortgage to be a "conventional" mortgage. In order to get a conventional mortgage, you normally need to put down at least 20% of the purchase price. If you don't have 20% down, you may be considered a "high leverage" mortgage, and there can be fees and costs associated with that.

In Canada, a conventional mortgage normally requires 25% down.

I'd say, based on my experience, you are on the right track. Buy within your means; put as much down as possible; keep your monthly payments low. The only thing I'd add is that while you want your monthly payments low (so that you can always handle them), you also want to put as much additional money as possible against your mortgage when you have it. Any additional lump sum payments you can make will go directly against the principle of the mortgage, and will save you hundreds if not thousands in interest over the long term. You'll also be mortgage-free faster!

Answer 3

It is a good thing if you want to put 20% down on a property of 120K but here is the thing.There are lots of programs available for 0% down means you can be financed 100% with an 80/20 loan.One loan will be 80% and another will be 20% .However you only have to come up with closing costs.After doing so you may wait for 1 year or two then refi because your property value will increase and you can be having an 80% one loan.
It will all depend on your credit score and your income you earn to maintain the mortgage payments.
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Thanks you.

Answer 4

The amount of your down payment is partially dependent on your credit and the lender you get your mortgage from. The average range is 5-15% but can go as high as 25%. Although I understand the desire to payoff a mortgage as quickly as possible keep in mind that a mortgage on a home is considered "good" debt when creditors look at your credit rating.

Also the interest on a home is a tax break in most states.

Answer 5

20% down is about the going rate it lets your finance company know that you are a serious buyer. Put as much down as you want it just makes it better for you in the long run. You dont want to end up with payments that you cant afford if an emergency should arise. GOOD LUCK

Answer 6

as a mortgage professional and if i was in your shoes i wouldnt put any money down. because you worked so hard to get that money and that is probably your life savings so you should go 100% financed and maybe have the selller pay all or some of the closing cost. You never know when you will need that money and if you decied to put the money in the property just know that if you put 20,000 in the house if you need to refinance and all there is, is 20,000 equity you wont be able to cash out the money you put in. 120,000 is a small loan amount compared to house in california so you shouldnt have any problems paying off the house during the term of the loan.

Answer 7

It really depends on how long long you want to stay in your home for and the type of area you are in. If you want to stay in your home for less than five to seven years then you shouldn't put 20% down and get an exotic loan such as interest only. If you plan on staying for a long time then you should put 20% down to lower your monthly payments.

Answer 8

A lot of mortgage companies require 20% down anyway, so this is quite a good thing that you want to do that. You are looking at it correctly. Good for you!

Answer 9

Seems like the perfect amount to put down - just enough to avoid PMI, but still uses lots of leverage.

Answer 10

No, you are definitely looking at it correctly. You want to keep your monthly expenses as low as possible.

Your balance will be lower and therefore you will pay less in interest charges.