I am new to this market. Never bought a house before. How much one should put down for a 250K house? I heard if you pay 20% then u dont have to take two loans and evade the high interest for second loan. But that means 50,000. Is putting putting down $50,000 a good thing?
2007-12-02 07:04:53 · 7 answers · asked by singhjg 1 in Business & Finance ➔ Renting & Real Estate
If you have the money, I would put it down.
But do you have it?
Understand, you will need more than 50k. You are going to have closing cost and you need a cash reserve, in case something happens.
Most people forgo the reserve, thinking the equity in their home will do. I won't if I was you because things happen and get equity out of your house is not as easy as it sounds.
Talk to a mortgage broker who can help you weigh a dozen diferent loan programs against put all that money down, a bank can't do this.
Then let the numbers speak for themselves. Only you know what you can afford or not.
Money talks. And you will not need to heard from anyone else when it does.
2007-12-02 07:31:08 · answer #1 · answered by Anonymous · 0⤊ 0⤋
First whatever you do - and I cannot stress this strongly enough - get a FIXED, not an adjustable, mortgage interest rate.
You definitely want to avoid PMI payments. Check around to see if you qualify for any special financing arrangements offered by HUD or some local housing agency. If your income is under a certain amount, you may qualify for a lower interest rate. You want to pay down as much as you can to avoid PMI and reduce the amount of your monthly payment. If you choose to go with a lower downpayment, you should be sure that your loan agreement states that once you have paid 20% of the principal amount you will be released from PMI payments; some banks will do this.
If you have a 401K plan at work, most plans will allow you to borrow up to 1/2 your vested interest for a home downpayment or an emergency. You pay the money back to yourself with interest; usually the interest rate is lower than the market rate; it is not a taxable event; you do not have to show it on your mortgage application as a loan because you're borrowing from yourself; you arrange a repayment plan for up to a 10-year period and the payments are automatically deducted from your paycheck each pay period; if you leave your job, you are required to pay off the balance of the loan at that time BUT because you've only borrowed 1/2 of your 401K vested interest, the balance can be deducted from the remainder of your vested interest and you will not have to pay out any cash. And you don't have to declare the money you borrowed as income on your taxes; only when you have the remainder deducted from your 401K do you pay taxes on the amount that has been deducted.
2007-12-02 15:18:28 · answer #2 · answered by L.G. 6 · 0⤊ 0⤋
Yes, you should put down $50,000. That avoids a second mortgage at a high rate, and it also avoids having to purchase private mortgage insurance, which is insurance that you pay for, but it insures the lender, not you.
A 20% down payment used to be the only way to buy a house, before lenders started to get "creative" with their financing. The creativity lead to the housing crisis that we are currently experiencing.
2007-12-02 15:10:42 · answer #3 · answered by Lisa A 7 · 0⤊ 0⤋
Yes, it is best to put down 20%, you get the best rates, remember you still have to pay for closing costs. It is a big hurdle for a lot of people. You can get an FHA loan with a lot less down payment 3% but you will have to pay for mortgage insurance.
2007-12-02 15:17:44 · answer #4 · answered by stephen t 5 · 0⤊ 0⤋
The more you can put down the lower your mortgage payments will be.
If you put at least 20% down you can avoid PMI (private mortgage insurance) which is a monthly payment you have to pay that benefits the mortgage company not you.
Yes, 20% of $250,000 is $50,000
Don't forget there will be closing costs.
Talk to a mortgage broker or banker who can help you more.
2007-12-02 15:10:09 · answer #5 · answered by Pete J 3 · 0⤊ 0⤋
Well, putting down 20% on the house is good if you have it - it'll save you some money, and probably make it easier for you to get a mortgage. But you can probably get by with less.
2007-12-02 15:08:07 · answer #6 · answered by Judy 7 · 0⤊ 0⤋
absolutely. if you put down 20% then you immediately have equity in that house. plus you dont have to pay private mortgage insurance which adds upto 1% to your APR. put down as much as you can but atleast 20%. a good rule of thumb is that if you are unable to put down atleast 20% then you are not ready to buy a home.
2007-12-02 15:10:05 · answer #7 · answered by Salman Hashmi 3 · 0⤊ 1⤋