The Pros And Cons Of A Large Down Payment When Buying A Home

Dated: December 12 2017

Views: 73


The Pros and Cons of a Large Down Payment When Buying a Home

The Pros and Cons of a Large Down Payment When Buying a HomeIf you are in the market for a new home, one of the considerations you will need to make is how much to invest in your down payment. Let’s take a quick look at some of the pros and cons of making a large down payment when buying your next home.

A Large Down Payment Has Its Benefits

If you have the funds available, you may find a bit of an advantage in a large down payment. The following are a few potential benefits that you may realize.

You Can Afford More ‘House’ – if you are aiming for a large, luxurious home a significant down payment can help you get there. As long as your credit is in line with your needs, a large down payment leaves more room in your mortgage.

You May Pay Less Interest – conversely, if you don’t need to carry a big mortgage you can choose a shorter amortization period for your mortgage. A shorter loan period means that you are likely to pay less in interest.

You Might Not Need PMI – if you can afford to invest more than 20 percent of the home’s value in your down payment, you may not be required to purchase private mortgage insurance.

A Few Of The Downsides

Of course, there are some potential downsides to using a large portion of your available cash as a down payment:

Do You Have The Money? – a large down payment doesn’t make a lot of sense if your finances can’t tolerate that hit right now. If you have your down payment and little else, you might want to reconsider.

You Will Be Less Liquid In The Short Term – keep in mind that once you sign the closing paperwork, your down payment cash is gone. This will leave you a bit less liquid in the short term since you would need to sell your home to get that cash back out.

You Can’t Invest That Money Elsewhere – you won’t be able to use these funds for other investment purposes. Of course, real estate is an investment itself so this may be less of a concern.

Still Have Questions? Get In Touch

Choosing the right amount for a down payment is a decision best made with professional help. Contact your trusted mortgage professionals and we will be happy to share our experience and insight.

For More Info Visit: http://www.bondstreetmortgage.com

Blog author image

Jessica Rojas

Jessica Rojas is an extremely dedicated and committed real estate agent who has been working in the Real Estate field since 1997. She became a licensed real estate agent in 2009 as a sales associate ....

Want to Advertise on this Site?

Latest Blog Posts

June Is National Homeownership Month Heres An Interesting Take On It

Are you aware that June is National Homeownership month? Probably not. Because you’re too busy working to afford the home you live in, whether you rent it or own it. Why should

Read More

5 Features Home Buyers Are Most Likely To Fight About

When you’re shopping for a property, you probably have a list of must-have features for your dream home. But when you’re shopping for a home with your partner, your list of must

Read More

How Buyers Sellers Can Prepare For An Early Start To The Spring Market

Is January the new April? When it comes to the real estate market, experts say yes. Regardless of whether that famous groundhog sees his shadow, a recent article on CNBC suggests

Read More

9 Unexpected Thoughts That Go Through Your Head After Submitting An Offer On A House

Buying a home is a rite of passage, and there are people who go through the process multiple times throughout their lifetimes. Even if you have a great agent, it can be a stressful process.

Read More