Cory Thompson

Mid America Mortgage, Inc.

  • Home
  • About
    • About Cory
    • Accessibility Statement
  • Blog
  • Mortgage Info
    • First Time Home Buyer Tips
    • First Time Home Seller Tips
    • Closing Costs
    • Home Appraisal
    • Home Inspection
    • Loan Checklist
    • Loan Process
    • Loan Programs
    • Mortgage FAQ
    • Mortgage Glossary
  • Zillow Reviews
  • Pre-Qualify
  • Contact

Cory Thompson October 11, 2016

The Pros and Cons of Using Your Savings to Make Your Full 20 Percent Down Payment

The Pros and Cons of Using Your Savings to Make Your Full 20 Percent Down PaymentIf you’ve been perusing the real estate market with the hope of purchasing a home, you may be aware that the often-touted amount you should put down is 20 percent. However, there are good things and bad things involved in investing so much money into your new home. If you’re wondering how to decide on your down payment amount, here are some things to consider before putting in 20 percent.

No Rainy Day Fund

It might seem like the best option is to put down as much as you can, and use up your savings if needed, but putting all of your money into your home can be a mistake. While you may not foresee any financial issues arising in the next few years as you pay down your mortgage, not having any extra money can put you in a vulnerable position if the market shifts or other life issues appear. Investing in a home is a good choice, but you may want to protect some of your other assets.

Lowering Your Monthly Payment

While putting down the full 20 percent can seem like a huge chunk of change, it can be a boon for your monthly finances in the sense that your monthly mortgage payment will be automatically reduced. While this is a good thing and can make your monthly amount more manageable, it’s important to remember that your monthly payments should be affordable and you shouldn’t be stretching for extra house because you can. Make sure you’re buying a home you can afford, with or without 20 percent.

Avoiding Mortgage Insurance

Putting less than 20 percent may seem like a good decision if you’re ready to buy a home and don’t quite have the money saved, but putting less down can actually increase the cost of your home overall. Because you’ll have to pay mortgage insurance if you put down less, this will add to your monthly payment and will be money that you can’t get back. If you’re ready to dive into the market, you may want to move forward, but it can also be a better investment to wait and save a bit more.

20 percent is often the magic number when it comes to a down payment, but there are pros and cons associated with putting this much money down. If you’re currently in the market for a new home, you may want to contact your local mortgage professionals for more information.

Filed Under: Home Mortgage Tips Tagged With: Down Payments, Home Mortgage Tips, Mortgage

Cory Thompson

CONTACT INFO


Mobile 832.347.1855

Office 281.218.0505

NMLS ID 225056
Legend Home Lending

Connect with Me

Let’s Keep In Touch!

  • This field is for validation purposes and should be left unchanged.

Recent Posts

  • Understanding Mortgage Amortizations and Why Longer Periods Can Cost More
  • What Does Contingent Mean on a House Sale
  • What’s Ahead For Mortgage Rates This Week – September 25, 2023
  • 5 Things To Know About Severe Weather And Homeowners Insurance
Equal housing
| © 2017 Legend Lending Corporation NMLS 229421 | Texas Recovery Fund Notice

Archives

Our Location

Legend Home Lending
17047 El Camino Real Ste 150
Houston, TX 77058

Return to top of page

Copyright © 2023 Cory Thompson. All rights reserved.   Log In