How Much Should I Put Down On My Home Loan?

Homebuyers always have a particular question running through their mind, and that is “How much should I put down on my loan?” Homeowners, usually consider between putting either small down payments or large down payment. It has to be said; both come with their merits and demerits. Take, for example; the small down payments will attract a bigger mortgage loan and payment, while a large down payment significantly reduce the mortgage loan and subsequently can result in smaller payments. Also, with a lower down payment, you can invest any extra cash you have saved up on some other profitable ventures, although a large down payment will mean you can pay off your mortgage much quicker. As earlier mentioned, both come with their pros and cons.

Large DOwn Payment Vs Small Down Payment

How you go about choosing which option to utilize isn’t something that can be done right off the head. You need to be educated in making the right decision that will benefit you in the long run, and this article looks to highlight some of the factors to consider when making a decision. First off, if you want to put down a small down payment and invest the extra cash in other ventures, then you must calculate the returns your investment will bring. Should your projected investment return be lower than the interest rate of your mortgage, it will indicate that it may not be a good idea to invest after all.

With the right idea and decision making, you can attain your desired profits. But if the investment isn’t your forte, you can put in all your cash for a larger down payment. Don’t fall for the trap of overspending; it will only lead to more problems for you. It is recommended for those who have debts, to take the small down payment option, and pay off their debts. Ultimately your final decision will be based on what you will like the stipulated monthly payments to be. If you don’t mind the large monthly payment that comes with the small down payment option, by all means, go for it.

On the other hand, you can consider a large down payment if you want to beat down your monthly payments. The large down payment option is usually applied to people who are about to retire than first-time buyers. With a larger down payment, you can get a lower interest rate, and at the same time rid yourself of extra fees like private mortgage insurance. With this, you can save yourself as much as $150 on a monthly basis. Another underlying factor that comes into play is the cost of moving. Cost of moving comes from moving itself, to closing costs. Considering all of these factors together you will be better prepared to make the right calculations and then make the correct estimate to borrow.

From the various points raised above, there are different factors to consider when taken into account the best payment option for you. This decision shouldn’t be taken lightly, and you should equip yourself with the right information before coming to a conclusion.