20% Down to Purchase Your Home: Is It Worth It?
the pros and cons you need to know
Putting 20% down has been the traditional rule of thumb for purchasing a house. But is it actually worth it? Should you put down more? Less? There are lots of factors to consider, including interest savings, private mortgage insurance, and renovation needs for your new home. Here's how to navigate all the pros and cons to decide what down payment is right for you.
More of a reader? Catch the video transcript below!
Is it worth putting down 20% to buy your house? There are pros and cons. Let’s talk about it!
Pros of Putting 20% Down to Buy Your House
You avoid having to pay private mortgage insurance.
You could get a better interest rate.
You aren’t borrowing as much money, so your monthly mortgage payment will be lower.
Can I buy a house without 20% down?
The answer is yes - you absolutely can, and there are several options for mortgages that don’t require a 20% down payment if you qualify for them.
If you don’t have 20% down, it might make sense to put a lower percentage down now just to get in the game and ride the wave up.
Yes, you’ll likely have to pay private mortgage insurance (PMI), but you can get the PMI removed from your payment once you reach 20% equity in your home.
Another reason why you may want to put less than 20% down is if you plan to make renovations to the home. Say you have 20% of your loan in savings, but you want some wiggle room to renovate the home. You can put 10% down, for example, and use the other 10% to make your renovations.
As I always say, each and every situation is different, so it’s a matter of making the choice that makes the most sense for you.
That’s it for me today, guys!
Brent Edwards (aka Brent the Broker) is a residential real estate agent and Realtor in San Diego, CA who helps clients buy and sell homes in San Diego, California and all surrounding areas. Brent is a highly-recommended Realtor in San Diego by family, friends and past clients. Call Brent today at 619-550-8070 if you have any questions about real estate in San Diego or you'd like to buy or sell a home.