Which Down Payment Strategy is Right for You?
By Scott Gleason, CRS, Westfield NJ New Homes Specialist
(Coldwell Banker Realty)
You’ve most likely heard the rule "save for a 20% down payment before you buy a home". The logic behind saving 20% is solid, as it shows that you have the financial discipline and stability to save for a long-term goal. It also helps you get favorable rates from lenders. But there can actually be financial benefits to putting down a small down payment—as low as 3%—rather than parting with so much cash upfront, even if you have the money available.Pros and Cons of a Small Down PaymentThe DownsideThe downsides of a small down payment are pretty well known. You’ll have to pay Private Mortgage Insurance for years, and the lower your down payment, the more you’ll pay. You’ll also be offered a lesser loan amount than borrowers who have a 20% down payment, which will eliminate some homes from ...
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