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Gold Contributor
TrabucoDom
Posts: 1,584
Registered: ‎01-05-2008
0

Re: Is 20% down really the way to go?

Ok, I am not sure I see what rate of return you are giving Sam on his investment of the money he did not use  on the downpayment and if you are calculating a compounding of his investment. I do believe that Edelman uses overly optimistic numbers for the return on investment and he admits he leaves out the PMI which seems like a big flaw in his calculations. It is hard to assume any specific return  on the investment since it cannot be guaranteed unless it is something very small such as T-bills, but what kind of return did you assume with your calculations?
Contributor
smak
Posts: 31
Registered: ‎01-28-2009
0

Re: Is 20% down really the way to go?

I'm pretty to new to this, but...

 

If you have enough for 20% down, what about putting 15% down and using some of that extra money to buy down your interest rate?

 

Even with pmi, could that save you money in the long run?

 

 

 

Contributor
Unforgiven
Posts: 43
Registered: ‎02-18-2009
0

Re: Is 20% down really the way to go?

bigger downpayment will get you obviously a lower monthly payment, which can or cannot be significant depending on the loan amount. You also avoid pmi, but frankly, if you have top credit score, you can get away with 10% down and negotiate the pmi in exchange for higher interest rate. Look up a finance calculator and run the scenarios you mentioned [5% vs 19%\ or whatever you like. That will paint an accurate story for you.