Real Estate and Home Mortgages - Is it worth putting down a lot of downpayment?
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pyro
09-07-05, 10:31 AM
I will be getting a gift money from my parents...But i am confused and hesitant if i should put that much money tores the downpayment of the house? i am talking about $60-80K
i was initially thinking of staying in that house for less than 5 years, but i cant tell for sure....The house price value is $320,000. Do you think is worth it? I bet is not worth it, if I decide to sell the house after 4 years...because i fear i will not recoup the 80K after appreciation...
I am so confused that i should rather go with a higher loan amount, since the interest rate for me is at 6-8%. And if i stay for longer than 5 years, i think i will not saved too much on my mortage payments to justify putting that much downpayment....??
My lender was pushing for an ARM loan but I insisted in a fixed rate loan...Unfortunately, he stated something true...If i want to qualify for prettier houses around $400K, i will need drastic measurements such as an ARM loan....If i was to choose fixed rate loans, i can only qualify for houses less than $340K.....
Do you think an ARM loan is worth it?Under what circumstances will they work for you?
i was initially thinking of staying in that house for less than 5 years, but i cant tell for sure....The house price value is $320,000. Do you think is worth it? I bet is not worth it, if I decide to sell the house after 4 years...because i fear i will not recoup the 80K after appreciation...
I am so confused that i should rather go with a higher loan amount, since the interest rate for me is at 6-8%. And if i stay for longer than 5 years, i think i will not saved too much on my mortage payments to justify putting that much downpayment....??
My lender was pushing for an ARM loan but I insisted in a fixed rate loan...Unfortunately, he stated something true...If i want to qualify for prettier houses around $400K, i will need drastic measurements such as an ARM loan....If i was to choose fixed rate loans, i can only qualify for houses less than $340K.....
Do you think an ARM loan is worth it?Under what circumstances will they work for you?
4EEM
09-07-05, 12:51 PM
ARMS are good in a couple of scenarios:
1.) You plan on selling or financing before the loan adjusts
2.) You WANT to pay the additional interest later as a tax shelter.
3.) You have no other option.
Regards,
Pat Lawson
Business names not permitted in Forums.
1.) You plan on selling or financing before the loan adjusts
2.) You WANT to pay the additional interest later as a tax shelter.
3.) You have no other option.
Regards,
Pat Lawson
Business names not permitted in Forums.
Family Guy
09-07-05, 02:10 PM
I will be getting a gift money from my parents...But i am confused and hesitant if i should put that much money tores the downpayment of the house? i am talking about $60-80K
i was initially thinking of staying in that house for less than 5 years, but i cant tell for sure....The house price value is $320,000. Do you think is worth it? I bet is not worth it, if I decide to sell the house after 4 years...because i fear i will not recoup the 80K after appreciation...
I am so confused that i should rather go with a higher loan amount, since the interest rate for me is at 6-8%. And if i stay for longer than 5 years, i think i will not saved too much on my mortage payments to justify putting that much downpayment....??
My lender was pushing for an ARM loan but I insisted in a fixed rate loan...Unfortunately, he stated something true...If i want to qualify for prettier houses around $400K, i will need drastic measurements such as an ARM loan....If i was to choose fixed rate loans, i can only qualify for houses less than $340K.....
Do you think an ARM loan is worth it?Under what circumstances will they work for you?
I'd put that money into the house, or at least 20% of the sales price.
Why?
That's $60-80,000 that you aren't borrowing and paying up to 6% on. Money saved is as good as money earned in an account somewhere, but with NO risk of a lower return. Also, with 20% down, you don't have mortgage insurance or have to deal with a 2nd loan to avoid mortgage insurance. This should also improve your budget some allowing you to purchase more house, IF that is what you want to do.
If you are qualified for $340,000 then you can buy a $400,000 house, only finance $320,000 and have your 20% down--if they are giving you $80,000. Also, on a conventional loan, your parents can GIFT you 20% down and you DO NOT have to use an additional 5% of your own funds. If less than 20%, you have to contribute 5% of your own. This also keeps you in conventional loan range, not going up to a Jumbo, which is a loan over $359,650 that carries a slightly higher rate and set of guidelines.
Be sure to fully document this gift. You'll need a gift letter, a copy of the cashiers check showing the full amount and your deposit slip showing that deposit in full (don't keep out $10 for lunch). For a conventional loan, they probably won't need a copy of their bank statement to source their funds, but you never know what they may ask for.
Since you said this:
i was initially thinking of staying in that house for less than 5 years, but i cant tell for sure....
I'd go with the fixed rate. The ARM's just aren't worth it these days. The rates aren't enough better than fixed to justify the possibility of refinancing later on. Rates are still good, I'd go fixed like you told your loan person.
i was initially thinking of staying in that house for less than 5 years, but i cant tell for sure....The house price value is $320,000. Do you think is worth it? I bet is not worth it, if I decide to sell the house after 4 years...because i fear i will not recoup the 80K after appreciation...
I am so confused that i should rather go with a higher loan amount, since the interest rate for me is at 6-8%. And if i stay for longer than 5 years, i think i will not saved too much on my mortage payments to justify putting that much downpayment....??
My lender was pushing for an ARM loan but I insisted in a fixed rate loan...Unfortunately, he stated something true...If i want to qualify for prettier houses around $400K, i will need drastic measurements such as an ARM loan....If i was to choose fixed rate loans, i can only qualify for houses less than $340K.....
Do you think an ARM loan is worth it?Under what circumstances will they work for you?
I'd put that money into the house, or at least 20% of the sales price.
Why?
That's $60-80,000 that you aren't borrowing and paying up to 6% on. Money saved is as good as money earned in an account somewhere, but with NO risk of a lower return. Also, with 20% down, you don't have mortgage insurance or have to deal with a 2nd loan to avoid mortgage insurance. This should also improve your budget some allowing you to purchase more house, IF that is what you want to do.
If you are qualified for $340,000 then you can buy a $400,000 house, only finance $320,000 and have your 20% down--if they are giving you $80,000. Also, on a conventional loan, your parents can GIFT you 20% down and you DO NOT have to use an additional 5% of your own funds. If less than 20%, you have to contribute 5% of your own. This also keeps you in conventional loan range, not going up to a Jumbo, which is a loan over $359,650 that carries a slightly higher rate and set of guidelines.
Be sure to fully document this gift. You'll need a gift letter, a copy of the cashiers check showing the full amount and your deposit slip showing that deposit in full (don't keep out $10 for lunch). For a conventional loan, they probably won't need a copy of their bank statement to source their funds, but you never know what they may ask for.
Since you said this:
i was initially thinking of staying in that house for less than 5 years, but i cant tell for sure....
I'd go with the fixed rate. The ARM's just aren't worth it these days. The rates aren't enough better than fixed to justify the possibility of refinancing later on. Rates are still good, I'd go fixed like you told your loan person.
Enigma869
09-07-05, 05:13 PM
I agree with Bill. ARMS really aren't worth it these days (and I have and always have had one). Short term interest (ARMS) rates have almost caught up with long term (fixed) rates. It's really difficult to justify it unless you have specific financial goals you're trying to achieve. In terms of how much to put down...I certainly wouldn't put down more than the 20% as I believe your money would probably serve you better elsewhere. Although Bill makes the point that money saved is as good as money earned, there are still many of us getting a much higher return than 6% on our investments. Avoiding paying PMI ALWAYS makes sense. Best of luck with your decision.
John from Boston
John from Boston