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Other than lack of having the full 20% is there any benefit to putting down less than 20% on a home?

by helger266 from Boston, Georgia. Jun 30th 2020 Reply


Yes, you can eliminate the added cost of PMI ( private mortgage insurance) if you put 20% down.

Jul 2nd 2020
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Bert Carpenter (BertCarpenter)
#1 ranked lender in Arizona - 1,894 contributions

With less than 20% equity lenders will require that you purchase a mortgage insurance policy that protects them in the event you default. All else being equal, a borrower with 10% down will have a slightly higher rate than the borrower with 20% down. I'd say close to 75% of my business are loans with Mortgage insurance. Probably a third of them are people that could put the full 20% down, but the loss of investment opportunity is greater than the increase in the funds needed, so they chose to put less down and keep their investment working for them. Additionally, depending on your market, leveraging your own money by putting less down allows you to buy more home with the same amount of money. As an example, you have $80,000 to purchase a home. 20% down payment on a $300,000 home is $60,000, leaving you $20,000 to cover closing costs and move-in money. IF the house you want is closer to $400,000, you can still put down $60,000 and get an 85% LTV loan. ~ Bert Carpenter, The LoansA2z Team of NEXA Mortgage ~ NMLS 40586 ~ Licensed in Arizona, California, Georgia, Oregon and Washington ~ www.ApplyYes.com 480-889-9000

Jul 2nd 2020
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