It is true that contributing more down payment money on a home reduces your monthly payment. But, not by as much as you’d think. Most times, it is best to consider the payment difference for every $1,000 borrowed. And in today’s market, depending on the loan terms, the difference in monthly payment for every $1,000 borrowed ranges between $5-7 in monthly payment. So, when considering available funds for cash to close, one should also consider the payment. For example, an additional $20,000 contributed for down payment reduces monthly payment approximately $100-140. So, consider how long it takes to save $20,000. It may be more important to pay less down and have additional funds in your reserves for items such as furniture, appliances, repairs – or just simply a financial safety net in the event of an unforeseen circumstance. Not all loans function the same way… Get educated about mortgages and the associated monthly loan payments. Ask us how.
*Not intended as real estate, accounting or investment advice. Contact your financial representative for more information.