I have cash. Where does it go?

Why is putting 20% down a bad idea? I'm in California if that matters. First time home buyer and trying to wrap my head around a mortgage of $400K. Should have put my money in the market the past ten years instead of the bank but hindsight is 2020.
 
scoobs said:
Why is putting 20% down a bad idea? I'm in California if that matters. First time home buyer and trying to wrap my head around a mortgage of $400K. Should have put my money in the market the past ten years instead of the bank but hindsight is 2020.
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It's not for some, is for others... It just depends on what you can afford and what you're comfortable with.

The less of your own money you use, the greater amount of other people's money you're using to purchase a tangible asset. Aka you have less of your own skin in the game and more of the banks, provided of course you can afford the differences in monthly payment etc.

Say you have enough for for 20% down on a 400k property. Go with a 0 down or 5% down loan that you can afford and use the other 15% for investments, buying an income property, emergency fund etc. and still have the same property you would had you spent all 20% on the property.
 
zippy said:
Say you have enough for for 20% down on a 400k property. Go with a 0 down or 5% down loan that you can afford and use the other 15% for investments, buying an income property, emergency fund etc. and still have the same property you would had you spent all 20% on the property.
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Problem is that with less then 20% down you (or at least used to) have PMI insurance. You also have to cancel it yourself once you are over that amount, it's not automatic.
 
ComplexHiAv8r said:
Problem is that with less then 20% down you (or at least used to) have PMI insurance.
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It's not quite the problem it used to be. Tax deductible etc. You used to have to take a second mortgage on top of the first to gain the tax deduction from the additional payment.

What's easier? An extra couple hundred a month or tens/hundrededs of thousands of dollars? There a pros and cons to both sides, only you can determine what's important to you.
 
zippy said:
Tax deductible etc
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With the current low rates people have been finding out they don't even make it over the standard deduction amount. It usually ends up as a few dollars if you can break over the minimum and your AGI is $109,000 MFJ, $54,500 SF or less.
 
I was told pmi wasn't tax deductible if you make more than $120k combined? If that is true is it worth it?

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scoobs said:
So is PMI worth it if you can't write it off?

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Depends on your situation. I have PMI because I wanted to lock in the rates, move fast on a house that was well below market and keep more money in savings. However my interest, PMI are so low this year I won't be able to write it off because it will be pretty small.
 
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