How much money should you put down on the purchase of a property? If you just want to put the minimum down, then you are generally looking at 3% down for a primary residence (unless it is a down payment assistance, VA, or USDA loan), 10% down for a second/vacation home, and 20% down for investment properties.
However, if you can make more than the minimum down payment, then you may want to consider the following factors. One factor is the rate of return your money is currently making as compared to the rate at which you will borrow. For example, if your money is invested in a mutual fund earning 8% per year, and the rate you can borrow is at 5%, then you may not want to put much down as the interest you are earning exceeds the interest you are borrowing. The rate in which the property will appreciate is another factor. If the rate of appreciation is 3%, but you are making 8% in investments, then you may want to put as little down as possible.
Another factor is if you put less than 20% down, the lender will assess mortgage insurance in addition to your monthly payment.
We can help you analyze how much to put down on a property. Contact Counsel Mortgage and we can help you.
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