With all the homeowners these days before being on their mortgages it is very hard to get the best mortgage rate on a new home because lenders have become very frigid and very strict about lending money because of what happened at the home mortgage crisis. There are however a few people out there that decided to go against the crowd and saying quite a large nest egg of cash and they have it laying on the sideline waiting to purchase a new home. Would it be wise for them to put between 40% and 50% down on a house to get the best mortgage rate? There are a few things that they would need to consider first before going through with such a large move.
The first thing to consider is do they have enough of an emergency fund to get them through the first year on top of this large down payment?
The second thing to consider is whether you have just gotten married or have you been married for quite some time and have a large family with many kids. If you are a newly married couple and have enough money for a large down payment on a house, chances are you have a better chance of getting through your first year and if you have the expenses of many children.
The third thing to consider is whether you intend to purchase that home as an investment or plan on living there for a long time. Right now there aren’t too many great investments out there in the housing industry and virtually every home you buy will be going down for at least the next 6 to 9 months. This is why a large down payment is best for someone who plans to ride out the current home mortgage crisis.
There will be many mortgage brokers that will advise against putting down a large down payment on a house as they will say this investment becomes dead money, but these are the same brokers that have been telling their clients that they should be refinancing as much gas as they can on their home and we have all seen where this practice has led us to. A large percentage of homeowners who bought into a low down payment or no down payment deal now wish they would’ve put a larger amount of money down.
Before making any investment in a home you should always consult your investment advisor as they are the true experts.