KennyTheKangaroo wrote:not intended to hijack this thread, but a related question:
kenny the kangaroo is also starting to kick around the idea of becoming a homeowner. the question is this:
We all know that you are supposed to make a 20% down payment on a mortgage. Howeva, kenny the kangaroo would like to know how much of your total assets/total net assets you are supposed to use as a down payment (percentage wise)? kenny the kangaroo would ideally like to make a large downpayment as possible, but does not want to be too overleveraged.
I'm one of those people who try to understand 100% of what I'm getting into before I dip my toes in, so I've read a few books recently. None of them really answer the question you ask, so maybe someone else on here may know, but in general, my understanding is yes, try to get at least 20% to get the best possible interest rate available. However, even with < 20% down, if you have a good credit score, you can get pretty close to rock bottom rates right now. My understanding is the real key to at least 20% is to avoid PMI, private mortgage insurance, which can be ~ $100/month, depending on the price of your house. You pay PMI until you get at least 20% equity in your home, I believe (though it will probably cost you $ to pay for an assessment to get rid of the PMI).
As far as paying > 20% down, I would think general budgeting would lead you to an answer - obviously the more you pay up-front, the less interest you're paying on a mortgage, and ultimately, the lower overall house cost. That said, I don't think it's smart to throw all of your savings into a downpayment if you don't have to - I personally want to have at least a few months worth of salary in my coffers, plus some cash to outfit the new place, left after downpayment.