Comments on: Real Estate Down Payment: Gone in 60 Seconds? http://www.biggerpockets.com/renewsblog/2009/02/08/real-estate-payment-60-seconds/ Learn, Network, Invest Sun, 22 Nov 2009 23:13:19 -0500 http://wordpress.org/?v=2.8.5 hourly 1 By: Laurie Morgan http://www.biggerpockets.com/renewsblog/2009/02/08/real-estate-payment-60-seconds/comment-page-1/#comment-63733 Laurie Morgan Mon, 09 Feb 2009 18:01:15 +0000 http://www.biggerpockets.com/renewsblog/?p=4024#comment-63733 Interesting question. I think your overall point about "doing the math" is really the right one ... because if you paid higher points for a lower mortgage, would you also have to pay PMI (presuming the downpayment is low)? But I do think you want to factor in how long you plan to stay, because it does impact the risk of value loss. And of course one of the things we've all learned recently is the desirability of an affordable payment -- i.e., comfortably affordable, not the max you can afford! Interesting question. I think your overall point about “doing the math” is really the right one … because if you paid higher points for a lower mortgage, would you also have to pay PMI (presuming the downpayment is low)? But I do think you want to factor in how long you plan to stay, because it does impact the risk of value loss. And of course one of the things we’ve all learned recently is the desirability of an affordable payment — i.e., comfortably affordable, not the max you can afford!

]]> By: Meghan http://www.biggerpockets.com/renewsblog/2009/02/08/real-estate-payment-60-seconds/comment-page-1/#comment-63724 Meghan Sun, 08 Feb 2009 22:06:08 +0000 http://www.biggerpockets.com/renewsblog/?p=4024#comment-63724 Good thoughts, Laurie. What about if you bought down your rate when you got your mortgage and paid points up front? Good thoughts, Laurie. What about if you bought down your rate when you got your mortgage and paid points up front?

]]> By: Laurie Morgan http://www.biggerpockets.com/renewsblog/2009/02/08/real-estate-payment-60-seconds/comment-page-1/#comment-63723 Laurie Morgan Sun, 08 Feb 2009 22:02:42 +0000 http://www.biggerpockets.com/renewsblog/?p=4024#comment-63723 Wouldn't you also have to consider how long you intend to hold onto the property? If it's a primary residence that you intend to hold for a while, it seems to me that your risk of being upside down at the time you decide to sell is a lot lower -- so it might be a better decision to make a bigger downpayment and take a lower interest rate. The savings over many years on interest would presumably be substantial. (In fact, it would be worthwhile to determine how much you'd save both due to the lower rate and lower principal -- might be as much or more than you'd lose by being upside down by a modest percentage.) The other thing is, if you have lower payments, you seem a bit more able to make the payments during a lengthy unemployment, should you be unlucky job-wise down the road. Wouldn’t you also have to consider how long you intend to hold onto the property? If it’s a primary residence that you intend to hold for a while, it seems to me that your risk of being upside down at the time you decide to sell is a lot lower — so it might be a better decision to make a bigger downpayment and take a lower interest rate. The savings over many years on interest would presumably be substantial. (In fact, it would be worthwhile to determine how much you’d save both due to the lower rate and lower principal — might be as much or more than you’d lose by being upside down by a modest percentage.)

The other thing is, if you have lower payments, you seem a bit more able to make the payments during a lengthy unemployment, should you be unlucky job-wise down the road.

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