Get a loan with PMI or save the money?

8 Replies

Hello BPers

I am about to close on the deal.

Purchase price is $144000

Either I do 15% down and pay PMI, save the cash or 20% down and no PMI

Down payment difference is $7000 more for 5%

PMI will be around $67.

Mortgage with PMI = 910

Mortgage without PMI = 785

Rent potential is $1200-1300

What should I do?

Thank you.

If it was me I would do 5%, save the rest of the money to now have 15% of the 20% required to buy a pure rental :) But I am crazy and love leverage! 

Honestly it really depends on your comfort with leverage and long term goal :)

@Elizabeth Colegrove 
I agree with you.
I saved my pennies and it was time i get started. Got my first deal done and now on to the next one.
I appreciate the feedback.

Treat is as an investment. If you were to pay $7k additional to get paid (same thing as saving) $67/month, you would net $804 ($67 x 12) per year. That is just over 11% rate of return on $7k. Pretty decent. Only time I wouldn't do that is if you need the cash or can use that $7k to get higher than a 11% rate of return on a different investment.

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