Putting Down More, No Less

There may be times when you will be asked to put down more than even 20%. When might this happen?

Co-ops may require up to 60% of the purchase price. This is often a way for the co-op board to weed individuals the board does not want in their building. Some people who are cash rich and feel uncomfortable owing money to anyone may be better off to put down as much as possible even though they will not benefit from the tax advantages of having a mortgage.

Making the decision on how much to put down depends on many things and there is really no right answer. Some folks feel comfortable with a 100% LTV ratio and other people feel very uncomfortable with an 80% LTV ratio. You may very well want to take advantage of not paying PMI by putting down more than 20%. If you do not have the 20% up front, you may wish to increase the number of mortgage payments each year to pay off the mortgage as quickly as possible. Remember, the more money you put down the less your monthly payments will be.

Some people feel that putting down less money has its advantages because any money left over can be invested. However, it is unusual to get the same high return on investment as that of investing in property, though in the past decade this has not necessarily been true.