topic Re: Needing advice in Mortgage Loans

Needing advice

wmarat — Wed, 11 Feb 2009 23:59:29 GMT

I have been offered 2 possibilities by the morgage broker.

1. 5.25% and 20% downpayment

2. 4.875% and 25% down

The difference in monthly payment is $175, and the difference in downpayment is $20k which is hard for me but possible. Which is better?

Any opinion is highly appreciated.

Re: Needing advice

Anonymous — Thu, 12 Feb 2009 00:07:14 GMT

If the 25% option would deplete your rainy day fund, I'd stick with the 5.25 rate.

Always best to maintain a good amount of reserves, especially in economic times like these. Right now, theres no incentive that could entice me to reduce my cash position below 6 months of reserves.

Cheers,

SDEngineer

Re: Needing advice

wmarat — Thu, 12 Feb 2009 00:18:58 GMT

You right, but at the same time this is $63K difference for 30 years of morgage, which is a lot of money for me.. Decisions, decisions.

Re: Needing advice

MattH — Sun, 15 Feb 2009 17:58:42 GMT

@Anonymous wrote:
If the 25% option would deplete your rainy day fund, I'd stick with the 5.25 rate.

Always best to maintain a good amount of reserves, especially in economic times like these. Right now, theres no incentive that could entice me to reduce my cash position below 6 months of reserves.

Cheers,

SDEngineer

Agreed, my wife and I also choose to maintain ample cash reserves at this time of great economic uncertainty.

Re: Needing advice

WannaHouse — Sun, 15 Feb 2009 18:19:32 GMT

@wmarat wrote:

I have been offered 2 possibilities by the morgage broker.

1. 5.25% and 20% downpayment

2. 4.875% and 25% down

The difference in monthly payment is $175, and the difference in downpayment is $20k which is hard for me but possible. Which is better?

Any opinion is highly appreciated.

4.875% and 25% down is the better choice in the long run. It really all depends on whether you have the funds or access to funds to fix a major expense if it should occur before you can rebuild a nice reserve back up.
If you feel confident that you can handle major repairs should they arise, then I would go this route.

Good Luck and congrats!!

Re: Needing advice

MattH — Sun, 15 Feb 2009 18:33:35 GMT

@WannaHouse wrote:
@wmarat wrote:

I have been offered 2 possibilities by the morgage broker.

1. 5.25% and 20% downpayment

2. 4.875% and 25% down

The difference in monthly payment is $175, and the difference in downpayment is $20k which is hard for me but possible. Which is better?

Any opinion is highly appreciated.
4.875% and 25% down is the better choice in the long run. It really all depends on whether you have the funds or access to funds to fix a major expense if it should occur before you can rebuild a nice reserve back up.
If you feel confident that you can handle major repairs should they arise, then I would go this route.

Good Luck and congrats!!

Congrats indeed, either way Original Poster is being very prudent making a substantial down payment. I never thought it was wise to buy a house with nothing down or very little down like so many people did in the boom.