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But its important to structure the deal in the best way for yourbudget.
Should You Make a 15% or 20% Down Payment?
As of the first quarter of 2024, the average U.S. home sells for just over $420,000.
Averagemortgage interest ratesare between 6.5% and 7%.
Lets use 6.5%, as interest rates are projected to fall as we approach 2025.
These figures dont account for property taxes, which vary bycity and state, or private mortgage insurance.
you’re able to multiply those savings by 12 to see how much youd save per year.
But remember, you paid an extra $21,000 to reach 20% down.
So, your actual savings over the 30 years would be $26,782.80.
This is a monthly insurance policy that protects lenders from losses.
How much higher will depend on factors like your credit score, home value and loan term.
Does a 15% Down Payment Ever Make Sense?
You end up saving thousands over the lifespan of the typical mortgage.
However, there are some circumstances in which a 15% down payment can make more sense.
For example, you might want to maintain a cash cushion after closing to buy furniture or complete renovations.
Even though youd pay more for your mortgage over the long term, youd havemore financial flexibilitytoday.
Thats sometimes worth paying for especially when the extra costs would be spread out over your 30-year mortgage period.
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