{ "media_type": "text", "post_content": "Convince me with logical reasoning that putting down 20% is better than 3% with PMI", "post_id": "5f618bbccad3360021e987cc", "reply_count": 41, "vote_count": 4, "bowl_id": "5a5242b78e26290018502ca0", "bowl_name": "The Real Estate Bowl", "feed_type": "bowl" }

Convince me with logical reasoning that putting down 20% is better than 3% with PMI

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Since you're asking for logical reasoning, we'll leave any emotional reasons out (e.g. I like the secure feeling of more equity in home). Once you do that, it's ONLY math. So, you just need to run both scenarios and see how they play out. I do recommend running different time intervals though, maybe 2, 5, 8, 12 years. You don't know what's going to change in your life to make you need/want more space, less space, different location, different opportunity costs, etc.

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Yea based on math, it makes way more sense to put down 3%

I don’t have much opinion via 20% down vs 3% - I put 20% down and had a way harder time then trying to furnish my new home. I can’t say I don’t sometimes wish I put less and maybe considered what you are thinking in regards to a second property. One thing I will add is that we just refinanced to a much lower rate and that would have been much harder if we didn’t have 20% equity. You also likely would have a much harder time qualifying for a home equity loan or HELOC if you needed one down the road with 3% equity. Possibly things you won’t need, but just something to consider 🤷🏻‍♀️

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You can buyout PMI too at closing as an option. I did that at 10% down. Only putting 3% down will limit your loan options too.

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It is not for investors. It makes sense for conservative non rei dave ramsey targeted home buyers. Average joe who don’t knoe

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It depends on what your ROI will be on the money that you didn’t put down. If it’s more than the extra costs you have because of PMI and higher taxes due to less money down, then yes, go for the 3% down. Otherwise, it doesn’t make sense.

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Because the math is simple as #^*%? 1% of mortgage until you hit 80% equity. Or invest in market the delta between 3% down versus 20% (17% at assumed 8% return). So 400k loan- 4K per year in PMI. I’m ignoring the extra interest fees you will pay. Now what will market return for the 17% you’re keeping ?? Add in taxes and fluctuations.

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It’s all gains. Money was put into funds 20ish years ago

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My pmi is like 0.3% of mortgage with 3% down

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3.65

I’m currently getting quoted 0.23% for PMI, although with 10% down

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And what’s your int rate?

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