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Why do foreign banks in India like Citi, JP, Barclays etc don't offer subsidised loans to employees like other Indian Banks. Banks like HSBC,Citi did offer personal loans but no rebate to employees. Why it is so ? In case I am not aware do any of them offer these simple interest/ low interest loans ?JPMorgan Chase Citi Barclays
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I’d go with 10%, or even 5%. IMO if you aren’t comfortably putting down 20%, might as well do as little as possible and keep the cash as a buffer or invest it. For reference, bought first home last year at 450k with 10% down and PMI is about $90 a month. Home appreciated about 100k in a year so I can remove PMI, and the extra money I saved from not putting down 20% I was able to use as a down payment for a second home. This time putting down 5% and renting out the first home. There is no difference in interest rate, but your monthly payments will be slightly more. There are also closing fees that you should factor in (and maybe points) your decision since it’s a lot up front.
PMI for me was an additional $50/mo. We put down 10%.
Same the PMI was so small it was a no brainer and would never be missed by me.
Coach
We only did 10%. I found that that there was a significant benefit to getting to 10%, but that above that there were diminishing returns. For quality credit risks, PMI is not expensive.
YMMV. I’d suggest pricing out what PMI looks like at different levels.
Coach
Lever up
Lever up means bigger loan
All other math aside, if 20% down is going to stretch you, I wouldn’t do it. We’re in our third home now and no matter how great your house and your inspection report are, there is so much maintenance and cost just to keep up with the house. You need to have a cushion available and if you “save” money on interest in the long term but can’t pay for unexpected home maintenance it’s not worth it. Just focus on paying down when you can or adding an extra payment each year with some of your bonus. I know that’s a personal preference but owning a house opens up a whole new world of costs.
If you can’t afford 20% don’t stretch yourself for it and end up with a smaller home. You can still go conventional with as little as 5% and PMI would be like 100-150 (if that… it’s 80 for me). Bigger the house, better the location and the appreciation in 2 years will knock off your PMI on a conventional without needed to refi.
We did a cost analysis & took into account how long we’d be in the home. Ended up for us that putting down 18% and paying off the PMI at close was the best option for us long term.
Could you elaborate how your cost analysis looked like. What factors, costs did you consider, and the calc?
Coach
The above is a good reason to price out $90 a month on a $400k loan is more than I would have expected. That’s over a quarter of a point of loan value on the front end.
Mine is $70 a month on a 650k loan or about half the above (12-13 bps)
Agree on pricing it out. My point was that for appreciating homes, you may be able to accrue equity much faster than however long it would take to get to 20% through monthly payments alone.
Coach
Talk to a mortgage broker. Many mortgage companies are waiving PMI at 10% to 15% now. But it is highly conditional on each individual circumstance, so answers from other situations may not apply.
Also, as others have said, run the numbers and see how much the “cost” actually is. It may be much cheaper than you think, especially if the value of the home appreciates quickly and you cross 20% loan-to-value in a few months or years.
Do 3% or 5%. Debt Is cheap at 2.x %. If you park your remaining equity even in a govt bond, you’ll make more money
I put down 5%. My PMI is $75 a month.
Buy a house that costs no more than FHA maximum. You need to pay PMI till you hit 20% equity. But rates are decent since it is a US Government loan.
Coach
Not sure if you aren’t being clear but PMI is for life of loan on a FHA loan.
Edited to be super clear sub 10% down FHA loans have PMI for life of loan.
Putting on my real estate investor hat, I’m sitting on cash, I’m not buying anything right now that isn’t in an affordable housing market. I don’t have a crystal ball, but I believe after the forbearance mortgage crisis and banks have time to foreclose, and if mortgage rates increase as Biden said that at some point he would be doing. I want to be clear, I’m not saying this will be 2008 again, but the market in my humble opinion will see a downturn, especially where I live and markets like that in the San Francisco Bay Area.