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You may have to pay PMI if you don't have 20% equity. This can cost you a lot of money over time - especially if it will take you years to get 20% equity. And

by nemo44x 11y ago

You may have to pay PMI if you don't have 20% equity. This can cost you a lot of money over time - especially if it will take you years to get 20% equity. And it likely will take you a long time due to the fact that mortgages are structured such that you're mainly paying interest on the loan the first few years creating nearly no equity. So if you buy a house with 10% down if may take you many years to get to 20% equity while paying PMI all the while. And exposing yourself to more foreclosure risk. If you don't have 150k (plus another 50k for buffer) liquid then you probably can't afford the 750k home and look for something cheaper or continue to rent and invest the difference between rent and mortgage to possibly stay ahead of the property values of your area. However, YMMV.

kbenson 11y ago
The same cases where you would want to go with 10% down instead of waiting to get 20% (such as increasing home prices in the area), are probably the same cases where you can refinance in a few years and take advantage of the increased assessment value to get 20% equity so you can drop PMI.
- nemo44x 11y ago
  Indeed - but now you are a speculator. There is no guarantee that the value will go up, that you will be able to refinance, that your credit will be any good then, that you will even have a job among a myriad of other things. I don't believe the typical person should take on that type of incredible risk.
  - kbenson 11y ago
    You are always a speculator when financing any portion of your house. You can lose your job in either scenario. By holding out until you have 20% down, you are speculating that the housing prices will not drastically increase in that time. > I don't believe the typical person should take on that type of incredible risk. If you can't afford it, you shouldn't do it. I'm talking purely about maximizing value by minimizing amount paid overall. Sometimes you will be better off waiting to get 20%, sometimes you are better off taking advantage of current market conditions. In both cases, there is the the chance that your decision ends up costing more than the other strategy, depending on how the market performs.

by nemo44x 11y ago

kbenson 11y ago

The same cases where you would want to go with 10% down instead of waiting to get 20% (such as increasing home prices in the area), are probably the same cases where you can refinance in a few years and take advantage of the increased assessment value to get 20% equity so you can drop PMI.

nemo44x 11y ago
Indeed - but now you are a speculator. There is no guarantee that the value will go up, that you will be able to refinance, that your credit will be any good then, that you will even have a job among a myriad of other things. I don't believe the typical person should take on that type of incredible risk.
- kbenson 11y ago
  You are always a speculator when financing any portion of your house. You can lose your job in either scenario. By holding out until you have 20% down, you are speculating that the housing prices will not drastically increase in that time. > I don't believe the typical person should take on that type of incredible risk. If you can't afford it, you shouldn't do it. I'm talking purely about maximizing value by minimizing amount paid overall. Sometimes you will be better off waiting to get 20%, sometimes you are better off taking advantage of current market conditions. In both cases, there is the the chance that your decision ends up costing more than the other strategy, depending on how the market performs.