Getting Personal
A Big Downpayment?
Question: I am searching for a new home (main residence) and was wondering whether I should use a huge downpayment and dent my assets or take a large loan and keep some assets, considering inflation, decreasing mortgage rates, and current turmoil. Thank you -- I love you show. Thank you for not printing my name. Anonymous.
Answer: I wonder what you mean by a "huge downpayment"? The traditional figure of a 20% downpayment is good benchmark. I wouldn't strap myself for cash--a home take money to maintain--to far beyond that percentage. And with the economy is recession or near-recession I'd want to have a healthy cash emergency safety net. Call it your "just-in-case" money. You can always accelerate principal payments on your own if it makes sense.
04/08/08 by Chris FarrellLooking for guidance on your personal finances? I'm taking your questions and answering one here each day. Just click on the "Ask a question" link to tell me what's on your mind.
Chris Farrell Marketplace Money personal finance guru
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