Plus-5
Would You Pay $21 a Month to Keep $15,000 in Savings?
Putting 20% down may eliminate mortgage insurance, but it can also leave you with much less cash after closing. This example shows why it can make sense to compare the small monthly cost of PMI with the value of keeping money in reserve.
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Read the transcript
Buyers often focus on getting to 20% down so they can avoid mortgage insurance. But sometimes that can leave them with very little cash after closing.
Let's say you're buying a $300,000 home. Twenty percent down is $60,000. But if that uses nearly all of your savings, what happens when the air conditioner breaks or you need furniture or some other unexpected expense comes up?
Now compare that with putting 15% down. You keep $15,000 in the bank, and for a buyer with very good credit, the mortgage insurance is only about $21 a month.
So the real question isn't simply, "Can I avoid mortgage insurance?"
It's, "Is keeping $15,000 in reserve worth about $21 a month to me?"
Sometimes, keeping that cash available can provide a lot more financial flexibility - and a lot more peace of mind.
And remember - it's always okay to ask. We're here to help you get home.