Should You Put Money Down Or Do A 0 Down Mortgage?

The decision of whether you should do a 0 down mortgage or put money down is not an easy one to make. Hopefully this article can help you make that decision.

First off there are still a couple of 0 down mortgages available. There is the USDA loan and the VA loan. Both of these do come with certain restrictions. But let’s assume that you would qualify for either of these loans.

The biggest thing to consider when looking to put money down when buying a home is that there are only three ways to get that money back. And all three ways will cost you money.

First you can refinance your home. Second you could sell your home. And finally you could get a home equity line of credit. With both refinancing and an equity loan you will be paying interest on your money that you put down.

The second thing to consider is, will putting money down make that much of a difference in your payment versus doing a 0 down. A simple way to figure that out is to play with a mortgage calculator to se the differences in the payments.

But for a very broad example, for every $1000 you put down it will save you approximately $6 to $8 in the monthly payment. Putting down $10,000 would reduce your payment $60 to $80.

One More Thing To Consider With A 0 Down Mortgage

The third thing to consider is whether or not you will have expenses after you buy the home. Will you need to do repairs? Will you need to buy new stuff for your home? Will you need to buy lawn mowers or other gardening equipment? And so on. If you will need money for these kinds of things it may be better to go with a 0 down home loan and use that money for the things you will need. It’s a better decision than putting it on a credit card.

Finally there is the use of other peoples money. In other words when you are utilizing 0 down you are really leveraging the banks money. You are investing in your home with none of your own money. This creates a huge return on your investment.

Ultimately the decision to use a 0 down mortgage or put money down will be yours alone. If you feel better about putting a down payment on your home go for it. If you like the idea of nothing down. Go for it. There really is no wrong or right way.