Hey all,
I would like your help to understand if it makes financial sense to raise my house downpayment to 15% from 10%.
5% is $33,000. Loan interest rate %4,99
Home monthly cost with 10% (Including Taxes, PMI, Insurance): 4,564.00
Home monthly cost with %15 (Including Taxes, PMI, Insurance): 4,296.00
The difference means PMI go from $170 to $81
Saving by months: 4,564.00 - 4,296.00 = 268 monthly
12 * 268 = 3216 yr in savings
$33,000 * 0.042 = 1386 yr (First year)
$33,000 * 0.08 = 2640 yr (First year)
I understand there is more opportunity cost by having those 33k liquid, But I don't know how I can take advantage of that opportunity.
There is a bit more piece of mind on lower home cost. Also, I plan to use those extra 268 to pay towards the principal until I can lower the monthly cost below $4,000.
Let me know your point of view and feel free to share other investment options that could be worth looking at.
For reference, I max 401(k) each year and either option would allow me to save a bit for my brokerage account.
I would like your help to understand if it makes financial sense to raise my house downpayment to 15% from 10%.
5% is $33,000. Loan interest rate %4,99
5% more Downpayment on the home
Home monthly cost with 10% (Including Taxes, PMI, Insurance): 4,564.00
Home monthly cost with %15 (Including Taxes, PMI, Insurance): 4,296.00
The difference means PMI go from $170 to $81
Saving by months: 4,564.00 - 4,296.00 = 268 monthly
12 * 268 = 3216 yr in savings
SOFI High Yield Savings Account
$33,000 * 0.042 = 1386 yr (First year)
Stock Market
$33,000 * 0.08 = 2640 yr (First year)
Pro and Cons
I understand there is more opportunity cost by having those 33k liquid, But I don't know how I can take advantage of that opportunity.
There is a bit more piece of mind on lower home cost. Also, I plan to use those extra 268 to pay towards the principal until I can lower the monthly cost below $4,000.
Let me know your point of view and feel free to share other investment options that could be worth looking at.
For reference, I max 401(k) each year and either option would allow me to save a bit for my brokerage account.