Buyers’ guide to optimizing down payment strategies in real estate.
If you’re gearing up to invest in real estate but unsure about putting down a bigger down payment, don’t worry—we have you covered. Today, I have the pleasure of being joined by Megan Ward from MW Financial and Insurance Solutions to discuss smart financial planning, goal setting, and effective strategizing. Here are the common questions buyers and investors ask before buying a property:
• Should you put down a bigger down payment? Ideally, putting 20% down is recommended to avoid paying mortgage insurance. But this will largely depend on each individual’s unique situation, particularly considering what else you can do with the extra cash. You should also consider the current rates and see how that affects your overall budget and evaluate what return you could get from investing the extra money elsewhere compared to the interest savings on your mortgage. Most importantly, understand your risk tolerance and how much risk you're comfortable taking.
• How do you leverage the money from refinancing? Another common question is about refinancing down the road and whether to leverage that money by investing it or keeping it in the property. The right decision will depend on the current rates and the potential investments available, but it also boils down to a question of liquidity. Extra payments towards your mortgage reduce the balance but make your money less accessible. Plus, if you need cash in the future, you’ll have to qualify for refinancing or a home equity loan. However, investing in liquid assets outside of your mortgage can provide more accessible cash if needed.
Buying a property is a huge financial investment, but the right financial strategy will help minimize the risks. For personalized advice, reach out to us at 858-461-8665. We’ll be happy to connect you with financial experts like Megan Ward to help you achieve long-term financial success in real estate investment.
