Exhausting entire savings on the down payment
Spending all or most of their savings on down payment and closing costs is one of the biggest mistakes first-time homebuyers make.
Some people scrape all their money together to make the 20 percent down payment so they don't have to pay for mortgage insurance, but they are picking the wrong poison because they are left with no savings at all.
Homebuyers who put 20 percent or more down don't have to pay for mortgage insurance when getting a conventional mortgage. That's usually translated into substantial savings on the monthly mortgage payment. But it's not worth the risk of living on the edge.
I'd take paying for mortgage insurance any day over not having money for rainy days. Everyone -- especially homeowners -- needs to have a rainy-day fund.
Spending all or most of their savings on down payment and closing costs is one of the biggest mistakes first-time homebuyers make.
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| Don't deplete your entire savings |
Homebuyers who put 20 percent or more down don't have to pay for mortgage insurance when getting a conventional mortgage. That's usually translated into substantial savings on the monthly mortgage payment. But it's not worth the risk of living on the edge.
I'd take paying for mortgage insurance any day over not having money for rainy days. Everyone -- especially homeowners -- needs to have a rainy-day fund.
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