Question
is it wise to spend all of your savings for a down payment?
We have saved a little over 100K and are looking to purchase a second home. The purchase price is approx 500K so the down will be all of our savings. We are planning on renting out our current house which will be paid off in a few years we have also factored in this payment if the house doesn't rent out quickly. Anyway we will have very little savings left and it will probably take us 3 months to build up our savings to at least 8K. We don't have any credit card debt and do have a line of credit available to us in case of an emergency and we have at least 250K in equity in the current home. Does anyone have any advice or opinion on dropping all of our savings on a down. (we are doing this to avoid PMI)
2 months ago - 1 answers
Best Answer
Chosen by Asker
NO Have an emergency fund available to you at all times. Unless you line of credit is can not be canceled, do not give up all your cash!
by Steve
2 months ago
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Other Answers
if you feel good about current job, can build back to $8k as fast as you say and have a line of credit. I think it is worth it. your loan costs are much less if you can put down 20%. it might be worth the short term risk.
by David Z- 2 months ago
Will your savings cover the down payment and the closing costs? I wouldn't use all of your savings... you need to have 6-8 months' emergency fund. What if a job is lost tomorrow? It may take time to sell your first house, and that line of credit can be canceled at any time (it's happening all over). Keep money in the savings. It's great to avoid pmi, but if you can't put down 20% and still have some money left then you need to wait before you purchase a house that expensive.
by spalmer- 2 months ago