Is it always a good idea to put the maximum amount of money you can afford into a down payment when buying your first home?
Absolutely! Even though most people can’t pay cash up front for a home, you always want to make as big a down payment as possible on any home you buy. Making a down payment of at least 20 percent helps you avoid private mortgage insurance, plus the whole idea is to pay that sucker off and become debt-free as fast as possible. Also, avoid 30-year mortgage plans. Stick with a 15-year, fixed rate loan.
Now, when it comes to putting money toward your down payment, make sure you don’t touch your emergency fund of three to six months of expenses or your retirement savings. Those things are off limits. But scrape together any other extra cash you can, pile it up, and apply it to your down payment. You’ll be glad you did!
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