+1 vote
asked Nov 17, 2017 in Downpayments by bjunta@yahoo.com

3 Answers

+1 vote
That's a complicated question best answered by a tax planner (as we don't pretend to be tax advisers or give tax advice). Current tax law allows you to write off interest paid on a primary home. So it would depend on your current income and how much a tax adviser recommends you protect via mortgage interest. As far as mortgage programs and rates, 20-30% down would be plenty to qualify for a loan, get a low rate, and avoid mortgage insurance.
answered Nov 18, 2017 by TimLucas (8,040 points)
+1 vote
I assume that you mean $400k in cash, not $400. I am a mortgage editor here but have also worked as a tax accountant in my previous life. As Tim mentioned, this is a complicated matter, depending on your bracket, your credit rating and other factors. The thing to keep in mind is that tax deductions are still just "discounts" on spending. Paying $100 to get $25 back doesn't make sense in many cases (but it does keep places like Las Vegas in business). So your answer depends on what else is competing for that money. An investment that pays more (after taxes) than you'd pay (after taxes) in interest? In that case, a bigger mortgage makes sense, so you can have that money for your investment. But if you have high-interest debt, you should probably pay off those 15% credit card balances and make a smaller down payment on your house. You also want to make sure that your emergency fund is full (3-6 months of expenses, depending on your employment and lifestyle), and that you are taking full advantage of any employer-matching contributions to your 401(k). Finally, there is the "sleep" question. As in, will I be able to sleep at night if I have a mortgage payment to worry about? If the answer is "no," pay cash and don't listen to anyone else. You are the one who has to live with the decision. In my case, I do 20 percent down to avoid mortgage insurance and I invest pretty aggressively in a number of things. But that is only my opinion and my decision -- not that of this site or anyone else associated with it.
answered Nov 22, 2017 by GinaPogol (39,300 points)
0 votes
Consult with your tax adviser
answered Feb 11 by GustanCho (107,040 points)

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