Should You ALWAYS Make A Big Home Down Payment?

When Paying PMI Makes Sense

If you caught last week’s episode, I talked about a financial decision we’ve made as a family that may not make sense to most people.

What was the decision?

When we bought our current home, we intentionally made the smallest down payment possible.

Not only that, but we did so knowing it would mean paying Private Mortgage Insurance for our loan.

I know, I know: if you’ve ever heard an old person talk about buying a home, one of the first things they tell you is pay at least 20% down so you can avoid PMI.

But I think that advice is out of date.

PMI is insurance that protects your LENDER in the case you default, but YOU could have to pay for it. It’s often added to CONFORMING loans when you don’t have at least 20% equity in your home.

But there’s all types of scenarios when PMI either isn’t an issue, or the level of problem it presents is grossly overstated. Scenarios like:

• You have a NONCONFORMING loan
• Your credit is immaculate
• You have other pressing financial goals

In this week’s episode, we talk about those mitigating circumstances and how they can shape your decision on making a huge down payment.

Check it out and see what else you need to be considering before deciding whether to avoid PMI, or to give a big warm hug instead!

Tune in to this episode to gain a nuanced perspective on PMI and make informed decisions about your home financing strategy.

This Week's Episode:

When Paying PMI is the Smarter Move for Homebuyers | NEW MONEY NEW PROBLEMS PODCAST

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