If you've been saving for a large down payment on the home of your dreams, you might want to stop saving. Many people will tell you that you need that big down payment if you want to get the best deal on a new home, but that's not always the case. The argument can be made that it's smarter to go with a smaller down so you can get into the home of your dreams that much quicker. Here are just three of the many reasons why you should stop saving and go with a smaller down payment.
No Telling What the Future Will Bring
You never know what the future may bring. You may start out saving a large amount of money for your down payment each month, but that doesn't mean you'll be able to keep doing that. You could end up saving for longer than you anticipated, which could end up pricing you right out of the home of your dreams. Instead of saving until you have a large down payment, save until you find the house that's right for you, and strike as soon as you can.
More Time Spent Renting
It may seem like a good idea to put money away each month until you have a large down payment. However, if you're renting, that means you're saving for a down payment and paying rent each month. While you're busy saving for a large down payment so you can buy your own home, you're paying someone else's mortgage. Stop investing in someone else's property. Instead of saving until you have a 20% down payment, start an active search as soon as you have a 10% down payment.
You Could Wait Yourself Out of a Good Interest Rate
While you're saving for a large down payment, the interest rates are fluctuating. They may be at an all-time low right now, but that doesn't mean they'll stay there. In fact, while you're saving for your down payment, the interest rates could shoot up through the roof. That means, your housing dollar isn't going to go as far as it would have had you purchased your home while the interest rates were low. Instead of taking a chance that the interest rates spike while you're saving for your down payment, purchase your home while the interest rates are low. You'll get more home for your housing dollar.
Don't risk losing out on your dream home for sale. Use the information provided here to see why waiting to buy your first home until you have a large down payment isn't always the right thing to do.