Portland Mortgage News

Which is better: saving up for a big down payment on a home or buying sooner?

February 6th, 2019 11:34 AM by Joe Focer

Many people who are renting are trying to figure out if it s better to save up for a 20% down payment on a home or go with a lower down payment option. This can be a tough question to answer because it depends on many variables. Here are a few:

1. how fast is your market appreciating?
2. how long will it take to save up a large down payment?
3. how much rent are you paying?

Avoiding mortgage insurance is a great reason to save up for a home, but for a lot of people it can cost you significantly more to avoid MI than to pay it for a few years. According to the Federal Housing Finance Agency (FHFA), if you bought an average home in Oregon two years ago for $300,000, it would be worth over $350,000 today.

Suppose that it takes two years to save up the down payment you need to put down 20% on your home. You could be giving up a significant amount of money in equity that you would have captured by buying sooner. Especially when you consider that rents have has gone up for most people year after year. Buying your own home can give you a much more stable payment to count on for the long term.

If you have any questions or comments about buying a home, we would love to hear from you.
Posted by Joe Focer on February 6th, 2019 11:34 AM