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You’ve most likely heard the rule: Save for a 20-percent down payment before you buy a home.

The logic behind saving 20 percent is solid, as it shows that you have the financial discipline and stability to save for a long-term goal. It also helps you get favorable rates from lenders.

The downsides of a small down payment are pretty well known. You’ll have to pay Private Mortgage Insurance for years, and the lower your down payment, the more you’ll pay. You’ll also be offered a lesser loan amount than borrowers who have a 20-percent down payment, which will eliminate some homes from your search.

THE UPSIDE

The national average for home appreciation is about five percent. The appreciation is independent from your home payment, so whether you put down 20 percent or three percent, the increase in equity is the same. If you’re looking at your home as an investment, putting down a smaller amount can lead to a higher return on investment, while also leaving more of your savings free for home repairs, upgrades, or other investment opportunities.

THE HAPPY MEDIUM

Of course, your home payment options aren’t binary. Most borrowers can find some common ground between the security of a traditional 20 percent and an investment-focused, small down payment.

I can provide some answers as you explore your financing options or speak to Dean Wong, my Lender I have worked with my entire career.

Contact Thomas Ray for all your real estate needs!

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5958 Paseo Canyon Dr Malibu, CA 90265

$3,195,000 - 3Br/3Ba -  for Sale in Malibu
New
Price $3,195,000
Beds 3
Baths 3
Living Area SqFt 2,815
Status Active
MLS # 20-567772
Property Type Single Family Residence
 
 

1420 Bienveneda Ave Pacific Palisades, CA 90272

$5,595,000 - 6Br/6Ba -  for Sale in Pacific Palisades
New
01912796
Price $5,595,000
Beds 6
Baths 6
Living Area SqFt 6,732
Status Active
MLS # 20-574876
Property Type Single Family Residence
 

23155 Mariposa De Oro St Malibu, CA 90265

$8,150,000 - 5Br/6Ba -  for Sale in Malibu
New
Price $8,150,000
Beds 5
Baths 6
Living Area SqFt 3,931
Status Active
MLS # 20-585452
Property Type Single Family Residence
 
 

1049 16th St Santa Monica, CA 90403

$1,349,000 - 3Br/3Ba -  for Sale in Santa Monica
New
Price $1,349,000
Beds 3
Baths 3
Living Area SqFt 1,516
Status Active
MLS # 20-581272
Property Type Condominium
 
 

16841 Bollinger Dr Pacific Palisades, CA 90272

$2,395,000 - 3Br/2Ba -  for Sale in Pacific Palisades
New
02003324
Price $2,395,000
Beds 3
Baths 2
Living Area SqFt 1,600
Status Active
MLS # 20-584764
Property Type Single Family Residence
 

1505 Sorrento Dr Pacific Palisades, CA 90272

$5,250,000 - 4Br/3Ba -  for Sale in Pacific Palisades
New
Price $5,250,000
Beds 4
Baths 3
Living Area SqFt 3,000
Status Active
MLS # 20-585232
Property Type Single Family Residence
 
 
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