piggybankWednesday’s post offering advice to would-be home buyers included Realtor Mike Aubrey recommending a 20% down payment.

Aubrey’s reasoning:

“The loans that carry the best interest rates often require a 20% down payment. Not only does this serve as a vehicle to allow you to take a smaller loan, but it serves to encapsulate you from market swings.”

But a couple of readers disagreed:

“Why would any one in their right mind put down 20% on an extremely overpriced RE market that is doomed to fail (at any) given time?” --practical

“I agree… I question the whole 20% down from a buyer’s perspective. I can understand for lenders, why they want that… but considering how unstable the economy is… I don’t think I would put that amount of cash into a home.” –irvinehomeowner

When we purchased our home recently, we opted to put 3.5% down, even though we had the equity from a previous home sale to put well over 20% down. Our reasoning: we could more than afford the payment at 3.5% down, and having substantial savings socked away in case of a job loss or other financial need gives us a sense of security.

Granted, we are paying Primary Mortgage Insurance, and the lender made us jump through many a frustrating hoop before our loan was approved. But we feel good about our decision.

So…what do YOU think?

Your thoughts and feedback on this topic are greatly appreciated. Please feel free to post your comments.

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