From New York Post · · 1m 30s
Zero-Down Mortgage: Save or Invest?
How to use savings wisely with zero-down mortgages without losing liquidity.
In brief
How to use savings wisely with zero-down mortgages without losing liquidity. Buyers with savings and zero-down mortgage options should compare interest savings from points versus keeping cash for emergencies before closing. Originally reported by New York Post.
Cash vs. Home Equity
Money in savings covers emergencies while home equity grows your most valuable asset.
Zero-Down Mortgage Tradeoffs
Cash in savings may be needed for moving costs, renovations, or emergencies before using it for down payment.
VA Loan Funding Fees
First-time VA borrowers pay 2.15% funding fee with less than 5% down, dropping to 1.5% with 5% down.
USDA Loan Costs
USDA loans require a 1% upfront fee and 0.35% annual fee but offer 100% financing in qualifying rural areas.
Mortgage Points Savings
One mortgage point costs 1% of the loan amount and lowers the interest rate, saving money over time.
Hypothetical Savings
A couple saving $9,000 on a $450,000 home saves $32,850 over 30 years by lowering the interest rate from 7% to 6.5%.
Stock Market Comparison
The stock market has averaged 10.44% annual returns with dividends over the last 30 years.
Practical Steps for Buyers
Run mortgage numbers for zero-down, 5% and 10% down options before closing to compare costs.
No Easy Return of Cash
Homeowners cannot easily get cash back from lenders if home repairs or income drops.
Key Decision Factors
Your choice should depend on loan price, cash needs, taxes and risk tolerance, not savings automatically belonging in the house.
At a glance
Buyers with savings and zero-down mortgage options should compare interest savings from points versus keeping cash for emergencies before closing.
