Is $50,000 dollars enough to buy a house?
The Pros and Cons of a 50,000 Dollar Mortgage
You've finally done it. After years of saving and being frugal, you have 50,000 dollars to put towards a down payment on a home. But is that enough? It depends. In this blog post, we'll explore the pros and cons of taking out a 50,000 dollar mortgage so that you can make the best decision for your unique circumstances.
The Pros of a 50,000 Dollar Mortgage
1. A lower mortgage means lower monthly payments.
2. With a smaller loan, you'll have your house paid off sooner than with a larger one.
3. Taking out a smaller mortgage may help you qualify for certain government programs designed to assist first-time home buyers.
4. Shaving years off of your mortgage can save you thousands of dollars in interest payments over the life of the loan.
5. A smaller mortgage leaves room in your budget to cover unexpected repairs or improvements that may come up down the road.
6. It's easier to refinance a smaller mortgage than a large one should interest rates drop or if you need to access equity in your home for some reason.
7. You'll have more cash flow each month since you won't be making such large mortgage payments.
8. A smaller mortgage is less risk for both lender and borrower alike should something happen that makes it difficult or impossible to make payments.
9. If you're able to get preapproved for a larger loan but only want to take out a 50,000 dollar mortgage, you may be able to negotiate for seller concessions at closing such as help with closing costs or prepaids.
10. You may be able to get by with a less extensive (and therefore less expensive) homeowner's insurance policy if your loan is for fifty thousand dollars or less.
The Cons of a 50,000 Dollar Mortgage
1. A fifty thousand dollar mortgage is going to have higher interest rates than a larger one since there's more risk involved for the lender. This means that over time, you'll end up paying more in interest with a smaller loan even though your monthly payment will be lower.
2. Unless you're putting down significantly more than 20 percent, you'll likely have to pay Private Mortgage Insurance (PMI) on your loan which will increase your monthly payments even more.
3. With such limited funds, it may be difficult to find a home that meets all of your needs and wants in terms of size, location, and price within your budget; you may have to make some sacrifices.
4. Your choice of lenders may also be limited with only 50,000 dollars to work with as many lenders have minimum loan amounts that are higher than this amount
5. You'll likely need to carry additional debt such as credit cards or personal loans since most lenders require borrowers to have at least three open lines of credit should you default on your mortgage payments
6. Tapping all of your savings for a down payment can leave you without an emergency fund should something happen and leave you scrambling financially
7. There may not be much room in your budget for anything else once mortgage payments and other housing-related expenses are factored in 8 Taking out such a small mortgage means that any future refinancing will probably not net you very much cash should you need it
9. Because only having 50,000 dollars limits your buying power so much, it could take longer to find the right property which could cost you even more money in the long run
10. If property values stagnate or decline in the area where you purchase, it could take longer to build equity in your home since you're starting out with such limited funds.
There are pros and cons associated with taking our a 50,000 dollar mortgage when buying a house. Weighing these factors carefully will help ensure that you make the best decision possible for YOUR unique circumstances. Remember- there's no rush! Take your time , do your research ,and consult with professionals before making such an important financial decision .