When you are buying a house, one of the big issues you must face is figuring out exactly how much money you have to come up with for a down payment. However, there s another question that you need to answer. Every dollar you borrow has to be paid back, with interest, and that interest adds up.
Interest can be beneficial when it comes to income tax deductions.
Every dollar paid in interest on a mortgage loan is tax deductible, and for this reason paying a high percent of interest could be advantageous. This consideration should be discussed with your accountant or tax attorney. For our purposes today, however, our focus will be on the pros and cons of making a lower down payment. The larger the down payment, the smaller the loan amount and the less you have to pay back. However, putting every extra dollar you have into the down payment might not be the wisest use of your money, unless you have enough money to make a down payment of 20 percent.