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Low Down Payment

December 02, 1990

It certainly makes no sense to borrow at a rate of 12% to keep cash invested at 8%. If this is the case, a maximum down payment is best. If the mortgage rate is lower (which is unlikely), go for the minimum amount down.

But if a buyer can qualify for a 10% mortgage with a higher down payment; he would be crazy to pay 12% with a minimum down in order to keep his 8% investments.

In Bruss's illustration, the $5,000 profit is correctly calculated as the difference between total purchase price (investment) and market value. This profit will remain the same dollar amount regardless of the amount of cash paid down.

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