How much down payment should you pay when you buy a property?

Q: How much down payment should you pay when you buy a property?
-Heather, Babylon, NY

A: There are lots of people who say that when you buy a property you should put down as much of a down payment as possible—some people say 20%, 25%, even 50%. I understand why people like Suze Orman, for example give that advice—it’s because your monthly mortgage payment will be lower if you pay a bigger down payment when you buy a property—that’s very logical and makes sense. Unfortunately, everyone, particularly 1st time home buyers don’t have a 20% down laying around to put down on a property particularly in higher price real estate markets. Another thing to consider is that money that you pay a lender for a down payment is money that you generally can’t get back if things don’t work out or you fall on bad financial times. For this reason, and I know this is a little controversial, my suggestion is that you pay as small a down payment as possible when you buy a property so long as you can comfortably afford the monthly payments—that last caveat is critical. If you cannot comfortably afford the fixed monthly payments, then do not buy the property—that said, I don’t think it’s a good idea to waste money unnecessarily on a down payment if you don’t have to. Thanks again for your question, Heather—good luck. For more real estate tips and information, visit performanceproperty.com or geraldlucas.com. I’m Gerald Lucas and I’ll see you again soon.