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URL:  https://boards.fool.com/how-much-of-a-difference-is-there-in-interest-30700781.aspx

Subject:  Re: question: down payment on my first home Date:  5/24/2013  2:01 PM
Author:  Dwdonhoff Number:  125383 of 129271

How much of a difference is there in interest rates?

On a purchase, its 1/4 to 1/2 to the rate on the principal, PLUS the carry costs of the additional 25% cash required for the higher amount of down payment. That cash carry cost may be 6-20%, depending on the alternatives its drawn from, which can raise the non-owner financing costs up an additional 1.5-3% on top of the 1/4 to 1/2 face premium.

1.75% - 3.5% higher carry costs on investor financing, versus owner-occupant financing, is sufficient incentive for some to seek workarounds.

Dave Donhoff
Leverage Planner
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