Coming up with a sizable down payment is one of the key barriers to affording a home. Learning how to invest your down payment if you’re planning to buy a house is a whole other issue.
On the one hand, you want to invest your down payment conservatively so that’s it’s available once you find your ideal house. On the other hand, you would ideally like to invest your down payment so that it grows even bigger. With a bigger down payment, you can lower your monthly payments or buy a nicer house.
This article will give you a framework on how to invest your down payment based on when you plan to buy. The longer out the timeframe, the more aggressive you can invest your down payment and vice versa. Despite a bull market in so many asset classes, investments do lose value sometimes. You don’t want to be caught in a down-cycle right when you want to buy a house.
Currently, demand for property is very strong because mortgage rates are near record-lows. Further, since we’re all spending a lot more time at home, we are utilizing our homes more. The intrinsic value of real estate has gone way up as a result.