I recently wrote about the importance of considering your overall financial status and goals when making a Carlsbad home purchase. It’s a big decision and there can be huge financial implications, both in the near term and down the road.

Most buyers, unless they qualify for 100% financing or obtain gift money, will allocate a large chunk of cash to the down payment (up to 20% or more of the purchase price; with detached homes starting around $500K in Carlsbad we are talking $100,000!). And the decision of how large a down payment to make on your home purchase is not just about making a competitive offer, but may have huge implications on your big-picture financial situation. This decision requires a careful analysis and depends on your unique set of circumstances.

So I got some information from a friend of mine, Paul Parotti, a financial planner, and wanted to share this. With the help of a qualified real estate agent, financial planner, mortgage professional and possibly a CPA, buyers should look at the following factors when making this decision:

How will the down payment expense affect your nest egg? Tying up too much of your net worth in your home would create major problems if you were to lose your job or encounter some other financial difficulty. For those who think they will always have the option of cashing out excess equity by refinancing, consider that mortgage standards on cash out refinances are much more stringent than on purchase transactions, with lower loan-to-value allowances and stricter borrower credit requirements. Even if you do qualify for a cash out refinance, closing costs may be several thousands of dollars. The bottom line: it’s best to keep enough cash available to float you for six months or more, just in case.

Read the full article here.

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If I can provide more information about Carlsbad and surrounding areas, or the housing market in general, or otherwise assist you in your homes search, please contact me by

phone or text at (760) 840-1360 or email me at JDowler@remax.net.

All content copyright © 2007 Jeff Dowler