Financing a co-op: downpayment vs prepayment

Unless they force you to put funds in Escrow, they have no knowledge of your financial state once you close.

firsttime,
You goal is to be approved by the coop and maintain max liquidity post closing for furnishing, reno, rainy day fund (at 1 year of total expenses), and of course other investments. If the min is 20%, you want to look better by putting down 25%. In any case, most banks these days want 25%. 25% may be the magic number as that would give you enough liquidity to show the coop as well. The rates are very low, why such a strong need to pre-pay.

So yeah it sounds like my original assumption was right-- for the purposes of the board package, I should "window-dress" debt/liquid assets vs. downpayment, but afterward, I am able to adjust anyway free of cost, at least if that adjustment is MORE down-/pre-payment?

@300_mercer you're right, rates are very low but I also do nothing with my money. I've always maxed out my 401K and IRA contributions, but everything else sits in cash accounts 2% interest. Mortgage would be my only debt, stocks and bonds both seem "too hot" right now, I think my extra cash should just build up a 1 year living expense reserve and then prepay debt to lower monthly payments.

One small caveat about my situation is given the timeline right now, I will receive my bonus (40-60k cash) within 1-2 months of closing. This means even if I leave myself the bare minimum @closing, I will immediate become fairly cash rich. So given this event is on the horizon, that's why I am considering all my financing options. Why borrow more than I need.

Where do you get 2% interest on a cash account? Thanks.

@JEM rewards checking accounts

Firsttimebuyer, are you talking about this? It looks like you'll only make 2% if you have $20k deposited. And they have lots of other conditions:

http://www.fmbanking.com/2239/mirror/p_reward_checking.htm

-3.05% APY* on balances up to $10,000
-1.05% APY* on balances over $10,000
-All you need to do is: make 15 debit card purchases, access online banking, receive monthly e-mail statements, and have one direct deposit or ACH auto debit

(Those are dashes before each item, not minus signs. This isn't Cyprus!)

That is one example of an RCA yes, there are entire hundred-page forums devoted to this topic if you are interested @fatwallet finance.

I maybe missing something but if you have a fixed rate mortgage and you pay additional principal your payments are not lowered, you just pay off the mortgage in less years.

yeah not true for ARM though. if fixed you can usually pay a small fee to have them re-amortize