Acey
Home Buyer
10025

I'm buying a co-op in Manhattan sponsored by the city. It's kind of a "gentrification" program -- the city subsidizes buyers to move into buildings in rougher areas of town. You have to stay for awhile though, to prevent flipping. In my case, if you sell within 4 years, any profit you make is reclaimed by the city.

So one of the questions I'm dealing with right now are:

1) I only need to put down 10%, but I have enough to put down 20%. Obviously, I'd like to put down more to reduce my monthly expenses, but my lawyer suggested that I put down as little as I need to, since that money could be earning more elsewhere, and because of the lock-in, I won't be making any money at all on that extra 10%.

On the other hand, if my mortgage payments are small, I'm saving on interest -- and there aren't a lot of investments doing that well nowadays. So I'm thinking of going with 20%.

What do you think? Is this a reasonable strategy?