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Big Down Payments Are Risky For California Home Buyers
If you're thinking of buying a home in California, you might not want to sink everything you have into the down payment.  In fact, it probably makes more sense to keep more money SEPARATE from the house equity, even if you have to pay private mortgage insurance or a higher interest rate.
Banks are asking for higher down payments since the credit crunch started.  Wanna know why?  It lowers the bank's risk.  If higher down payments lower the bank's risk to market fluctuations, than who assumes that risk?
You got it; YOU DO ! 
Consider this article from the Arizona Republic:
Joan Shaffer is turning in the keys of the north Phoenix Tatum Ranch home she bought with her daughter in late 2005. They put nothing down on the home, took out a loan that let them pay less than they owed each month and now their loan is $200,000 more than the house is worth. "We paid $585,000. It was the peak of the market, but no one told us," said Shaffer, a real-estate agent from Colorado. "We would probably have to spend the next 20 years trying to get right on the mortgage. That's crazy."
Housing has become volatile this decade.  The pendulum like ... more

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