Originally Posted by VEforlife
Put more down on our house. We didn't put much down on our house because we wanted remodeling money. Now we are stuck with an extra $200 per month PMI payment that doesn't go away until we pay 20% down. I wish we would have rented or stayed with my parents until we had a huge down payment.
I have mixed feelings on first time home buyer or any loan that doesn't require at least a significant down payment. I used to work in lending and part of my job was problem loan work out and I rarely saw conventional mortgages go bad (this was before the recent mortgage mess) but a large % of the first time home buyer and similar lending program loans did go into default. I have two theories as to why.
The first is many of those programs require the seller to give cash back for closing costs and that pushes up the price of the house a bit and that increases the mortgaged amount.
The second is if a buyer can't come up with a significant down payment, chances are they will have a hard time building up the cash reserve necessary to pay the mortgage, taxes, and insurance PLUS the cushion necessary to maintain a house and replace costly items like a roof, heating system, etc.
If I sound cynical about programs that "should" help home buyers, it is because I saw many broken hearts when families lost their homes because they couldn't afford them.
If you go that route, make sure you really understand the loans. Because little down payment is required, it can be hard to sell a home and come out ahead. I saw this with people buying started homes that they wanted to sell 3 -4 years later and there was little equity because not much principle had been paid down.
If all your ducks are in the row, the programs can be great. I have seen great outcomes with people that used the programs and understood the benefits of paying down their principle and building up equity.