What do you think is a practical goal for a down payment on a home? - Page 2

[Garden~Lover]

We just bought out home last year for $250k. We put down $12K, and the we got the 2 loans so we dont have to pay PMI. a friend of mine bought her house at the same time as us and pays almost $400 more a month just for PMI, and you have to pay PMI until you reach that 20% down amount.
our mortgage payment is about $1500 a month. I think good credit and job security are key. I wouldnt change jobs anytime right before you purchase b.c I believe lenders can change their mind if you do, or take out any large loans and not tell them. I could be wrong but this is what our lender told us.

Also look into the town. In our town they have a first time homebuyers program. They gave us $6K towards our home purchase.

[KnittingShaker]

Originally Posted by velochic

Okay, this kind of lines up with what I am hearing. Before, as long as you were willing to take out a mortgage with a high interest rate, you could do the creative financing (even with poor credit, iffy employment, etc.). It sound like they are being picky about who they loan to, but if you meet a certain criteria, you can still get creative financing. Times - they are a changin'.

They certainly are, Sister.

That being said, if you have a good credit score, stable employment and a low loan to value, you can still get a very good deal on a conforming product. But I think the days of high ratios for first time homebuyers are over.

[staceychev]

There are so many different options in mortgages, and if your credit is decent (even if you're carrying debt, which we were when we got our fixed rate 30 year mortgage at 6.5% and with 10% down), you should be able to have multiple options. The biggest problem in the mortgage biz right now is the so-called "subprime" loans that are targeted at people with really bad credit.

As far as figuring what your mortgage is really going to cost you, I like looking at houses using the Prudential Realty website for my area (www.prufoxroach.com). When you go into a listing, it breaks down what your montly payment will be including taxes, and you can also "change assumptions" which means you can plug in that you're only going to pay 10% down or 5% or whatever.

By the way, if a 20% downpayment is really out of the question, you can look into an FHA loan. That's what DH and I just used for our refinance. Like airmide, we live in an area where you really can't buy anything for less than 200K. Trust us--we looked hard to find that!

Info from Freddie Mac

Info from Bankrate

ETA: you can also get a loan without a long employment history by doing a "no doc" or "stated income"--that way you don't have to provide W-2s. This is what my uncle, who is self-employed, did to buy his place. We did the stated income, because DH was employed, but I had been on maternity leave and DH was in school the year before, so we didn't meet the 2-years-of-W-2s requirement.

[airmide_m]

Originally Posted by Tradd

"Everyone we knows owns a home" is a bad reason to go buy a house! I've known way too many young couples over the past 1-2 years who decided after only several years of marriage that they HAD to buy a house/condo. Then when they had to move within 6-12 months (variety of reasons), they ended up losing their shirts.

Originally Posted by valerina_cole

i agree that you should never buy a home just because everyone you know has one.

Ok I'm just curious, why on earth would anyone assume from my post that my reason for wanting to buy a home was because "everyone else has one"? It seems pretty obvious to me, if I were the type of person upon whom peer pressure had *any* influence, we would be living paycheck to paycheck just the same as our friends.

I was simply saying that we know a TON of people who own homes (across the country and also nearby) and as far as I know none of them had near $60k in the bank before buying their first home. A lot of them are contractors and are in and out of jobs every 3-12 months. If it really took 20% down I don't see how anyone except the extremely rich could buy homes in a lot of parts of the country. I know no one would be able to get a moderately nice house here, or in most of California or New York and I know there are a lot of other places with similar or more expensive housing costs. Sure, we could probably get a house cheaper if we moved to an area a LOT longer drive (higher gas prices and more time away from home) from my husband's work in a neighborhood with lots of meth labs, or a cheaply made condo with no yard...but if those are our only options I'd much rather just stay in our apartment.

I think given our financial track record together we are *perfect* candidates for owning a home. And honestly it's pretty offensive to me that anyone would suggest otherwise especially not knowing anything about me aside from completely twisting one statement.

My husband has worked at the same place for nearly 4 years. We have been saving for a while and are very frugal. We don't have credit cards, have no debt and hardly ever spend money on anything other than healthy food and toiletries, and even then we are bargain hunters. We don't have electronics or any of those luxuries aside from each having our own computer which we build ourselves, are not that fancy and we upgrade a part at a time usually when we have to. For entertainment we go to the library and go on day drives and hikes. We don't ever eat out, and we go to a $3 movie about twice a year on average. We don't even spend money on hair cuts lol...my hair is knee length and I trim it myself and my husband is bald and I help shave his head. We now live in a decent 2 bedroom that we got into when rents were *very* low, and before that we lived in a studio apartment together for 2.5 years. So obviously we're not the type of people who rush into having more space than they need.

We're not in a *huge* hurry to get a house but we do want one for a lot of reasons, and in fact I don't have any of the same housing priorities as our friends either. I want a kitchen big enough to move in so it will be easier to cook healthy, a nicer bathtub with decent water pressure and a yard so we can eat our own organic vegetables and hopefully have a goat and maybe some chickens for our own eggs and milk. If we need to stay in an apartment a little longer, or even a couple more years the only real reason I'd be impatient is that I'm TTC and don't know if it would be possible to have a birthing tub in our 2nd story living room. That and housing prices here are skyrocketing and if we save up to 20% of say, a 3k house and in the time it takes us to get to 20% that house goes up to 4k...what good does that do?

[brogansmomma]

I paid $140k (or $142k - I can't remember! ) for my house and that was overpriced, however the market has been very much a seller's market for a couple of years and good houses are very hard to find. It was lower than the max I wanted to spend though so that's okay with me. My mortgage is $437 bi-weekly. But yes, it is going to vary greatly from location to location; and my figures are in Canadian dollars.

eta: I put $7900 down but didn't technically have to put anything as a first-time home buyer. I probably rushed faster than would be wise but that was my choice. I saved for a little over a year, saving nearly $15k in cash however that was due to retroactive pay from work, an awesome tax return, and not having a ton of expenses while I was renting.

[pumpkin]

We put 5% down and had to come up with about another $5000 for assorted fees and taxes.

My biggest piece of advice would be to not select your house price based upon the mortgage you qualify for. We qualified for a mortgage of Y, but chose to get a house that was only 1/2 of Y because it was a MUCH more comfortable monthly payment. Of course, we also had to move to a city where it was even possible to buy a house for 1/2 of Y. Where I lived before, what we paid for this house would not even buy a studio apartment.

[wannabe]

Holy crap! 20%! Seriously? I though $30,000 was a decent deposit (not that we could afford the mortgage payment even then, but still, we'll never get $70,000+ ):

Add in this

Then when they had to move within 6-12 months (variety of reasons), they ended up losing their shirts.

And the fact that rents here run around 50 - 70% of the mortgage.

We are never ever ever going to be able to own a house.

[AnamCara]

Originally Posted by WNB

Is this really allowed? I thought PMI was to insure the lender against the risk of buyers walking away b/c they had little equity (i.e., less than 20%) to lose. (Just goes to show you how f'ing arbitrary the expenses are. I'm surprised banks haven't decided en masse (but no collusion going on, no way, of course not) to come up with a fee they charge buyers who were not born on Feb. 29th.)

I agree, they do seem rather arbitrary. I entered in an 80/15 a few years ago and was buying a home well BELOW what they wanted to sell to me. I personally hate to clean so wanted a little place. It was also a FSBO so I didn't have much in the way of closing costs. The second loan rate was higher than the first in interest rate, but not terribly so. I had the money for the down, just didn't want to pull it out of my investments right at that moment. I sold that home about 5 years later and made a tidy sum from it (even accounting for all those buy/own/sell expenses).

Now we are looking to move to Northern Cali. Prices are SPENDY and they REALLY REALLY want to get a person into a home, so they are doing some fancy math. I honestly don't see how anyone with the average income gets into a home...even with the RE price drop that has happened. I would rather rent cheaper and save the difference if I can't get into something affordable.

IF rents in the area are that much lower, then it might not be *financially* worth buying a home. The bank does get a good chunk of change, there is a cost to home ownership. It is important to know your priorities.

So loans are tools...crunch the numbers. Stay well within budget and find things that work.

[jtbuko]

Originally Posted by Tradd

"I've known way too many young couples over the past 1-2 years who decided after only several years of marriage that they HAD to buy a house/condo. Then when they had to move within 6-12 months (variety of reasons), they ended up losing their shirts.

What she said!!! After having kids we felt this insane drive to buy. So we saved and we saved and we followed a cool job opportunity across the country to slightly cheaper housing market and bought a little town home... and I have NEVER in my life felt so trapped. Marriage didn't do it. The first kid didn't do it, the second kid didn't do it, but... owning a home makes me feel so incredibly stuck & trapped.

We bought in late 2005. We put 5% down and are living pretty hand to mouth - it is stressful and its not sustainable.

Family on the west coast needs us. We need them. The job has been great, and could be a good stepping stone to cool opportunities elsewhere. However, in order to sell now we'd have to take a huge loss - i.e. we'd have no home and a loan at least the size of a very high end car. Our choices are stay here and stick it out in the hopes of recovery or cut our losses and leave with a huge loan left to pay and nothing to show for it.

So PLEASE learn from our mistake and tread carefully in the housing market.