I bought my place with 10% down about 6 years ago. I now have about 25% equity. I was nervous at the time about not having 20% down, but I made sure I wasn't buying above what I could afford in terms of the monthly payment. Historically low interest rates, a housing glut, and an $8000 tax credit (which saves you an additional ~$10,000 in interest payments over the life of the loan at 6%) is pretty hard to pass up.
You can use your old fabrics by cutting them into rags and use them for cleaning in the home, washing your car, washing windows, braiding them into rugs after cutting them into cloth strips (something our grandmothers did routinely), making patchwork quilts or pillows. I use them when I paint my oil paintings ( I am an artist)to clean my brushes.
These are just some ideas.
Use them instead of paper towels, they get recycled, some may even get a new life as a carpet and you are saving trees and saving money.
"On a side note, I got three emails from my broker today pushing me to give him an answer on the current place we're in love with. Which I do NOT like, but that's his job I guess."
He's probably worried that he won't make his mortgage this month.
"I live in CA, and sure it took a long time to save 20% - but I am in no danger of now losing my house. I have equity and a decent mortgage. Others who convinced themselves that they could bend the rules are not in nearly as good a position as I."
Diane, I wouldn't be so smug. Unless you're independently wealthy (and no snark, good on you if you are), the MAJORITY of people are never immune from losing their homes. I read a sad tale just the other day about a woman who lost her home 28 years into her mortgage after a run of bad luck (unemployment and medical issues).
We have a modest mortgage, and if we've learned anything in this whole housing mess, equity is as fleeting as the wind.
I think this an absolutely terrible plan. House prices aren't going to shoot to the moon in a year, and even if they do - throwing out common sense to try and time the market and buy before you are ready is a mistake. I was a renter for 20 years and totally disagree that "it sucks." - if you let yourself buy for a whole bunch of emotional reasons - renting sucks, the markets is slow, OMG I'm going to miss the boat! - you are likely to make a big mistake.
I live in CA, and sure it took a long time to save 20% - but I am in no danger of now losing my house. I have equity and a decent mortgage. Others who convinced themselves that they could bend the rules are not in nearly as good a position as I.
You are basically doing the same thing everyone did for the past 3-5 years - buying on a wish and a prayer and not much stake - and convincing yourself that for you it will be OK. Well, maybe it will. But really - this is an emotional decision and a gamble, and the reasons are pure gut. It's not sensible.
My name is Boris G Jennings and I'm Artist,Song writer.I've lived in europe for many years,I've worked with the largest companys such as B.M.G,SONY,E.M.I,M.C.A and many more written songs 4 myself and others.I have a large collection of songs in every style.I'm interested in selling my work 4 use in jingles,movies,commercials.. 2 know more about me,myspace,youtube or just google boris g jennings..My num.is 914-616-1181 I would love 2 hear from u ASAP !Thank U... Boris
I know 20% down is a good idea but I think that the bigger questions are 1) whether you are rushing the process just to get the tax credit, low interest rates, and low prices and 2) whether the house is affordable. Rushing to make such a huge financial decision is never a good idea but if you can readily afford the payments - that is meet all your obligations after buying, and you have stable jobs or could replace an income fairly easily or afford the house with one income, then the amount of equity is not so relevant. PMI is no fun but it doesn't last forever. You have probably already done this but it wouldn't hurt to run the numbers under various scenarios including no incentive and no PMI.
I consider myself somewhat conservative as far as mortgages and am getting ready to pay mine off this month but put down less than 20% on our first house. It's useful to look at the entire picture, and also public records to look at tax values, sales histories. etc. Best wishes on your decision (whatever it is).
I checked with my realtor twice and he assured me that the area I was looking at was pro-metachlorian. In fact, I remember reading that as a requirement on my pre-approval letter from the bank. I don't see the PMI - metachlorian connection though. I only put 7% down and I can my telekinesis skills are still intact.
We bought our house three years ago with 10% down. This means we split the cost of the house into two loans--a conventional mortgage and an equity loan--in order to avoid PMI. I'm pretty on top of our finances and don't regret this one bit.
I suspect that a lot of people who are telling you not to buy are not renting right now. Renting sucks. We bought a brand new home under warranty. We have done extremely little to the house--not even much paint. We certainly didn't go out and buy furniture or do any "improvements." However, we are paying less for it than we would to rent. We knew that buying a new home meant that we wouldn't see a lot of appreciation value, but we also knew that we were young and financially disciplined. We've been paying down the equity loan aggressively. When we got to sell, I will be happy if we end up if we coming out ahead if we compare what it would have cost to renting something the entire time. Since we're in a fairly stable market, we will come out a bit ahead of even (including property insurance, etc.). To me, this makes it a better idea than renting.
That said, I also went into the homebuying process with no expectations that this was an "investment" like my 401(k) or something. It's not a depreciating asset like a car, but I do think of my mortgage payment as something I pay in order to live in a place I like that is close to where I work. Not every decision can come down simply to numbers, and I think as long as you realize that and are aware of what you will end up paying, then it can be a good idea.
I think there is a lot of skepticism about home ownership out there right now. But just because others didn't think through their financial situations very well doesn't mean that you won't. I'd run the numbers and evaluate for your specific situation.
We live in Seattle, where the median home price is $350 - $400k. If you live outside the city, you make up the difference in gas to get around. $70k in cash? Really? If we did nothing else for 6-7 years, we MIGHT scrape that together.
We found a great little turnkey house in the city for $284k and put 12k down. We have ZERO other debt and can afford the mortgage on one income.
You can always drop the PMI once you have 20% equity and refinance - you can get there pretty quickly by accelerating principal payments every month.
You have to go with your comfort zone. If I lived somewhere where houses were $100k, I would absolutely save 20%. It's not always so one-size-fits-all.
I sometimes think that I miss commuting via public transportation - goodness knows that I don't enjoy driving the 50+ miles roundtrip. However, I do recall that while on my old commute into downtown Seattle, I pretty much had to spend the time concentrating on not gagging from the smell of the unwashed masses around me (and I do mean "unwashed"; one guy who got on aroun 23rd was frequently covered in human waste).
There is definitely something to be said for being able to zone out to music, though. The emotional transformation that music can provide is amazing. You can wake up in a terrible mood, and by the time you get to work, have calmed yourself down through listening to some of your favorite tunes. And that goes for drivers, bikers, and riders.
Looks like that link to wikipedia given in the "We're talking historically low." is actually the prime rate rather than the 30 year fixed rate. THe 30 year mortgage rate will be higher than prime usually.
And only a few months ago, people were refinancing left and right at rates below 5%. Over the life of a 30-year, $250,000 mortgage, you'd pay $261,000 in interest at 5.5% vs. $410,000 at 8%. So the rate matters quite a bit. : thanks a lot
My husband and I are also trying to save our 20% down payment for a home. We also may not be able to save this full amount, yet I think we still will be able to purchase one by early next year. I have a couple of thoughts on why paying less than 20% down is sometimes OK:
1.)For many people, 20% may not be difficult to come up with if you live in an area where you can actually find a home under $110,000. I DO NOT LIVE IN AN AREA LIKE THIS, DO YOU? If you live in Southern CA for instance, it will be a long road to making it to 20% of $250K - $300K (a typical starter home price)
2.) How much are you paying in rent? Are you paying way less than what a mortgage will cost? My husband and I figured that we are already paying MORE than what a mortgage will cost on a $250K home. So even if we can't make the full 20% down payment, we will still be paying the same or perhaps less than our current rent.
3.) I fear that waiting until I have my 20% down will actually negatively affect the overall goal of purchasing a home. Again, I live in CA and homes go up and down like a roller coaster. Right now, my husband and I can actually AFFORD one of these homes. If we wait until we have 20% or 30% down, we may again be in a catch-22, meaning by that time, homes will be back up over $400K and we again won't have the money nor be able to afford the mortgage. Is this what you are also concerned about?
I guess my main point is LOCATION, LOCATION, LOCATION. If you live in an area where housing prices have historically remained stable and affordable, maybe you can wait it out. If you live in an area like Southern CA or another volatile city, I would say the sooner the better.
So now..we reach at a conclusion...but hey, are we missing something :-| wolla..i think so. Being an app testing company and giving proper considerations, I think Thrive should also be driven by mobile support apps...specially for iPhone as trend goes..
Wait for my detailed review and test results including performance, usability and functional aspect. Ciao.
Those reasons are exactly why my boyfriend and I decided to buy a house in April. We have a good emergency fund, and we can still afford the house off of one income if need be. The only reason we didn't have 20% yet was that we've only been out of college for a year. (Ok, I'll admit we could have saved up 20% in that year if we made a ton of sacrifices, but you get my point). I feel ok about our decision.
My wife and I were in the same boat as you in May. We only had 13%ish to put down. Technically we could have put down more, but that would have sapped our furniture and emergency funds (a no-no for us).
What pushed us over was that the seller is basically paying the PMI. I probably still would have done it with the price and rate we got.
I'm a server and I am not surprised by the strong comments here! Some people seem to feel resentful "having" to tip. As someone already commented, society has invoked this system. Is it fair? Not sure that it is, since the acronym tip means "to insure prompt" service, but it's given after the fact! I do know that if restaurant owners had to pay at least federal minimum wage, than at part of that cost would be passed onto the customer, i.e., higher food prices.
My job is to wait...wait on customers to decide, get off their cell phones while I'm at their table, and all around ensure that they have an excellent dining experience. Most of my customers are very pleasant people & are a pleasure to serve. But yes, their are customers who like to make a lot of special requests and demands, and it's very frustrating when I have fulfilled their needs and they leave a poor tip (less than 15%). I still have to pay taxes on $ I didn't earn, and tip out to support staff (hostess/bussers). Unfortunately, every job has its cons, and if you're a server, you're sure to run into this situation from time to time.
This list really helped me figure out who I want to be rather than what other people want me to be. I will do all of the achievable things on my list and live my 1 life to the fullest.
You are operating under the assumption that you deserve a house right now because you are you. Your reasons are just emotional justifications.
I assure you that we are not at the end of the economic fall; don't be fooled into buying because costs are low right now or because some slimy real estate agent wants to make money off of you. And, once we start to recover, do you really think housing prices will rise as astronomically as they've done over the past decade? If you think that's the case, can you also tell me how the US will provide jobs to the millions left unemployed from this mess? If nobody is earning money, nobody is buying houses. Unless you think a new economy is going to show itself in the next year or two, I don't think you have much to worry about when it comes to housing prices in the near future.
Honestly, not everybody should be a homeowner. This is being made perfectly clear with all the foreclosures. Stick to sound economic principles, don't let emotion rule you, and try to get through this mess without losing your head. You are far luckier than millions of people out there; think about that for a while before you jump into something for which you may not be ready.
I cannot WAIT until I have children, specifically so I can give them bad haircuts. It's a genetic thing. The Polish part of me can't resist too-short bangs.
I bought my place with 10% down about 6 years ago. I now have about 25% equity. I was nervous at the time about not having 20% down, but I made sure I wasn't buying above what I could afford in terms of the monthly payment. Historically low interest rates, a housing glut, and an $8000 tax credit (which saves you an additional ~$10,000 in interest payments over the life of the loan at 6%) is pretty hard to pass up.
You can use your old fabrics by cutting them into rags and use them for cleaning in the home, washing your car, washing windows, braiding them into rugs after cutting them into cloth strips (something our grandmothers did routinely), making patchwork quilts or pillows. I use them when I paint my oil paintings ( I am an artist)to clean my brushes.
These are just some ideas.
Use them instead of paper towels, they get recycled, some may even get a new life as a carpet and you are saving trees and saving money.
"On a side note, I got three emails from my broker today pushing me to give him an answer on the current place we're in love with. Which I do NOT like, but that's his job I guess."
He's probably worried that he won't make his mortgage this month.
"I live in CA, and sure it took a long time to save 20% - but I am in no danger of now losing my house. I have equity and a decent mortgage. Others who convinced themselves that they could bend the rules are not in nearly as good a position as I."
Diane, I wouldn't be so smug. Unless you're independently wealthy (and no snark, good on you if you are), the MAJORITY of people are never immune from losing their homes. I read a sad tale just the other day about a woman who lost her home 28 years into her mortgage after a run of bad luck (unemployment and medical issues).
We have a modest mortgage, and if we've learned anything in this whole housing mess, equity is as fleeting as the wind.
I think this an absolutely terrible plan. House prices aren't going to shoot to the moon in a year, and even if they do - throwing out common sense to try and time the market and buy before you are ready is a mistake. I was a renter for 20 years and totally disagree that "it sucks." - if you let yourself buy for a whole bunch of emotional reasons - renting sucks, the markets is slow, OMG I'm going to miss the boat! - you are likely to make a big mistake.
I live in CA, and sure it took a long time to save 20% - but I am in no danger of now losing my house. I have equity and a decent mortgage. Others who convinced themselves that they could bend the rules are not in nearly as good a position as I.
You are basically doing the same thing everyone did for the past 3-5 years - buying on a wish and a prayer and not much stake - and convincing yourself that for you it will be OK. Well, maybe it will. But really - this is an emotional decision and a gamble, and the reasons are pure gut. It's not sensible.
My name is Boris G Jennings and I'm Artist,Song writer.I've lived in europe for many years,I've worked with the largest companys such as B.M.G,SONY,E.M.I,M.C.A and many more written songs 4 myself and others.I have a large collection of songs in every style.I'm interested in selling my work 4 use in jingles,movies,commercials.. 2 know more about me,myspace,youtube or just google boris g jennings..My num.is 914-616-1181 I would love 2 hear from u ASAP !Thank U... Boris
I know 20% down is a good idea but I think that the bigger questions are 1) whether you are rushing the process just to get the tax credit, low interest rates, and low prices and 2) whether the house is affordable. Rushing to make such a huge financial decision is never a good idea but if you can readily afford the payments - that is meet all your obligations after buying, and you have stable jobs or could replace an income fairly easily or afford the house with one income, then the amount of equity is not so relevant. PMI is no fun but it doesn't last forever. You have probably already done this but it wouldn't hurt to run the numbers under various scenarios including no incentive and no PMI.
I consider myself somewhat conservative as far as mortgages and am getting ready to pay mine off this month but put down less than 20% on our first house. It's useful to look at the entire picture, and also public records to look at tax values, sales histories. etc. Best wishes on your decision (whatever it is).
I checked with my realtor twice and he assured me that the area I was looking at was pro-metachlorian. In fact, I remember reading that as a requirement on my pre-approval letter from the bank. I don't see the PMI - metachlorian connection though. I only put 7% down and I can my telekinesis skills are still intact.
Great article keep it up!
We bought our house three years ago with 10% down. This means we split the cost of the house into two loans--a conventional mortgage and an equity loan--in order to avoid PMI. I'm pretty on top of our finances and don't regret this one bit.
I suspect that a lot of people who are telling you not to buy are not renting right now. Renting sucks. We bought a brand new home under warranty. We have done extremely little to the house--not even much paint. We certainly didn't go out and buy furniture or do any "improvements." However, we are paying less for it than we would to rent. We knew that buying a new home meant that we wouldn't see a lot of appreciation value, but we also knew that we were young and financially disciplined. We've been paying down the equity loan aggressively. When we got to sell, I will be happy if we end up if we coming out ahead if we compare what it would have cost to renting something the entire time. Since we're in a fairly stable market, we will come out a bit ahead of even (including property insurance, etc.). To me, this makes it a better idea than renting.
That said, I also went into the homebuying process with no expectations that this was an "investment" like my 401(k) or something. It's not a depreciating asset like a car, but I do think of my mortgage payment as something I pay in order to live in a place I like that is close to where I work. Not every decision can come down simply to numbers, and I think as long as you realize that and are aware of what you will end up paying, then it can be a good idea.
I think there is a lot of skepticism about home ownership out there right now. But just because others didn't think through their financial situations very well doesn't mean that you won't. I'd run the numbers and evaluate for your specific situation.
NOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOoooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooo..................................!
Don't do it! If you do, all your metachlorians will lose their power and all shall be lost!
That's what happened to me and now I'm a ton ton herder on Hoth. We don't have seasons here. Cold all year long. It sucks.
Mind your metachlorians!
We live in Seattle, where the median home price is $350 - $400k. If you live outside the city, you make up the difference in gas to get around. $70k in cash? Really? If we did nothing else for 6-7 years, we MIGHT scrape that together.
We found a great little turnkey house in the city for $284k and put 12k down. We have ZERO other debt and can afford the mortgage on one income.
You can always drop the PMI once you have 20% equity and refinance - you can get there pretty quickly by accelerating principal payments every month.
You have to go with your comfort zone. If I lived somewhere where houses were $100k, I would absolutely save 20%. It's not always so one-size-fits-all.
And take everything a realtor says with a grain of salt.
I sometimes think that I miss commuting via public transportation - goodness knows that I don't enjoy driving the 50+ miles roundtrip. However, I do recall that while on my old commute into downtown Seattle, I pretty much had to spend the time concentrating on not gagging from the smell of the unwashed masses around me (and I do mean "unwashed"; one guy who got on aroun 23rd was frequently covered in human waste).
There is definitely something to be said for being able to zone out to music, though. The emotional transformation that music can provide is amazing. You can wake up in a terrible mood, and by the time you get to work, have calmed yourself down through listening to some of your favorite tunes. And that goes for drivers, bikers, and riders.
Looks like that link to wikipedia given in the "We're talking historically low." is actually the prime rate rather than the 30 year fixed rate. THe 30 year mortgage rate will be higher than prime usually.
And only a few months ago, people were refinancing left and right at rates below 5%. Over the life of a 30-year, $250,000 mortgage, you'd pay $261,000 in interest at 5.5% vs. $410,000 at 8%. So the rate matters quite a bit. : thanks a lot
My husband and I are also trying to save our 20% down payment for a home. We also may not be able to save this full amount, yet I think we still will be able to purchase one by early next year. I have a couple of thoughts on why paying less than 20% down is sometimes OK:
1.)For many people, 20% may not be difficult to come up with if you live in an area where you can actually find a home under $110,000. I DO NOT LIVE IN AN AREA LIKE THIS, DO YOU? If you live in Southern CA for instance, it will be a long road to making it to 20% of $250K - $300K (a typical starter home price)
2.) How much are you paying in rent? Are you paying way less than what a mortgage will cost? My husband and I figured that we are already paying MORE than what a mortgage will cost on a $250K home. So even if we can't make the full 20% down payment, we will still be paying the same or perhaps less than our current rent.
3.) I fear that waiting until I have my 20% down will actually negatively affect the overall goal of purchasing a home. Again, I live in CA and homes go up and down like a roller coaster. Right now, my husband and I can actually AFFORD one of these homes. If we wait until we have 20% or 30% down, we may again be in a catch-22, meaning by that time, homes will be back up over $400K and we again won't have the money nor be able to afford the mortgage. Is this what you are also concerned about?
I guess my main point is LOCATION, LOCATION, LOCATION. If you live in an area where housing prices have historically remained stable and affordable, maybe you can wait it out. If you live in an area like Southern CA or another volatile city, I would say the sooner the better.
Hope this helps-
Little House
So now..we reach at a conclusion...but hey, are we missing something :-| wolla..i think so. Being an app testing company and giving proper considerations, I think Thrive should also be driven by mobile support apps...specially for iPhone as trend goes..
Wait for my detailed review and test results including performance, usability and functional aspect. Ciao.
Those reasons are exactly why my boyfriend and I decided to buy a house in April. We have a good emergency fund, and we can still afford the house off of one income if need be. The only reason we didn't have 20% yet was that we've only been out of college for a year. (Ok, I'll admit we could have saved up 20% in that year if we made a ton of sacrifices, but you get my point). I feel ok about our decision.
My wife and I were in the same boat as you in May. We only had 13%ish to put down. Technically we could have put down more, but that would have sapped our furniture and emergency funds (a no-no for us).
What pushed us over was that the seller is basically paying the PMI. I probably still would have done it with the price and rate we got.
Between the tax credit and the low prices, I say go for it. You will be able to negotiate the price down even more that what they are asking.
I'm a server and I am not surprised by the strong comments here! Some people seem to feel resentful "having" to tip. As someone already commented, society has invoked this system. Is it fair? Not sure that it is, since the acronym tip means "to insure prompt" service, but it's given after the fact! I do know that if restaurant owners had to pay at least federal minimum wage, than at part of that cost would be passed onto the customer, i.e., higher food prices.
My job is to wait...wait on customers to decide, get off their cell phones while I'm at their table, and all around ensure that they have an excellent dining experience. Most of my customers are very pleasant people & are a pleasure to serve. But yes, their are customers who like to make a lot of special requests and demands, and it's very frustrating when I have fulfilled their needs and they leave a poor tip (less than 15%). I still have to pay taxes on $ I didn't earn, and tip out to support staff (hostess/bussers). Unfortunately, every job has its cons, and if you're a server, you're sure to run into this situation from time to time.
This list really helped me figure out who I want to be rather than what other people want me to be. I will do all of the achievable things on my list and live my 1 life to the fullest.
OK, amend to in most states service staff are not paid minimum wage.
You are operating under the assumption that you deserve a house right now because you are you. Your reasons are just emotional justifications.
I assure you that we are not at the end of the economic fall; don't be fooled into buying because costs are low right now or because some slimy real estate agent wants to make money off of you. And, once we start to recover, do you really think housing prices will rise as astronomically as they've done over the past decade? If you think that's the case, can you also tell me how the US will provide jobs to the millions left unemployed from this mess? If nobody is earning money, nobody is buying houses. Unless you think a new economy is going to show itself in the next year or two, I don't think you have much to worry about when it comes to housing prices in the near future.
Honestly, not everybody should be a homeowner. This is being made perfectly clear with all the foreclosures. Stick to sound economic principles, don't let emotion rule you, and try to get through this mess without losing your head. You are far luckier than millions of people out there; think about that for a while before you jump into something for which you may not be ready.
I cannot WAIT until I have children, specifically so I can give them bad haircuts. It's a genetic thing. The Polish part of me can't resist too-short bangs.