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How long would it take you to pay off the $2,000 in credit card debt? I know I am in the minority here, but I would pay that off first so you don't have to get an 80/20 loan (meaning you would have two mortgages and the 20% is usually a significantly higher interest rate). The market is not going to get much better in most areas of the country for quite some time so there will be deals. Plus, another homeowner buying incentive may happen again. Believe me, it will be so much easier to save for that downpayment once that $2,000 is gone.
If we had it to do over again, I would have waited longer to buy our first house. Even though we bought a new house, there were still some unexpected expenses we had to deal with and if we had a larger nest egg, it wouldn't have been nearly as stressful. Only having the house expenses and not credit card expenses and DH student loan expenses would have been really nice. They became a lot more difficult to pay down once the house was in the picture.
I love how everyone acts like buying a house isn't a big deal...because it really is. Just because it may seem like you can get a good deal on a house doesn't make it even more worthwhile. Waiting is okay...
How long would it take you to pay off the $2,000 in credit card debt? I know I am in the minority here, but I would pay that off first so you don't have to get an 80/20 loan (meaning you would have two mortgages and the 20% is usually a significantly higher interest rate). The market is not going to get much better in most areas of the country for quite some time so there will be deals. Plus, another homeowner buying incentive may happen again. Believe me, it will be so much easier to save for that downpayment once that $2,000 is gone.
If we had it to do over again, I would have waited longer to buy our first house. Even though we bought a new house, there were still some unexpected expenses we had to deal with and if we had a larger nest egg, it wouldn't have been nearly as stressful. Only having the house expenses and not credit card expenses and DH student loan expenses would have been really nice. They became a lot more difficult to pay down once the house was in the picture.
I love how everyone acts like buying a house isn't a big deal...because it really is. Just because it may seem like you can get a good deal on a house doesn't make it even more worthwhile. Waiting is okay...
Nice to voice some valid concerns, but just becuase you wish you would have waited to purchase does not mean that it the best plan for someone else.
Nowhere did it say the OP was looking at an 80/20. And just to let you know those are not even available in the market today.
Lastly, I don't see how getting rid of a credit card with a $40/month payment "be so much easier to save for that downpayment once that $2,000 is gone".
If your housing payment will be comparable after closing and you can continue to deleverage after moving in, then consider it.
If an FHA loan with 3.5% down (which means you're immediately underwater when you turn the key in the lock) puts you in a position where you're spending much more on the housing nut, plus the extras a house brings, plus the need to buy stuff like furnishings (things you'll be tempted to throw on a CC) - you should think long and hard about it. You probably should completely deleverage before you buy your 1st house. Everything costs more then you think it does.
Plus, don't let the low interest rates and "reasonable" home prices make you think either is going up any time soon.
If your housing payment will be comparable after closing and you can continue to deleverage after moving in, then consider it.
If an FHA loan with 3.5% down (which means you're immediately underwater when you turn the key in the lock) puts you in a position where you're spending much more on the housing nut, plus the extras a house brings, plus the need to buy stuff like furnishings (things you'll be tempted to throw on a CC) - you should think long and hard about it. You probably should completely deleverage before you buy your 1st house. Everything costs more then you think it does.
Plus, don't let the low interest rates and "reasonable" home prices make you think either is going up any time soon.
Crazy question... if you put down 3.5%, how are you immediately underwater?
What if they got a good deal on the house from a seller eager to sell due to job transfer or something else. They could just as easily have more equity in their home.
Your post implies that everyone that puts down 3.5% is underwater... that is wrong.
Nice to voice some valid concerns, but just becuase you wish you would have waited to purchase does not mean that it the best plan for someone else.
Nowhere did it say the OP was looking at an 80/20. And just to let you know those are not even available in the market today.
Lastly, I don't see how getting rid of a credit card with a $40/month payment "be so much easier to save for that downpayment once that $2,000 is gone".
You need to have a downpayment for a house of 20% still or you have to take a loan out for it. Otherwise known as PMI which is always at least 20% and separate from your traditional mortgage - thus one mortgage will be 80% and the other will be 20% or whatever the companies she goes through offers, I am not stating that someone has to get an ARM or an 80/20 loan or anything like that. But, you do have to have 20% down. No plan is one size fits all but most banks even now want the 20% down - otherwise they extend higher interest rates. Are you a real estate agent, or mortgage broker because you sure seem dead set on her buying a house right away.
Buying a house is a priviledge - not a right and just because someone can afford the payments doesn't mean that they should buy a house. It is a long term investment and there are many things to consider...not just if you can afford it financially.
What if they got a good deal on the house from a seller eager to sell due to job transfer or something else. They could just as easily have more equity in their home.
Your post implies that everyone that puts down 3.5% is underwater... that is wrong.
I disagree... A "good deal" in a declining market is subjective and "value" is only known just in time when you find a suc- (er buyer) to take it off your hands.
More often then not in RE, you get what you pay for. You're not stealing something that you'll turn around and get insta-equity in... That's a bubble philosophy.
Alley, PMI is not always 20%... PMI is insurance you pay where if you default on the loan the lender doesnt lose money will they sell your house in foreclosure.
Also, VA and USDA loans allow for 100% financing with no monthly mortgage insurance. You dont have to have 20% down... FHA allows for only a 3.5% downpayment and a loan for 96.5% of the purchase price(plus a 1% fha fee is added to loan.) I know of 0 lenders that require 20% down on a primary residence... they will on a investment property.
Not to defend Tim as he will be able to do that himself, but it is a great time to buy. Home ownership is not a right but sure beats renting.
I disagree... A "good deal" in a declining market is subjective and "value" is only known just in time when you find a suc- (er buyer) to take it off your hands.
More often then not in RE, you get what you pay for. You're not stealing something that you'll turn around and get insta-equity in... That's a bubble philosophy.
Who said he is buying in a decling market? S&P/Case Shiller Home Price index has shown many parts of the country where home values are going up. You are assuming and you know what that does.
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