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Meanwhile,while you are saving for the 20% down payment,your rent might be $1500/month.
So you are in effect losing money while saving for the down payment through renting.
But if you bought earlier you'd be losing money on PMI, interest for those additional years (net of appreciation), property taxes, maintenance and repair, insurance, HOA dues, landscaping, possible capital improvement (depreciable), the value of your own time, etc.
I did not mean to say they caused it. And I realize that minimum down payment mortgage loans have been around for a long time - particularly for Veterans.
But that's not to say that they should be given out so easily. And I think we can ALL agree that it was part of the problem in 2008.
I don't think too many people applying for these loans would agree that they are "easy" to acquire.
As far as 2008 goes, the "A paper" min down loans were more of a casualty than a cause. It was the greedy pig wall street low doc, no doc, negative amortization Alt-A, B, C, D paper and shady rating agencies that caused the meltdown. So no, I don't agree.
But if you bought earlier you'd be losing money on PMI, interest for those additional years (net of appreciation), property taxes, maintenance and repair, insurance, HOA dues, landscaping, possible capital improvement (depreciable), the value of your own time, etc.
I read the story. It is for a loan no larger than $417,000. Good luck with that in my area. These 52 year old homes in my area are approaching $500,000 and that is for a modest home.
As for us we were first time buyers that put down 3% to buy out home near the end of 2010. Best year to buy in the past 15 years I am thinking. We have a low interest rate, we do pay PMI although that is coming off soon. The best part and the reason we were kind of forced to buy a home, our rent was higher than the cost of buying a home. Now rents are way more than what we pay for the home. This is local to our area. We could rent out the house for $700 more a month than it cost us to pay the mortgage, taxes, PMI, and insurance.
No, if you buy the house 3 years earlier, you are paying ALL expenses for 3 ADDITIONAL years. None of them build equity, so they are just as much a waste as rent. Only appreciation and principal payments build equity.
No, if you buy the house 3 years earlier, you are paying ALL expenses for 3 ADDITIONAL years. None of them build equity, so they are just as much a waste as rent. Only appreciation and principal payments build equity.
So I take out the loan 3 years ago instead of today....now I only have 27 years of interest and payments left instead of 30. If I keep renting I am simply paying the landlord's taxes, repairs, etc. for the 3 years.
It depends when you buy and your situation. Realize we bought a home near the bottom of the market and we had a great interest rate. We had to find a bigger place. Renting or buying we had to do something. We chose to buy a home and it was the best thing we have ever done. Homes on our street and in the neighborhood are approaching $500,000. Our home had a soft appraisal at over $167,000 over what we paid.
Our motivation to buy was when our rent was going to be the same as the house payment. Now rents for the same apartment are about $400 more a month and our house payment is the same. We are locked in with the 30 year mortgage. Rents for homes have increased as well and when we found we could rent it out and have an income that is a big benefit as well. Not that we plan on doing that. We still need to live in this home.
What I am saying is that paying PMI may have hurt but it does have an end and if we had waited we would have been so much further behind than we are now.
Person A- buys the home with 3% down at 3.8% interest,property taxes $5600/yr=
$1256 a month which includes PMI
Person B-Buys home with 20% down at 4.6% interest rate,property taxes $5600/yr=
$1081 a month
The $175 difference does not seem like a big deal.
Why is your interest rate higher for the 20% down house? Is this your assumption that rates will rise while you're saving? There's really no reason for that assumption, interest rates could go either way.
Regardless what's wrong with this example isn't the difference in monthly payment. It's the assumption of risk. You're only thinking about your monthly bills, you aren't thinking about what happens when you lose your job, have a serious illness, or need a new roof.
I don't think too many people applying for these loans would agree that they are "easy" to acquire.
As far as 2008 goes, the "A paper" min down loans were more of a casualty than a cause. It was the greedy pig wall street low doc, no doc, negative amortization Alt-A, B, C, D paper and shady rating agencies that caused the meltdown. So no, I don't agree.
You don't blame the people who borrowed that money at all?
You don't blame the people who borrowed that money at all?
This is the United States. We can't blame the people that hold the fault! They're the victims!
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