Opinions on Northern Virginia and housing "rules"

[djmont]

Originally Posted by SallyField

When banks are giving away cash, take as much as you can. Put down whatever gives you a favorable rate and absolutely do not put down more than that.

But they're not "giving away cash." They're loaning it to you at 5% (give or take). Where else are you going to earn a guaranteed 5% with your money?

[oneasterisk]

Originally Posted by djmont

But they're not "giving away cash." They're loaning it to you at 5% (give or take). Where else are you going to earn a guaranteed 5% with your money?

It isn't guaranteed, hence numerous banks going under for holding bad loans. Not everyone pays their debts...

[djmont]

You misunderstood. I'm talking from the perspective of the consumer. By putting more money down, and thus borrowing less at 5%, you're paying less interest. The impact on your bottom line is the same in that scenario as if you were earning 5% on your money (the money you saved instead of using for the down payment). Five percent on savings/investments has gotten really hard to come by in today's market. Thus it can often make sense to put more money down, rather than holding the funds in reserve, where they do very little for you.

[LamontS1]

If you are going from renter to homeowner, you'll might need cash for things like blinds (could need a lot of them and they can run you many thousands of dollars), a washer and dryer, lawn equipment (lawn mower, weed whacker, sprinklers), cleaning supplies (good vacuum, Bruce hardwood floor cleaner, air filters), furniture (you'll need to fill all those rooms with something), etc. Many people put themselves in a bind by buying too much house and/or making too big a down payment, then they end up with a nice house with paper blinds and Ikea furniture (or worse).

[Jlyles]

Don't take it personally. That's difficult advice to take, I've been there.

That said, I've been criticized as well, by those professionals who have probably half the transaction numbers. It's all relative, and "local"! A very fine mortgage professional spoke very well on the numerous products that were perfect for certain clients ... don't let others speculate on information gathered by a few newspaper articles (very broad brush). Many of my clients are FHA (4.5%) or VA and will do just fine.

Originally Posted by jillabean

I am buying a house here and putting 20% down--as we all know, no matter what the home, in NoVa that's a lot of money and it wasn't easy to gather it all.

Anyway, I was on financial forum and contemplated putting 15% down instead of 20% so as not to use up all my cash reserves and asked for opinions (mainly about the PMI I would have to pay since my interest rate would be the same).

There were exceptions, but I was pretty much chewed out for asking to have things "handed to me" and that I should put 20% or more down! That I was irresponsible, etc, etc, for even contemplating such a thing. That I (personally from the sound of it) was the cause of the whole housing collapse. And to top it off, they even scolded me for paying as much as I do in rent because it's more slightly more than 25% of my take home income (ironically, a mortgage payment with 20% down, for me, ends up being less than my current rent).

Anyway, it kind of bugged me. But then again, I wondered if the people "scolding me" had any appreciation for the fact that my down payment here is more than a lot of houses cost in other parts of the county. Are they even in the same reality as we are here in NoVa as it were? I just envision some guy in a $120k house in the Midwest (which would sell for $500k here) wagging his finger at me because I *only* saved $88k for a house when he probably only put up $24k for his.

What are your thought on "housing rules" and how they apply or don't apply to the NoVa housing market? Should I even bother asking for tips or advice from the rest of the county? I think, except for other markets like ours, that we are playing by a different set of rules here.