Mortgage decisions (PMI, loan, premium, loan)

[2040f]

The housing expenses will be 43% of my monthly income before tax if I accept the mortgage they are offering me. PMI and raising rates are killing the deal. Alternatively I can deplete all my savings and decrease monthly payment to 40%. (less PMI and PI payment but still PMI exists)

I wanted to keep the savings for repairs and as a buffer. There are some critical repairs that seller's lender (it's short sale) is refusing to make.

I'm hoping that I have relatively stable job and I like the house. I would stay there for a while. I have waited a bit for this but the current climate is not good for lending.


There's a third option that a family relative can loan me money to pay 20% down that would take my payments to 35% but then I'd have to pay him. But it would not go to the insurance premium but toward the house directly. It would be the same scenario more and less like 40% one since I'd have to use all savings.

What would you suggest? Take the risk and in a few years with increased income hope to be OK? Or walk away? If the house prices will keep raising (rates too) I might be able to afford a similar house for a long time.

[sj08054]

Buy a less expensive house.

[timthegreat]

Walk away. This house will make you "house poor".

[2040f]

Thanks. Walking away from this and trying to get something lesser seems the best.

[EvanMLO]

Hey 2040f, it really depends what you plan to do in the long run.... if you are looking to semi-flip the property... ie you plan to sell in 10 years or less it mayyy be worth it.

stretching yourself too thin from the get go is only a worthwhile gamble if you have a good exit strategy

[clutchrider]

Wow 43% BEFORE taxes!?!?! When I did our budget I worked off of NET income, I advise you do the same since before tax money is a myth for affordability.