So I can get a loan up to 300k at 5.454% with PMI (escrow, property tax)

[MobiusStrip]

I don't want to spend over $240k though. Why would I want to wait and spend $1500-1600 a month on rent while trying to save 20% down? I still can't make waiting add up. As long as I use part of my annual bonus as a couple of extra payments, I should be out from under PMI in 5 yrs or about $16000, less than I would pay renting for a year. How does it make sense to keep renting? I must be missing something since the general advice here has been to rent first and save even though I am entering my dotage and eager to have a paid off house in my lifetime (my hope is to pay on about a 20 year schedule for 15 years then pay less for the next 10 or so.)

[LookingInRichardson]

You can only get out of PMI with a conventional loan, so make sure you aren't dependent on an FHA loan. Otherwise you would have to refi in order to get a loan without PMI. If you are paying the same amount in rent as you would be for a property, go ahead and make the jump. I think a lot of people on here suggest renting do so for people coming in from out of town unfamiliar with the area. With the inflation of rent over the past several years in DFW you probably would be smarter to buy now if you are ready.

Just keep in mind, property taxes could put a crimp in your plan. Our mortgage payment actually went up a couple hundred dollars a month after year 1 due to an assessment increase after our purchase.

[Rakin]

I just talked to a really good lender and refinanced.

You should do the same and not ask for opinions on the internet.

[Threestep2]

Originally Posted by MobiusStrip

I don't want to spend over $240k though. Why would I want to wait and spend $1500-1600 a month on rent while trying to save 20% down? I still can't make waiting add up. As long as I use part of my annual bonus as a couple of extra payments, I should be out from under PMI in 5 yrs or about $16000, less than I would pay renting for a year. How does it make sense to keep renting? I must be missing something since the general advice here has been to rent first and save even though I am entering my dotage and eager to have a paid off house in my lifetime (my hope is to pay on about a 20 year schedule for 15 years then pay less for the next 10 or so.)

Do you ever read anything or just rant on? Full moon is not until next week.

Why would "a couple of extra payments" make PMI go away? Yes, you are not missing something but what seems to be the financial side of the whole concept of home purchase and ownership.

[MobiusStrip]

Originally Posted by LookingInRichardson

You can only get out of PMI with a conventional loan, so make sure you aren't dependent on an FHA loan. Otherwise you would have to refi in order to get a loan without PMI. If you are paying the same amount in rent as you would be for a property, go ahead and make the jump. I think a lot of people on here suggest renting do so for people coming in from out of town unfamiliar with the area. With the inflation of rent over the past several years in DFW you probably would be smarter to buy now if you are ready.

Just keep in mind, property taxes could put a crimp in your plan. Our mortgage payment actually went up a couple hundred dollars a month after year 1 due to an assessment increase after our purchase.

It's a conventional loan. Yes, I am not looking forward to property taxes going up but hope my raises keep up with them!

[MobiusStrip]

Originally Posted by Threestep

Do you ever read anything or just rant on? Full moon is not until next week.

Why would "a couple of extra payments" make PMI go away? Yes, you are not missing something but what seems to be the financial side of the whole concept of home purchase and ownership.

....because when you've reached 20% equity on a conventional mortgage, you no longer have to pay PMI. And making 14 payments a year instead of 12 makes that happen much more quickly, yes?

[jdallas]

Originally Posted by MobiusStrip

It's a conventional loan. Yes, I am not looking forward to property taxes going up but hope my raises keep up with them!

Unless you receive a 20% raise every year, the tax and insurance increases will greatly outpace your income.

[TheOverdog]

Unless you receive a 20% raise every year, the tax and insurance increases will greatly outpace your income.

You need to switch insurance companies.

[Threestep2]

Originally Posted by MobiusStrip

....because when you've reached 20% equity on a conventional mortgage, you no longer have to pay PMI. And making 14 payments a year instead of 12 makes that happen much more quickly, yes?

Please google a mortgage calculator or see a broker.

[beerandon]

You make a good case for pulling the trigger now. I will share my experience. I bought my first house on FHA with a measly 3% down right before the bubble burst in '08 (bad timing!) and I still came out pretty good 8 years later when I was ready to buy my forever home. On the second house, I ended up putting a much more respectable 33% down. My escrow went down during those 8 years in my first home due to the bust, so my payment never really changed for the worse; other than after the first year, which is typical anyway. That's different now with the crazy increases in property values of late. Which brings up another point, the house you could afford now, you might get priced out of by the time you have finally saved up. I would obviously say it is most ideal to have 20%, but it can still be done without. The risk you take is you will be upside down for a while when you consider realtor fees and all that comes with selling, but it sounds like you have a plan to pay extra principle. That worked out well for me and I was able to refinance later.

Being upside down is when people in a jam walk away, unfortunately. We bought well below our means the first time for this reason. From reading your post, it doesn't sound like you're looking for just a starter house, so buying well below your means might not be an option either. You'll have to find some sort of balance there to be happy in it for a long time or possibly forever. If you have a partner, and if possible, it would be wise to get into a payment that can be made on one salary should either of you lose your job. Property values seem to be outpacing salaries here, so that may not be possible anymore and I don't know your situation. Good luck!