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I've been lurking around the old threads and it seems like on on here it is more common people don't put down 20% rather than the other way.
I know it is possible to put down as little as 3% or even 0% if you're a veteran. However, I could never imagine doing it. But I like to be open minded. Maybe I'm missing out.
For folks who put down a very, very small amount what were your reasons for doing so? How did it benefit you? Or is it something you soon regretted?
Do you refer to the generally more cash strapped FIRST time buyers?
Or are you including the move-up and retiree move-down sort usually with some accumulated equity?
>Some people just don't have 20% for a down payment.
>Money is cheap, and has been for years. Why tie up cash when money is so cheap.
>Oddly, it sometimes is possible to get a better rate with less than 20% down. It didn't used to be that way, but sometimes it is that way.
Do you refer to the generally more cash strapped FIRST time buyers?
Or are you including the move-up and retiree move-down sort usually with some accumulated equity?
Talking about exclusively on this forum it seems to be across the board. There are some threads with folks putting 20% but it’s less common than the other way around. And the only threads where folks put down more than 20% are threads specifically about putting more than that much down
Just an observation.
Another odd one I find are threads where folks buy houses for $400K or more and then everyone else acts like they’re a madman and $400K gets you a castle. As a resident of the Greater Boston area I can tell you this is not the case here lol. Some of these threads sure make me want to move though. I was just browsing one from a few years ago where a house cost $25K. I don’t care if it’s in the middle of the desert, that one sure sounds good to me But again as a Greater Boston resident you can pay $600K for a house here and just get 3 bedrooms and a regularly flooding basement
For folks who put down a very, very small amount what were your reasons for doing so? How did it benefit you? Or is it something you soon regretted?
The first and only home I purchased back in the 99 was purchased with 0% down. We still live in the same home today. I was only 6 months post-graduation, new to the state, and my accommodations fell through . My real estate agent (and a personal friend) said the area has been increasingly appreciating in home cost for a while and she only said it will get more expensive quickly. You can always renegotiate the interest with the bank later on, but the initial purchasing price is always set....
As such, that's what we did... My initial interest rate was 8.25% and I had to also pay for PMI. I even borrowed from friends/family, sold stuff, and used credit cards to cover the cost of closing and such. Banks were willing (not sure today) because I was a college graduate (earning potential) with clean credit, had a job, and no college loans (worked.. paid tuition.. lived meagerly through college). My real estate agent chose a wonderful town that was on her short list when she was looking for a home. I struggled as a first time home buyer back then... I was used to it... it wasn't too long before that i lived in an illegal apartment... the house was nearly void of furniture for a while.
Sure enough.... 2 years later, the home's assessment (plus a little more down) allowed me to remove the PMI. Over the years, we refinanced a couple times and now sitting at 3%.... I will be fully paid off between 1-2 years from now... way shy of the typical 30 years people typically carry. We've been paying more than minimum payment.
I was a naive back then (my personal friend is older ie.. wiser than I) and I wasn't all sure it was a good decision. Reflecting back... probably the best financial decisions I made.... getting into the market while housing was affordable. My monthly payment today towards mortgage, tax and insurance is still cheaper than renting apartments in my area. Had I been looking for a home later on, I'd probably give up, quit my job and head back to my home state.
Now keep in mind, we are a very frugal family.... the home is only 1000sqft 2 bed / 1 bath and we are now a 5 person family. We decided that the area is now too expensive to get into a bigger home.. so we made things work and do fine living tiny. Even back then was considered a starter home. Credit is not a bad thing... it is how you use it. It is very easily for a person to over leverage themselves doing something similar with a much more expensive property resulting in a financial mess later on.
Because the cost of homes has risen so much that few buyers don't have 20% cash of the cost of homes. The only way most buyers can generate down payments is to have had a home previously that appreciated in value.
There's nothing more unworthwhile than having to pay big PMI premiums because the down payment was below standards. It's a complete waste of money.
I was fortunate to have made good money on selling/trading homes. And I'm now old. Sometimes financial stability comes with time.
Because the cost of homes has risen so much that few buyers don't have 20% cash of the cost of homes. The only way most buyers can generate down payments is to have had a home previously that appreciated in value.
There's nothing more unworthwhile than having to pay big PMI premiums because the down payment was below standards. It's a complete waste of money.
I was fortunate to have made good money on selling/trading homes. And I'm now old. Sometimes financial stability comes with time.
This is very true! PMI SUCKED!!! Glad I was able to get rid of it sooner than later but we bought a relatively inexpensive home even back then's standards. I think way too many home buyers over-leverage themselves with a big / expensive home. In my case, timing was important. Sucking it up with PMI allowed me to get into the market sooner than later.
As a resident of the Greater Boston area I can tell you...
Some of these threads sure make me want to move though.
You should. Or figure a way to earn enough to actually AFFORD to live there.
Affordability goes beyond any one line on our budget scheme. It's comprehensive.
Only when the totality of our housing costs align with the reality of our net income...
only then can we say that $X spent is affordable vs a specific $Y earned.
Do you refer to the generally more cash strapped FIRST time buyers?
Or are you including the move-up and retiree move-down sort usually with some accumulated equity?
Quote:
Originally Posted by usayit
This is very true! PMI SUCKED!!! Glad I was able to get rid of it sooner than later but we bought a relatively inexpensive home even back then's standards. I think way too many home buyers over-leverage themselves with a big / expensive home. In my case, timing was important. Sucking it up with PMI allowed me to get into the market sooner than later.
Yeah PMI looks like one major drawback of biting the bullet rather than keep renting. It really goes toward nothing and with more saved you can eliminate it altogether. Of course there are also many arguments to buy a house (any house) rather than keep saving. As your example shows it can work out beautifully.
I am a little curious though how you manage a family of 5 with just 2 bedrooms. If it’s just 2 bedrooms with 3 kids I’d imagine all the kids are in 1 room.
You should. Or figure a way to earn enough to actually AFFORD to live there.
Affordability goes beyond any one line on our budget scheme. It's comprehensive.
Only when the totality of our housing costs align with the reality of our net income...
only then can we say that $X spent is affordable vs a specific $Y earned.
Meh I make enough to live here, but $25K is always going to be less than $600K or $400K or whatever houses are selling for in my market. It’s fun to daydream about and fawn over the idea I could literally get 20 houses for what 1 costs here but it’s just not practical with all the open ended questions. Where is my job going to be for one?
And if you're not ever going to actually own then why does any of it matter.
It's largely the same with cars (buy or lease) ... it's all about the payment plan.
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