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What worries me is the inflation. How can one protect one's savings so that the value of it remains constant with the ever-rising prices?
I would have preferred to wait a few years before buying, but I just don't have any confidence in the investment tools out there that will hold the value in case we see higher inflation rates over the next few years.
It would be devastating to see my savings, which I'm going to use as a downpayment, basically vanish.
What worries me is the inflation. How can one protect one's savings so that the value of it remains constant with the ever-rising prices?
I would have preferred to wait a few years before buying, but I just don't have any confidence in the investment tools out there that will hold the value in case we see higher inflation rates over the next few years.
It would be devastating to see my savings, which I'm going to use as a downpayment, basically vanish.
If you want to hedge general inflation, then Google TIPS.
I'm 28 years old and need about 4 more years to save money so that I can make a 20% down payment on a starter home that's about $200,000+. That means I won't be able to buy my first house until I'm 32! I don't want to do FHA because the monthly payment is significantly higher, and the PMI is outrageous at about $180 a month these days. Yes, things are expensive in New England.
Anyway, my concern is this. I understand that home values have already bottomed out and are starting to rise again. Does this mean that in four years from now (2017), prices will be so high, and I won't be able to get a deal on a home? Will my salary likely increase in correlation to home prices? In other words, since it's going to take me four years to save up for the down payment, does that mean I will have missed the boat and I will be screwed? And interest rates will be higher? I mean, what a shame......does that mean I shouldn't even bother saving for a down payment?
It is not 20% or FHA only. You can go 5% or 10% down on a conventional loan and the mortgage insurance is much cheaper than FHA. Not saying you should rush in, but check this option out.
OP, hang on there a second and I will dig my crystal ball out of the closet.
I would be less worried about home prices than about interest rates. A couple of percent makes a big difference in the monthly payment and final total cost. On the other hand, I really loathe paying for that mortgage insurance, so I always make enough of a down payment so that I don't have to pay it.
My suggestion is to look at smaller cheaper homes. Not what you want, but the game is to use that smaller home to trade up later. As the price on that house you want goes up, so will the price on your smaller place. The difference between the two values will remain fairly close to the same. That protects you from the price increases.
Also, you are young. You should be able to buy a cosmetic fixer and do the painting and cosmetic repairs yourself. That adds value. Learn how to garden and turn the yard into a show place. That adds a bit of value, too, and makes your small house very quick to sell.
what is your relationship/family status? i would think that would play a big role in your decision. i bought a house at 25 while single, but i live in an area with low housing prices so it just makes sense since my mortgage is so much lower than my rent would be for a comparable place. when i get married and start thinking about kids we will probably move on to a different place.
It depends on where you live, although buying a house is NOT an absolute necessity for millions of us, who are prevented from moving to an area of the country with a stronger economy and employment picture because of that albatross known as a mortgage tied around their throat.
no if you wait, if you save, you will see the banks dump billions in real estate on the open market which they can no longer affort to keep off of radar. when that happens you must have the money in your pocket no bank loans.
no if you wait, if you save, you will see the banks dump billions in real estate on the open market which they can no longer affort to keep off of radar. when that happens you must have the money in your pocket no bank loans.
This has been the subject of much speculation for the past 5+ years. There's no reason to believe after what we've seen that banks will put an unmeasured stream of homes on the market. For one, there just isn't a huge supply of vacant homes anymore. The last 4 years of record low home building significantly cut down on supply from years of overbuilding. Furthermore, the majority of homes with defaulted loans are still occupied. While these home may be coming on the market, they don't represent excess supply. The people living in them now have to move somewhere, fueling demand for rentals. Some local markets may see excess supply going forward, but it's not going to be across the board.
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