Renting or living with mom and dad a few more months in order to save more money (to put towards the house) is a bad idea?
Adding more money to your payment (P.M.I.) is acceptable?
Adding more money to your payment (P.M.I.) is acceptable?
20% downpayment on a new house
- Thread starter ParamedicMXr
- Start date
The PMI payment may be lower than waiting a few months and getting a higher interest rate or housing prices continue to climb.
What's wrong with locking in your rate or at least finding out how long your lender will lock it in?
Look what got us in this mess: People buying houses they couldn't afford.
Look what got us in this mess: People buying houses they couldn't afford.
Yeah I think it is. Rates have jumped up 1.5% in less than 6 months. That's thousands of dollars out the window. PMI isn't permanent.
What would be wrong with locking in a rate? Plenty of people do it. Interest rates are a gamble.
Where I come from I want to have as much equity in my house as possible and I want as little as possible being paid in insurance, interest, etc.., How about you?
But a down payment isn't the deciding factor.
Apples to oranges I know, but do you feel the same way about vehicles?
I take it you don't own a house? have you ever owned a house?
You can only lock in a rate for so long...
In a perfect world, yes. I would want as much equity as possible but it doesn't always work out that way, especially for first time home buyers.
Typing from it right now.
Forget P.M.I. for a moment. Look at the interest paid over the life of the loan.
Someone asked about a car. That's a throw away product. People look at a house as an investment.
A $300,000 home with a interest rate of 3.5% is a $1,347/month payment. The same house with 4.5% interest rate is $1,520/month. The difference is $173. Stretch that out for 30 years and you are left with a $62,280 difference. So you can either wait and save up an extra $10k to have no PMI or just pay PMI for a couple years...
I know it's a throw away versus an investment and there's no PMI or equivalent, hence admitting it's apples to oranges, but it's still a valid question in the sense that if I can't afford a set percentage for a down payment, are you saying I can't afford the car? And what is that percentage?
On your forget PMI and to just look at the interest over the course of the loan, what's your point again? Sure everyone wants the most equity and as little interest as possible, but sometimes it's just not that easy. Anything I can put 20% down on I wouldn't recommend my worst enemy living in, but rest assured I'll own a house one day.
People tend to only look at the here and now and completely ignore how much interest they'll be paying over the life of the loan whether it's buying an automobile or a house. You being able to afford a car for a few years is a bit different than affording a mortgage for 25 or so.
We have a pmi on our home, its $169 a month. It doesn't bother me because it will eventually go away and its a tax deduction just like your mortgage interest.
interesting your "why not lock a rate in" threw me off. NO ONE locks in an interest rate longer than 30 days 45 days max and that is very very rare.
your down payment has ZERO to do with being able to afford a home. I bought my house with 3% down and it wasn't even my 3%. I could afford the house expenses but had zero money for down payment, closing costs or anything else LOL! yeah I paid PMI for a bit but who cares? I had my own home and am still in it 12 years down the road.
as far as interest, that is tax deductible so you get a tax advantage as well so your real interest cost is somewhat less.
Thats the way I see it.
I rather pay PMI for 5 years locking at a 5% rate than no PMI with a 6% rate for 30 years.
You are incorrect with your 45 day max.
Your down payment can mean the difference between paying for the mortgage every month and not being able to do so. I ran the numbers when I bought my house. There was a nice difference between having the 20% and not having the 20%. That interest and PMI is more shit going to the bank and not to you. Eventually you get the PMI removed.
Your down payment can mean the difference between paying for the mortgage every month and not being able to do so. I ran the numbers when I bought my house. There was a nice difference between having the 20% and not having the 20%. That interest and PMI is more shit going to the bank and not to you. Eventually you get the PMI removed.
I stand corrected. seems 30-60 is the industry average. but even at 60 with an extension if you can get it you are not going to be able to save another 5-10% for a down payment.
this is obvious and totally misses my point. I said how much your down payment is has zero to do with whether or not you can afford a mortgage. as I said I could easily afforded my mortgage and house expenses with 3% down. 20% would have been even better but I didn't have 3% let alone 20%. I was quite happy to get in at 3% and pay PMI for a few years.
again you are stating the obvious. but not everyone that can afford the costs of home ownership has 20% down. which goes back to my point that having 20% down really has nothing to do with weather or not you can afford the house. yes it makes it easier for some but if you don't buy more than you can afford you don't need 20% and paying PMI is a small price to pay for having your own home, IMHO
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That I can't tell you but they are out there. Plus, there are even greater lock in periods for people building houses. Of course it all depends on the lender and such.
Your situation is not the situation of everyone else though. We got into a lot of trouble by granting mortgages to people who either didn't have a proper income, didn't have a down payment, etc.., If that extra 10% is going to break you, wait until you own a house and see all the other unseen expenses such as increasing taxes, repairs, etc.., Because you can get a mortgage doesn't mean you should.
Think of something else for a moment: What's the general rule in terms of how much savings you have in the bank in case of a job loss, illness, etc.., that would allow you to pay your mortgage.
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sorry I am not buying it. from what I have experienced it was 30 days. the industry average seems to be 30-60. when you are building a house you get a builders loan not a mortgage and the rules are a bit different. Any bank locking in for longer than 60 days without adjusting the rate is shooting themselves in the foot. and any homeowner that does without some serious reasons is just stupid. interest rates bounce more than candy samples tits when she walks. and a bank locking in longer than 60 days stands to lose thousands of dollars on one loan, potentially millions over their customer base. so I am not buying you being able to lock in an interest rate long enough to save up that additional 10% down payment.
Just like my scenario I listed earlier.
I bought in '08, have 6.5% interest rate, and pay about $1600/month for P & I only. I can't refi because the market dropped and I don't have 20% equity in my home....so I'd have to put a huge payment to refi today. I'm above water, but just barely, so when I sell it, after commission, I'll break even.
But then, I don't have much to put down on a new place. I can only do about 15% right now. That said, the same $1600\month with todays 4.5% adds nearly 100k to the overall purchase price I can afford, which is the reason we're looking. The market is just so good right now, that I'm afraid to pass it up because I don't have the 20% to put down.
I bought in '08, have 6.5% interest rate, and pay about $1600/month for P & I only. I can't refi because the market dropped and I don't have 20% equity in my home....so I'd have to put a huge payment to refi today. I'm above water, but just barely, so when I sell it, after commission, I'll break even.
But then, I don't have much to put down on a new place. I can only do about 15% right now. That said, the same $1600\month with todays 4.5% adds nearly 100k to the overall purchase price I can afford, which is the reason we're looking. The market is just so good right now, that I'm afraid to pass it up because I don't have the 20% to put down.
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