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Started By
Message
5% or 10% down ??
Posted on 1/8/13 at 1:19 pm
Posted on 1/8/13 at 1:19 pm
First home for my wife and I.. Can't do 20%. Without exceeding DTI ratio, we can afford something $250k+, but we are looking at houses that are $200-$225 tops..
We have enough for 10% DP, but because we don't expect this house to be our last, I'm wondering if maybe we should just put down 5% instead, and pay the higher note with the expectation that we will be selling the house after 3-5 years. I don't expect to be in the house long enough to realize the savings of spending an extra $10-12k on the down payment. I'd much rather have this money in our back pocket for emergencies, vehicles, etc.
The only thing that worries me, is when interest rates go back up, I think home prices will have to go down.. I'm scared we'll get stuck with a house that has stagnant value and end up owing out of pocket if we try to sell it...
Any advice from the MT gurus?
We have enough for 10% DP, but because we don't expect this house to be our last, I'm wondering if maybe we should just put down 5% instead, and pay the higher note with the expectation that we will be selling the house after 3-5 years. I don't expect to be in the house long enough to realize the savings of spending an extra $10-12k on the down payment. I'd much rather have this money in our back pocket for emergencies, vehicles, etc.
The only thing that worries me, is when interest rates go back up, I think home prices will have to go down.. I'm scared we'll get stuck with a house that has stagnant value and end up owing out of pocket if we try to sell it...
Any advice from the MT gurus?
5
Posted on 1/8/13 at 1:26 pm to jmcwhrter
quote:
we will be selling the house after 3-5 years
quote:
end up owing out of pocket if we try to sell it...
With those two lines, there are good chances you will end up paying out pocket regardless. The first 5-10 years of your loan you will be paying mostly interest anyways.
I would either (a) look for a nice apartment, while saving everything you can or (b) look for a house that is considerably less than $200k.
That seems like a lot of house for two people, of course not knowing the housing market where you live.
Posted on 1/8/13 at 3:45 pm to jmcwhrter
10
Posted on 1/8/13 at 3:48 pm to Brian Wilson
See if you can find a lender that will do an 80-10-10 so you can avoid the pmi
Posted on 1/8/13 at 4:10 pm to Brian Wilson
Any particular reason why 10%?
This post was edited on 1/8/13 at 4:15 pm
Posted on 1/8/13 at 4:17 pm to jmcwhrter
If you're only planning on living there shortly, put as little down as possible. Yes you may have a higher monthly note, but the difference between 5% and 10% down doesn't make a significant difference in a monthly note. Chances are your house will appreciate and you can make money by using borrowed money. The more you put down, the more of your own money you are using instead of borrowed.
Posted on 1/8/13 at 4:24 pm to Delacroix
This was my thought process as well.. Seems like it would be much easier to budget an extra $75-100 per month, than it would be to come up with another $12-15k.
Posted on 1/8/13 at 4:39 pm to jmcwhrter
Have you thought about getting a place now with the low rates, and then when you're ready to move out rent it as an investment property?
Posted on 1/8/13 at 4:50 pm to foshizzle
Hadn't really thought about it.. We're not dead set on moving out after X number of years, either. But I doubt very seriously that we will be there long enough to realize a total savings from paying $100 less each month instead of saving $11k up front.
The PMI is what drives me nuts though.. Is it still not tax deductible?
The PMI is what drives me nuts though.. Is it still not tax deductible?
Posted on 1/8/13 at 5:08 pm to jmcwhrter
quote:
we can afford something $250k+, but we are looking at houses that are $200-$225 tops.
My unsolicited .02$
Keep an balance as far as what you want to spend, vs. what you can "afford" to spend. When you put a number in your head on what you can afford, you anchor your thinking on that number and a real estate agent will use it to move you into a house at or above that number that you may regret down the line.
In response to your question, I would try to
quote:
See if you can find a lender that will do an 80-10-10 or an 80/15 so you can avoid the pmi
Good Luck!
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