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Started By
Message
First time homebuyer
Posted on 12/7/17 at 8:22 am
Posted on 12/7/17 at 8:22 am
As the title says, I am looking to buy my own house and would love some insight.... google really hasn't been my friend on this one as there is lots of conflicting stuff.
We are in our 20's and each have about $10,000 in savings. My main concern is with the downpayment/closing costs, as the note would likely be less than we pay in rent.
I have heard I should expect to pay 20-30% down, but have also seen I could pay as little as 3%. What is the norm? Are there pitfalls to a low down payment other than a higher note? What the hell am I doing?
TIA
We are in our 20's and each have about $10,000 in savings. My main concern is with the downpayment/closing costs, as the note would likely be less than we pay in rent.
I have heard I should expect to pay 20-30% down, but have also seen I could pay as little as 3%. What is the norm? Are there pitfalls to a low down payment other than a higher note? What the hell am I doing?
TIA
27
Posted on 12/7/17 at 8:23 am to scott8811
Ask the guys on the money board. You'll regret asking that here.
Posted on 12/7/17 at 8:23 am to scott8811
Money board will be better help to you.
Posted on 12/7/17 at 8:23 am to scott8811
quote:
We are in our 20’s
quote:
What the hell am I doing?
No clue
Posted on 12/7/17 at 8:24 am to scott8811
You a veteran?
Posted on 12/7/17 at 8:24 am to scott8811
quote:
Are there pitfalls to a low down payment other than a higher note?
if you don't have 20% for a conventional loan, you will have to buy mortgage insurance called PMI, which will add to your monthly bill
but the PMI will go away eventually
I put down 3%, remodeled my house, refinanced, and had enough equity in my house to remove the PMI within 3 years
Posted on 12/7/17 at 8:24 am to scott8811
Avoid the temptation to blow all your savings and max out your note to get more house. This is known as being house poor when you are struggling month to month just to meet your mortgage. Unlike renting, when the AC goes out or a pipe bursts it is you and not the landlord that needs to come up with the cash. Be ready for that.
Posted on 12/7/17 at 8:25 am to scott8811
I’m too lazy to explain everything, but if all you each have is 10k in savings, that really isn’t a smart idea to buy a home. Just my 2 cents
This post was edited on 12/7/17 at 8:26 am
Posted on 12/7/17 at 8:25 am to scott8811
quote:
We are in our 20's and each have about $10,000 in savings. My main concern is with the downpayment/closing costs, as the note would likely be less than we pay in rent.
Contact a local non profit housing counseling agency where you live. There are down payment and closing cost assistance programs you likely would qualify for.
I work in this industry. IF you need help finding one, tell me where you live.
Posted on 12/7/17 at 8:25 am to scott8811
You can get FHA financing for as little as 3% I believe. Ask a realtor, they'll have the info for you. Everyone on this board is full of shite.
Posted on 12/7/17 at 8:26 am to scott8811
Generally, you want to avoid PMI if you can which requires a larger down payment, but that also depends on your lending institution.
I was able to avoid PMI on a 30 year conventional loan with only 5% down (although we had more to put down)
I was able to avoid PMI on a 30 year conventional loan with only 5% down (although we had more to put down)
Posted on 12/7/17 at 8:27 am to scott8811
Ot ballers will say never put down less than 30%.
Honestly you can put down as little as 3% but you'll pay an extra $100-250 in monthly insurance called PMI.
You can refinance the house later and take equity out and get rid of the pmi.
The situations differ based in need and area. Though very very few first timers in today's market can come up with 30%.
Honestly you can put down as little as 3% but you'll pay an extra $100-250 in monthly insurance called PMI.
You can refinance the house later and take equity out and get rid of the pmi.
The situations differ based in need and area. Though very very few first timers in today's market can come up with 30%.
Posted on 12/7/17 at 8:27 am to Displaced
quote:How?
I was able to avoid PMI on a 30 year conventional loan with only 5% down
Posted on 12/7/17 at 8:27 am to scott8811
You usually need 20% down for a conventional home loan. Less than that, you will probably have to get an FHA loan which carries PMI. The PMI premiums are tax deductible though, and if you get the loan, you can get it removed by paying more each month towards the principal. Once the loan is at 80% of appraised value, you can request it be removed, at 78% it is automatically taken off.
Posted on 12/7/17 at 8:28 am to Salmon
Isn't it the FHA loan that require you to refinance once you have the equity to remove PMI? If doesn't drop off automatically?
Posted on 12/7/17 at 8:28 am to scott8811
I was a first time homebuyer 12 months ago. A lot of thigns you learn as you go but yeah the money board will be a good resource.
As for money down, of course 20% is ideal but if you don't have that it's not the end of the world. As mentioned you can do an FHA loan for like 3.5%, but of course you're gonna end up paying more monthly.
As for the other questions, that's simply a personal choice and what you are comfortable with.
As for money down, of course 20% is ideal but if you don't have that it's not the end of the world. As mentioned you can do an FHA loan for like 3.5%, but of course you're gonna end up paying more monthly.
As for the other questions, that's simply a personal choice and what you are comfortable with.
Posted on 12/7/17 at 8:28 am to scott8811
quote:
I have heard I should expect to pay 20-30% down, but have also seen I could pay as little as 3%. What is the norm? Are there pitfalls to a low down payment other than a higher note? What the hell am I doing?
Like someone said, if you don't have 20% down, you'll have to pay PMI as part of your note, and yes obviously the base note will be higher as you are financing more of the cost.
I would guess that most people in your situation don't have 20% to put down. I didn't on my first home. It's not the end of the world.
As far as closing costs, you can likely get most of them paid by the seller, but you'll still have to come out of pocket some.
Posted on 12/7/17 at 8:29 am to The Mick
Financed through NFCU
Posted on 12/7/17 at 8:29 am to LSUBoo
with interest rates so low, not putting 20% down isn't nearly as bad as it once was
Posted on 12/7/17 at 8:30 am to SilverStallion
quote:
I’m too lazy to explain everything, but if all you each have is 10k in savings, that really isn’t a smart idea to buy a home. Just my 2 cents
That's not true. They can probably get a mortgage cheaper than rent payments, receive tax benefits, and if done correctly, will start building equity quickly.
My wife and I paid 5% down on our first home, I put a little sweat equity in the house, sold it for 35% profit 4 years later.
The main concern is buying a house you can afford. Just because you qualify, does not mean you should purchase it. Live well inside your means on a first time home purchase.
This post was edited on 12/7/17 at 8:32 am
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