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Started By
Message
Thoughts on saving vs. home equity?
Posted on 9/20/11 at 5:18 pm
Posted on 9/20/11 at 5:18 pm
I’m 33years old and want/need to upgrade my house after finding out that I have a second child on the way. Here's my situation:
I make around $115k yearly and my wife doesn't work.
I stand to pocket about $15k in selling my home at the moment.
I would like for this to be a house to last a while – I don’t plan for more kids.
I have about $18k on hand at the moment.
I can expect about $15k in bonus around February.
I am on pace and plan to max out both mine and my wife’s Roths by tax day of next year.
I save up to my company match 6% in my 401k.
I have a equity incentive plan with my company that’s on pace to earn me $1m in about 10 years.
Basically, I’m trying to decide between two options:
1. Stay at my current savings trajectory and just buy a new home, paying MI
2. Halt most of my savings and stack up $ to try to get to 20% of a new home (and enough left over for a safety net)
I know that homes aren't a great investment these days but if I plan on staying in it for 15+ years I'd hate to be throwing away money at interest.
Thoughts?
I make around $115k yearly and my wife doesn't work.
I stand to pocket about $15k in selling my home at the moment.
I would like for this to be a house to last a while – I don’t plan for more kids.
I have about $18k on hand at the moment.
I can expect about $15k in bonus around February.
I am on pace and plan to max out both mine and my wife’s Roths by tax day of next year.
I save up to my company match 6% in my 401k.
I have a equity incentive plan with my company that’s on pace to earn me $1m in about 10 years.
Basically, I’m trying to decide between two options:
1. Stay at my current savings trajectory and just buy a new home, paying MI
2. Halt most of my savings and stack up $ to try to get to 20% of a new home (and enough left over for a safety net)
I know that homes aren't a great investment these days but if I plan on staying in it for 15+ years I'd hate to be throwing away money at interest.
Thoughts?
2
Posted on 9/20/11 at 5:31 pm to Doom
I'm one of the Dave Ramsey sunshine pumpers on this board and even I would not put 20% down with interest rates as low as they are. I mean, they are ridiculously low. Go get a house and don't be in any hurry to pay it off.
ETA: I would still try to swing a 15 year loan though if you can afford it. Making a house payment for 30 years or more just sounds depressing.
ETA: I would still try to swing a 15 year loan though if you can afford it. Making a house payment for 30 years or more just sounds depressing.
This post was edited on 9/20/11 at 5:33 pm
Posted on 9/20/11 at 7:30 pm to I Love Bama
I would have to agree...put down less, save more.
Posted on 9/20/11 at 7:52 pm to uzzy
I wouldn't pay pmi. I'd get the 20% down first.
Posted on 9/20/11 at 8:19 pm to Doom
With rates as low as they are i'll pay PMI and take the deduction.
I didn't put 20% down, because the market here you need to spend around $200k-250k to get into a good safe neighborhood. I wasn't about to put $40k +/- on a house and not have anything left so I could save on PMI.
When the market turns around. Go get an appraisal and as long as the loan to market value is greater than 20% then you won't have to pay PMI, even if you didn't put 20% down.
I didn't put 20% down, because the market here you need to spend around $200k-250k to get into a good safe neighborhood. I wasn't about to put $40k +/- on a house and not have anything left so I could save on PMI.
When the market turns around. Go get an appraisal and as long as the loan to market value is greater than 20% then you won't have to pay PMI, even if you didn't put 20% down.
Posted on 9/21/11 at 1:05 pm to GimmieSomeGlitter
quote:
With rates as low as they are i'll pay PMI and take the deduction.
You think with all the tax-talk this will be deductible after 2011?
Posted on 9/21/11 at 5:26 pm to ItNeverRains
quote:
You think with all the tax-talk this will be deductible after 2011?
I hope they extend it. The housing market is still horrible and by taking away tax deductions for buyers and owners, it will hurt.
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