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re: What's the most amount of money you'd put down on a new house? It would be a new build.
Posted on 3/5/24 at 5:50 am to VermilionTiger
Posted on 3/5/24 at 5:50 am to VermilionTiger
I close on a newbuild at the end of the month. I put down 20%, but I am adding upgrades like landscaping, a pool, closets, gutters, and furnishings. I am paying cash for all of that.
Once I am closed and settled, I'll look at my cash and decide if I want to throw more $ at the principle. I am also going to at least double the required mortgage payment.
Make sure you have money left over to furnish it, so factor that in your planning.
At 7% rates, you want to put down as much as practical. You are losing money if you keep a ton of cash in a MM or CD. At the same time you always need cash for an emergency. Whatever peace of mind number you would desire is the amount you need to keep available.
Once I am closed and settled, I'll look at my cash and decide if I want to throw more $ at the principle. I am also going to at least double the required mortgage payment.
Make sure you have money left over to furnish it, so factor that in your planning.
At 7% rates, you want to put down as much as practical. You are losing money if you keep a ton of cash in a MM or CD. At the same time you always need cash for an emergency. Whatever peace of mind number you would desire is the amount you need to keep available.
This post was edited on 3/5/24 at 5:51 am
1
Posted on 3/5/24 at 6:24 am to Mariner
I have had just about every kind of mortgage available. By far, the best is the 15yr mortgage. Every month, you really feel like your making progress.
Posted on 3/5/24 at 8:08 am to JohnnyKilroy
Because for first time homebuyers, especially in the current market, home prices may very well outpace your ability to save the cash you can save for a down payment.
Paying pmi is such a minuscule cost compared to what you can “lose” by waiting until you have the full 20%.
A big factor in my personal networth has been buying my first house for what I did and selling it a few years later for what I did. I only out 10% down to buy the house. It was in an incredibly desirable neighborhood that was only getting more and more expensive.
If I had waited another year or two to save up the additional 10%, the market would have passed me by and I would have had to buy a less desirable house in a less desirable neighborhood.
Also if you are still paying rent to a landlord because you don’t want to pay pmi, then you might be an idiot.
_________________
Very one-sided argument. You describe market conditions that don't often exist. Good for you on your timing, but I would not casually advise that without knowing more details. Most of the time, keeping your total cost of ownership low is a good thing.
Also, you are assuming the buyer is paying rent while waiting to purchase a home. May not be the case. Even if it is, you don't know their rental situation vs the house market. I had an extended period where I rented after a work related relocation. I was paying less than half of what my mortgage would have been. I invested heavily in stocks during that time and hit a very fortunate run up that earned me triple digit returns. Your opportunity cost of money is always a consideration.
Your last statement is just a cliche. One would be an idiot if they believed that either of our scenarios is the way to go without more specifics.
Paying pmi is such a minuscule cost compared to what you can “lose” by waiting until you have the full 20%.
A big factor in my personal networth has been buying my first house for what I did and selling it a few years later for what I did. I only out 10% down to buy the house. It was in an incredibly desirable neighborhood that was only getting more and more expensive.
If I had waited another year or two to save up the additional 10%, the market would have passed me by and I would have had to buy a less desirable house in a less desirable neighborhood.
Also if you are still paying rent to a landlord because you don’t want to pay pmi, then you might be an idiot.
_________________
Very one-sided argument. You describe market conditions that don't often exist. Good for you on your timing, but I would not casually advise that without knowing more details. Most of the time, keeping your total cost of ownership low is a good thing.
Also, you are assuming the buyer is paying rent while waiting to purchase a home. May not be the case. Even if it is, you don't know their rental situation vs the house market. I had an extended period where I rented after a work related relocation. I was paying less than half of what my mortgage would have been. I invested heavily in stocks during that time and hit a very fortunate run up that earned me triple digit returns. Your opportunity cost of money is always a consideration.
Your last statement is just a cliche. One would be an idiot if they believed that either of our scenarios is the way to go without more specifics.
Posted on 3/5/24 at 8:24 am to KWL85
quote:
Very one-sided argument. You describe market conditions that don't often exist.
They've existed for the past like 20 years and counting.
quote:
Your opportunity cost of money is always a consideration.
Yea, which is why it's really not THAT important to put the most amount of money you can into your home down payment.
The whole point of my posts is that people in this thread and many others on this board act like PMI is some sort of unbearable yolk around your neck when it's like 30-40 bucks a month.
It's such a miniscule amount I can't imagine any real life scenario where that's worth locking up additional tens of thousands in liquidity and/or putting off a purchase to avoid it.
Whatever you save in avoiding PMI gets eaten up instantly by increased home prices YoY.
This post was edited on 3/5/24 at 8:25 am
Posted on 3/5/24 at 10:59 am to VermilionTiger
quote:
VermilionTiger
Father in Law is a builder, not associated with anyone of the big names like Manual/Schumacher/etc. He has built a ton of custom homes in the Duson/Scott/Carencro/Rayne area.
Shoot me an email if you want to get contact information.
coincollections@hotmail.com
Posted on 3/5/24 at 11:08 am to XenScott
quote:
not to mention, mortgage interest is deductible,
That only applies to some massive OT ballers. With the new standard deduction, it takes a very large mortgage to be able to itemize for many folks.
Posted on 3/6/24 at 3:17 am to VermilionTiger
Everyone is going at this from straight mortgage.
How much are you anticipating paying for preschool and when? Where I live in For F@*% Bend County, in TX, I paid my amount in property taxes for pre-school every year. It was not great. ($2k+ a month)
Even when in moved into my first house, that cost $96k, I dropped $2k to get basic appliances in there, and I was single. If you're married up, you will spend an astronomical amount of money. If you think she's long term, introduce the principle of a "prioritization list." Backyard or sinks first? Pergola or new stove? Bait her into making decisions. If she can't make a choice, I will meet you at the bachelor bar in a few years.
Prioritize. If she can't do it, or you can't figure it out, get out.
How much are you anticipating paying for preschool and when? Where I live in For F@*% Bend County, in TX, I paid my amount in property taxes for pre-school every year. It was not great. ($2k+ a month)
Even when in moved into my first house, that cost $96k, I dropped $2k to get basic appliances in there, and I was single. If you're married up, you will spend an astronomical amount of money. If you think she's long term, introduce the principle of a "prioritization list." Backyard or sinks first? Pergola or new stove? Bait her into making decisions. If she can't make a choice, I will meet you at the bachelor bar in a few years.
Prioritize. If she can't do it, or you can't figure it out, get out.
Posted on 3/6/24 at 5:09 am to VermilionTiger
Having a paid for house is soooo much better than gaining a few interest points of interest in other investments.
Posted on 3/12/24 at 4:12 pm to JohnnyKilroy
quote:
Very one-sided argument. You describe market conditions that don't often exist.
They've existed for the past like 20 years and counting.
quote:
Your opportunity cost of money is always a consideration.
Yea, which is why it's really not THAT important to put the most amount of money you can into your home down payment.
The whole point of my posts is that people in this thread and many others on this board act like PMI is some sort of unbearable yolk around your neck when it's like 30-40 bucks a month.
It's such a miniscule amount I can't imagine any real life scenario where that's worth locking up additional tens of thousands in liquidity and/or putting off a purchase to avoid it.
Whatever you save in avoiding PMI gets eaten up instantly by increased home prices YoY.
___________________________
You are still painting a one-sided picture. Rapidly increasing home prices have indeed occurred for 20 years. In pockets. And not for the majority. And likely not in Vermilion parish if that is where the OP lives. Home prices go up on average, but most experience 2 or 3% yearly increases. The hot markets are definitely lucrative. Actual increases are very specific to one's local market and even neighborhoods/areas within a market. But advising someone to buy now because they will go up requires more context than given. Most will not see the increases you refer to.
I also would never advise others to pay as little down as possible. For most, this is bad advise. I agree that pmi should not be the driving factor, but it is a factor. Interest cost is likely more important, and a good reason to put more than the minimum.
Very one-sided argument. You describe market conditions that don't often exist.
They've existed for the past like 20 years and counting.
quote:
Your opportunity cost of money is always a consideration.
Yea, which is why it's really not THAT important to put the most amount of money you can into your home down payment.
The whole point of my posts is that people in this thread and many others on this board act like PMI is some sort of unbearable yolk around your neck when it's like 30-40 bucks a month.
It's such a miniscule amount I can't imagine any real life scenario where that's worth locking up additional tens of thousands in liquidity and/or putting off a purchase to avoid it.
Whatever you save in avoiding PMI gets eaten up instantly by increased home prices YoY.
___________________________
You are still painting a one-sided picture. Rapidly increasing home prices have indeed occurred for 20 years. In pockets. And not for the majority. And likely not in Vermilion parish if that is where the OP lives. Home prices go up on average, but most experience 2 or 3% yearly increases. The hot markets are definitely lucrative. Actual increases are very specific to one's local market and even neighborhoods/areas within a market. But advising someone to buy now because they will go up requires more context than given. Most will not see the increases you refer to.
I also would never advise others to pay as little down as possible. For most, this is bad advise. I agree that pmi should not be the driving factor, but it is a factor. Interest cost is likely more important, and a good reason to put more than the minimum.
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