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Old 04-05-2007, 01:34 PM   #1
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Default thinking about buying a house

Iíve put a lot of thought into it, and Iím saving up for a house. The only question is how much do I save up for the down payment? Some people say a good rule is 20% of the cost of the house. But others say thatís too much. Also, just before anyone says ďjust put down as much as you canĒ, Iím the kind of person thatíll likes to spend the extra money I have but if I set a reasonable goal Iíll try to reach it. And Iím thinking to look for a house around $120,000 in Stafford, Texas area. I currently live in Houston. Opinions? Suggestions?
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Old 04-05-2007, 01:50 PM   #2
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How much you put down depends on the rate you get. Wouldn't make much sense to put cash down if you locked in at 5-6% IMO. Find out what kind of rate you "qualify" for first- and if there's a required amount for down payment. IMO a mortgage broker with a good reference from a friend is a nice way to go about it. A lot of times they'll get a better deal than you would directly from a bank, and though they take a cut, they might still save you money.
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Old 04-05-2007, 01:54 PM   #3
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On the house I'm building I put down 25%. Was a lot of money for us, but real estate prices here aer stupid right now, as a result I've made a lot of money on my condo, 2.5X my purchase price in 6 years. If I had more liquid funds I would have put more down initially.

If the market you are in is hot, I'd get into a house ASAP with what ever you can scrape together. Waiting in a market like I am in right now just costs money. On average it looks like houses here are still going up about 5% a month.
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Old 04-05-2007, 02:16 PM   #4
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120K, makes me want to move, ive been saving for a house myself but if there was something decent for 120 i would already be living in it for 2 years. Instead of asking what you need to put down do the math and find out what that extra 10k saves you if you don't finance it for 30 years
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Old 04-05-2007, 02:20 PM   #5
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that's a third of what i just paid for a 1 bedroom condo.... :(
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Old 04-05-2007, 02:21 PM   #6
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that's a third of what i just paid for a 1 bedroom condo.... :(
location location location
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Old 04-05-2007, 02:25 PM   #7
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FWIW, I think you should find out how big a down payment you need to avoid PMI, and go with that - assuming it isn't too much. IIRC, it's usually about 15%. Don't blow all your cash on a down payment - houses have a nasty way of surprising you with a sudden $3000 repair, and it really blows if you need to borrow it.

I went all in on my first house, and ended up having to borrow money to pay the IRS(don't ask). Sucked pretty thoroughly - out of cash, extra debt.
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Old 04-05-2007, 02:32 PM   #8
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how's the market down there? gotta love a buyers market if anything.
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Old 04-05-2007, 04:35 PM   #9
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PMI on a 120K house???

I come from northern california. 20% down is the value of your whole house! I'd say you should ask the dude lending you the money. there may be incentives to put more or less depending on the rates, points, and whatever.

if you're worried about not having post-purchase cash, consider that you can get a bigger mortgage and borrow on the phat down payment equity as you need to.

also if the market in that area is going to improve (if it's guaranteed to.. while you own the house), then a big down payment is less important.

remember youll need cash up front for other closing costs.
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Old 04-05-2007, 04:39 PM   #10
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Just live in the miata....
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Old 04-05-2007, 05:10 PM   #11
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Houston market is excellent at the moment. We just closed about 3 weeks ago. 1650 sq ft. 3/2 in a good area 6 miles from work (NW Houston near 290 & 1960) with a 2 car garage. We paid $92.9K for the house, closing costs were under $1K, zero down.

Just be aware that the second largest mortgage bank in the country just filed for Chapter 11, so all the banks are getting more strict on 100% financing, employment history verification, etc. The banks are expecting a record number of foreclosures in the next 5 years.

I would suggest 5-10% down, plus 5% for closing costs. So plan to save 10-15% of your purchase range. FYI if you finance ~$97K your monthly payment will be a hair under $1K including escrow for taxes and insurance.
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Old 04-05-2007, 05:16 PM   #12
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I was able to get the seller to pay closing costs, with enough contribution left over to pay about 1.5points to lower the interest rates and put some in escrow for condo fees and my 3k deposit back....something like that.
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Old 04-05-2007, 07:00 PM   #13
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You can get around PMI (private mortgage insurance) by having 2 loans. Most lenders will roll closing costs, or a portion of them, into the loan balance. Closing costs suck. Mine were around $5k after everything totaled up.

I was saving to put 25% down on a house, but ended up finding a easy "fixer upper" type house priced well under market. I financed 100% of the house between 2 mortgages (one at 80% purchase price, the other 20%). Both of the mortgages are interest only and have a balloon payment after 15 years. Then I used the money I had saved for the down payment on fixing up the house. Worked out great for me. I plan on selling after another year or two--then take the equity and move into a bigger house.

I've been in my new house only 6 months but have a boat load of equity, and am in a steadily appreciating area.
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Old 04-05-2007, 07:07 PM   #14
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i'm gonna cry. i pay over a thousand bucks a month for my share of rent in my house. course I do got the garage. i wish my car paid rent.

oh and FSBO FTW.
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Old 04-05-2007, 07:13 PM   #15
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Yeah I rented a small house before, at $1000 per month.

Now I live in a much nicer house that's $1070 per month (interest only mortgage, though I pay a little extra)(plus $230/mo for taxes and insurance).

But the kicker is that $1070/month is tax deductible (subtract the standard deduction, and that's like taking $7k per year off your taxable income )
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Old 04-05-2007, 07:26 PM   #16
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Quote:
Originally Posted by BrillntBlk92 View Post
Iíve put a lot of thought into it, and Iím saving up for a house. The only question is how much do I save up for the down payment? Some people say a good rule is 20% of the cost of the house. But others say thatís too much. Also, just before anyone says ďjust put down as much as you canĒ, Iím the kind of person thatíll likes to spend the extra money I have but if I set a reasonable goal Iíll try to reach it. And Iím thinking to look for a house around $120,000 in Stafford, Texas area. I currently live in Houston. Opinions? Suggestions?
First of all it depends on the market. Sometimes its better to skip the down payment just to lock in the price of the house before it goes up more.

20% does save you the insurance, but you can get around that by combining an equity loan with your mortgage. I would start looking for houses and wait for the right one to come along, or go around and lowball eventually someone will bite.
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Old 04-05-2007, 07:42 PM   #17
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One school of thought says to put down as little as possible to minimize your exposure in an uncertain market. If the market declines significantly you just walk away. Kind of an ******* approach and one I don't intent to try but is a (technically) legal option you should be aware of. It's always nice to have options.
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Old 04-05-2007, 08:13 PM   #18
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Not to get into specifics... I received $12.5K back at closing when I bought my house. My mortgage is $350.00/mo and I don't pay PMI, It is a traditional P&I loan. (There was a realtor involved, and she was unaware of the style of deal I presented).

There are several creative ways to finance, it may take some calling around to find the right one. Also try to go with a traditional loan with @ least 20% down --- Stay away from gov programs (esp local 1st homebuyer programs that offer grants) There are literally hundreds of strings attached, and in the end you'll most likely only be an equitable partner on the low side(like 75/25 (and your the 25%).
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Old 04-05-2007, 08:37 PM   #19
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I don't know how your market is, but sometimes being a first-timer can work to your advantage if the market is soft. My brother got pre-approved for a specified maximum, had some decent cash for a down payment. The people he bought from had been burned twice - once by a "can't get a mortgage" and once by a "can't sell what i've got first." They took a big hit just to get a real buyer with no strings.
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Old 04-05-2007, 08:53 PM   #20
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make sure you have enough left over to paint the walls at least. You have to make it yours, and I'd rather paint the walls before I moved everything in.
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