How much would I need to make a down payment on a HOME...

[Hot dog]

Re: How much would I need to make a down payment on a HOME...

Definitely buy now don't wait till you have 70000 if you have 20000 buy a 100000 house and continue saving the extra money for your next home then you will have that plus all of the equity you acquire on your smaller house to put down. Especially if you are renting put that money to pay down your principle and not the landlord's (but don't tell my tenants I said that )

[safari]

Re: How much would I need to make a down payment on a HOME...

If I had waited until I had 20% for a downpayment, I would have never become a homeowner. I live in Southern California, where real estate costs an arm and a leg. I started looking for a condo back in 2000, and every month the prices were going higher and higher. I took a risk in the summer of 2001 and bought a condo for $340,000 with 5% down and took out two mortgages -- the first mortgage had a variable APR, which was around 7% at that time and was changing every month, and the second mortgage was fixed at 11%. My income was only $72,000 at that time. After paying the downpayment I only had about $3,000 left in my emergency fund, but I was counting on several things: 1) my income increasing, 2) interest rates going down, 3) house appreciating in value. The risk paid off. In 2003 my condo was valued at $420,000, and I was able to consolidate both loans into one and refinance at 5.375% 30 year fixed. Today my condo is valued at just under $700,000, and I wouldn't be able to buy it now, if I had waited, even though my income has increased quite a bit since then.

[poundwise]

Re: How much would I need to make a down payment on a HOME...


Ideal: 20% or more

Bottom-line: Never less than 10%

Shop for a lender; there are some with little or even no-closing costs.

Avoid interest-only payments, period.

Check your income to house payment ratio. I know people who need 1/2 of their take-home pay just to pay the mortgage; that's just looking for grief IMO.

[disneysteve]

Re: How much would I need to make a down payment on a HOME...

Also remember the rule of thumb that your mortgage debt shouldn't exceed 28% of income. That's another guide to help decide if you can afford the home you are looking at. An additional one is that you shouldn't spend more than 3 times your income on your home.

[tinapbeana]

Re: How much would I need to make a down payment on a HOME...

Check your income to house payment ratio. I know people who need 1/2 of their take-home pay just to pay the mortgage; that's just looking for grief IMO.

i feel this part is more important that one's downpayment, but that's just me. what's the point in saving for 20% down on a house when you still won't be able to afford the resulting monthly payments anyways?

when i started looking for a house, i calculated how much we were willing to pay per month. then i used an online loan calculator and the highest end of the average interest rate for my area to calculate my highest comfortable purchase price.

it worked out well for us. we found a house we liked, bought for about 20% below appraised value, and our mortgage payment is now less than 15% of our net income.

[disneysteve]

Re: How much would I need to make a down payment on a HOME...

what's the point in saving for 20% down on a house when you still won't be able to afford the resulting monthly payments anyways?

Absolutely. There's a lot more to it than the downpayment, though that is a starting point. Certainly, you need to be able to afford the monthly payment, taxes, insurance, as well as things I mentioned above like maintenance, furniture, etc.

[poundwise]

Re: How much would I need to make a down payment on a HOME...


Those things typically go hand-in-hand though. Often, the reason someone can't come up with a substantial down payment for a house (percentage-wise) is that they are trying to buy too much house for their income level.

[sweeps]

Re: How much would I need to make a down payment on a HOME...

Related story: California lawmakers on Wednesday began considering restrictions on unorthodox mortgage-lending practices that have allowed hundreds of thousands of Californians to buy homes they otherwise could not afford.

Article

[Aleta]

Re: How much would I need to make a down payment on a HOME...

It's about time. Sometimes you have to save people from themselves. In years past, it was very difficult to get credit. Sometimes it required a co-signer. With all the change in the bankruptsy laws, new laws should be looked at to prevent unscrupulous loans.