Two questions for homeowners

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Two questions for homeowners

Postby KennyTheKangaroo on Fri Feb 15, 2013 2:44 pm

1.) When you made your down payment, did you feel like you pushed your self to the limits to make that down payment? Were you comfortable with the amount that you had left over in savings and such after you made the payment? In terms of total assets, how much did you spend on your down payments?


2.) In terms of paying rent vs paying a mortgage, how much did your monthly mortgage payment differ from your rent payment
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Re: Two questions for homeowners

Postby Troy Loney on Fri Feb 15, 2013 2:53 pm

If you'd rather hold some cash, i'd ask for the max seller assist, especially if your looking to make sure you get that 20% down.

Second...that will depend solely on what your paying in rent and how expensive a house your buying. I'll say that our entire monthly payment (taxes and mortgage) was roughly the same as i was paying for my share of a two bedroom apt in shadyside.
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Re: Two questions for homeowners

Postby KennyTheKangaroo on Fri Feb 15, 2013 3:02 pm

in this hypothetical scenerio, kenny the kangaroo can afford to make the 20% down payment, without seller assist, and still have about half of what was originally saved up.

also in this hypothetical situation, the mortgage,r/e tax, insurance, etc would be about 200 to 250 more than the current rent payment

kenny the kangaroo does not want to put any undue strain on kenny the kangaroos financial well being
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Re: Two questions for homeowners

Postby mac5155 on Fri Feb 15, 2013 3:04 pm

The way I look at it is that you are saving for ___ reason. Sure I wouldn't want to completely deplete the savings but that's what it's there for. Time to start building that back up.
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Re: Two questions for homeowners

Postby newarenanow on Fri Feb 15, 2013 3:06 pm

1) My wife and I were comfortable with both of our downpayments for the two homes we have owned. While it is a lot of money, we made sure the homes we purchased were well within our comfort zone and didn't push the limits. On both homes we made the 20% down payment in order to avoid the additional insurance payment. That 20% probabl reprsented about 15-20% of our total assets. We never dipped below the amount we felt uncomfortable having in our savings.

2) In terms of rent vs mortgage, our first monthly mortgage at the lowest was probably 3 times our monthly rent, and the new home is probably 5 times, although for both homes, we pay probably 7 times more than what we paid for rent to just pay off the house faster.

Do whatever you feel comfortable with.
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Re: Two questions for homeowners

Postby newarenanow on Fri Feb 15, 2013 3:10 pm

KennyTheKangaroo wrote:kenny the kangaroo does not want to put any undue strain on kenny the kangaroos financial well being


This is key to being a happy home owner.

I know a few people that have extremely nice homes, but have to worry because if they lost their job or something happened, they have absolutely nothing to fall back on. Plus they pretty much live paycheck to paycheck sinking it all into their home.s They can't go on vacation, can't go to sporting events (used to love to go), and are building up some debt because they have to store some on their credit card.

You want to buy what you can afford, while still living the life you want. Sure, there are some adjustments, but if you do it right, you won't notice them after a few months.
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Re: Two questions for homeowners

Postby canaan on Fri Feb 15, 2013 3:11 pm

nan is pretty on-point.
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Re: Two questions for homeowners

Postby mac5155 on Fri Feb 15, 2013 3:14 pm

canaan wrote:nan is pretty on-point.


For once.
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Re: Two questions for homeowners

Postby canaan on Fri Feb 15, 2013 3:14 pm

yeah, it pained me to type that.
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Re: Two questions for homeowners

Postby newarenanow on Fri Feb 15, 2013 3:15 pm

canaan wrote:yeah, it pained me to type that.


You loved it.
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Re: Two questions for homeowners

Postby Tomas on Fri Feb 15, 2013 3:16 pm

I took a majority of my savings to satisfy the 20% down + initial house improvements (HW floors,...). I had left ~ 4 months worth of (modest) living expenses.

Also, in today's economy, given the extremely low mortgage rates (let alone tax deductibiity of the payments), I would absolutely, positively put down not one penny above the minimum threshold of 20%.
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Re: Two questions for homeowners

Postby KennyTheKangaroo on Fri Feb 15, 2013 3:21 pm

newarenanow wrote:Do whatever you feel comfortable with.


Therein lies the problem, it's all relative. Kenny the kangaroo's parents are the type that paid their mortgage off early, never got into CC debt, and spent very frugally. So when it comes to a big decision like buying a house, it messes with kenny the kangaroos comfort zone. There are probably a lot of people that would be comfortable if they were in a comparable financial situation, but kenny the kangaroo leans on the conservative side. But this is probably a situation where it might be better to take a more agressive approach.
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Re: Two questions for homeowners

Postby KennyTheKangaroo on Fri Feb 15, 2013 3:24 pm

Tomas wrote:I took a majority of my savings to satisfy the 20% down + initial house improvements (HW floors,...). I had left ~ 4 months worth of (modest) living expenses.



thats a great way to look at it, and it would be about 6 months of living expenses for this gentleman. of course, a lot of that money would be tied up in an IRA and retirement fund.
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Re: Two questions for homeowners

Postby newarenanow on Fri Feb 15, 2013 3:40 pm

KennyTheKangaroo wrote:
newarenanow wrote:Do whatever you feel comfortable with.


Therein lies the problem, it's all relative. Kenny the kangaroo's parents are the type that paid their mortgage off early, never got into CC debt, and spent very frugally. So when it comes to a big decision like buying a house, it messes with kenny the kangaroos comfort zone. There are probably a lot of people that would be comfortable if they were in a comparable financial situation, but kenny the kangaroo leans on the conservative side. But this is probably a situation where it might be better to take a more agressive approach.


Financially, I'm very conservative as well. (guess us accountants are like that).

Me and the Mrs probably could have spent more on our home and could financially afford it, but it wouldn't have made me comfortable. I also was trying to look forward as well (ie. knowing we wanted more kids, what daycare cost for those kids, purchasing larger cars to fit the family, higher food bills, etc), and built in a cushion to our monthly pay vs what our mortgage was. We also want to pay our house off in the next 15 years, so we worked that in as well.

I know the comfort level is different for everyone, but just IMO, from the viewpoint you are looking, you are on the right track.

However, anytime I look at savings, I exclude my 401k and IRA as I will only touch those if I only absolutely have to, and it is the very last hope. To me, I just forget I have that money.
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Re: Two questions for homeowners

Postby count2infinity on Fri Feb 15, 2013 4:44 pm

My fiancee just asked me to think about buying a house while we're still in grad school as it'll be cheaper than rent. I understand where she's coming from... with what we pay in rent we could easily afford a mortgage on a $150,000 home... BUT we don't have the money saved for a down payment. All the money we are saving is going towards our wedding. We're going to be leaving the area in about 3 years. I don't really understand her want to look for a house, but we're going to look at our options and see what we can come up with.
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Re: Two questions for homeowners

Postby mac5155 on Fri Feb 15, 2013 4:49 pm

count2infinity wrote:My fiancee just asked me to think about buying a house while we're still in grad school as it'll be cheaper than rent. I understand where she's coming from... with what we pay in rent we could easily afford a mortgage on a $150,000 home... BUT we don't have the money saved for a down payment. All the money we are saving is going towards our wedding. We're going to be leaving the area in about 3 years. I don't really understand her want to look for a house, but we're going to look at our options and see what we can come up with.


I feel you there, right now our savings is banked but its all for the wedding. Hopefully we recoup that through gifts, get some student loans paid down, and in 3-5 years have a solid down payment saved up.
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Re: Two questions for homeowners

Postby shoeshine boy on Fri Feb 15, 2013 4:51 pm

that was 4 questions not 2. just sayin'......
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Re: Two questions for homeowners

Postby KennyTheKangaroo on Fri Feb 15, 2013 5:01 pm

shoeshine boy wrote:that was 4 questions not 2. just sayin'......


Yeah but thats why the nubmers in parenthesis were used. its totally different.
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Re: Two questions for homeowners

Postby Loaf31 on Fri Feb 15, 2013 5:08 pm

1) My wife and I did not put a down payment on our house. We did a first time homeowners program (I don't think it is around anymore). We had max seller assist, I actually left the closing with more $ than I walked in with.

2) My mortgage is actually cheaper than the rent that we used to pay.
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Re: Two questions for homeowners

Postby Tomas on Fri Feb 15, 2013 5:09 pm

KennyTheKangaroo wrote:
Tomas wrote:I took a majority of my savings to satisfy the 20% down + initial house improvements (HW floors,...). I had left ~ 4 months worth of (modest) living expenses.



thats a great way to look at it, and it would be about 6 months of living expenses for this gentleman. of course, a lot of that money would be tied up in an IRA and retirement fund.


I think a lot in that decision should depend on "how secure your job is?" Living with 4 months of savings (incidentally, I am of a mindset that retirement should not be counted as a part of "savings" - it's simply the necessary evil I have to take care of so that I don't starve to death once I turn 70) was a little creepy, but I knew that because my job was quite secure, I'd build up my savings eventually.

If the house it worth it, living with limited options for a while (hopefully not that long) is not a bad price to pay.
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Re: Two questions for homeowners

Postby skullman80 on Fri Feb 15, 2013 5:43 pm

Loaf31 wrote:1) My wife and I did not put a down payment on our house. We did a first time homeowners program (I don't think it is around anymore). We had max seller assist, I actually left the closing with more $ than I walked in with.

2) My mortgage is actually cheaper than the rent that we used to pay.


Ditto here, well we didn't put down no money, but not alot.

Mortgage is also cheaper than what I used to pay in rent. We certainly bought below what we could afford though, as we looked at this first house as a starter house, and something we could pay off in 10 years or so and be able to move up to a bigger house once we have a family.
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Re: Two questions for homeowners

Postby Shyster on Fri Feb 15, 2013 5:51 pm

In retrospect, I purchased my home too soon. I made less than a 20% down payment and didn’t have a separate emergency fund saved up in advance. I ended up with more expenses for furniture and ancillary items than I thought I would, and it cost me a couple years’ worth of credit-card interest to pay off. I recommend the following:

1. In addition to at least a 10–20% down payment, you should have a cash emergency fund of three to six months of living expenses before you buy. That does not include money in retirement accounts like IRAs or 401(k)s. I would also have a cushion of at least another couple thousand dollars for things like lawn mowers, appliances, new carpeting, etc. that a new house always seems to need.

2. Your mortgage payment should be no more than around 25% of your household take-home pay, and ideally that should be for a fixed-rate mortgage of 20 years or less.

3. You should be as debt-free as possible before you buy. For example, if you have credit-card balances, then pay those off first. If there are monster student loans out there, you may want to keep renting and pay them off as much as you can. It’s not a good idea to pile debt on top of debt.
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Re: Two questions for homeowners

Postby pfim on Fri Feb 15, 2013 5:57 pm

KennyTheKangaroo wrote:1.) When you made your down payment, did you feel like you pushed your self to the limits to make that down payment? Were you comfortable with the amount that you had left over in savings and such after you made the payment? In terms of total assets, how much did you spend on your down payments?


2.) In terms of paying rent vs paying a mortgage, how much did your monthly mortgage payment differ from your rent payment


1. I don't think there's any reason to push yourself if you have the 20% already, provided you are comfortable with the monthly cash outflow of the mortgage payment. Especially as Tomas noted with low mortgage rates. If your mortgage rate is between 3.5-5% and you can find an investment that on average would make more than that, why would you tie that money up in your house?

2. It was about $300 more, but everyone will have different circumstances. It was a strain at first, but the mortgage payment will remain relatively static (taxes and insurance may go up) but I assume you are young and your salary will grow at some rate, if only inflation. So it will be more palatable in a few years, in my experience.
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Re: Two questions for homeowners

Postby canaan on Fri Feb 15, 2013 5:58 pm

Shyster wrote:3. You should be as debt-free as possible before you buy. For example, if you have credit-card balances, then pay those off first. If there are monster student loans out there, you may want to keep renting and pay them off as much as you can. It’s not a good idea to pile debt on top of debt.

im gonna disagree with part of this because, in my case for instance, its about long-term equity. renting, especially in the market as is, you can have a comparable mortgage for the cost of renting, depending on the area. i have a couple of years of a mortgage paid off while still maintaining my student loan payments. that money on rent is wasted opportunity.
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Re: Two questions for homeowners

Postby mac5155 on Fri Feb 15, 2013 6:20 pm

I'm prioritizing student loans over mortgage cause I have more than 60k worth, but once that's under 20 ill consider a mortgage.
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