Buying your first home

[fLum0x]

My fiancee and I have very little debt. We have some money in her student loans, but everything else is paid for. We own both cars (they aren't worth a whole lot to be honest) and we own all the furniture and things in our apartment. We are planning to live in this apartment for 1-3 years max and at that point, we will look to buy our first home. At that point, we should be close to a 100k combined income, maybe a little less since we live in the midwest. Nevertheless, we are already building our 401K nicely along with a 7% CD with around 6,000 in it right now. Currently, we can save about $1,000 a month buying small things and typical expenses. We just bought a new TV along with furniture and washer and dryer, but there is more to get. Would you continue to buy nice things or start saving to put a large percentage down on a house? I have heard two different things. One being that you can put zero down being a first time house owner, but i know my monthly rate will be outrageous. The other idea that most people talk about is an 80/20 loan. We are looking for a house around the 200-250k mark and that would only be 25-50k to put down. That seems really do-able if we start to save and live here for 2-3 years.

My fiancee and I are really into our apartment and building a nice home with nice furnishings...which is why this is such an ordeal. Is it better to get nice furnishings for the house you don't own yet and put little down on a house...or is it better to save and get the house and work towards the furnishings? poll added

 

[dainthomas]

In all likelyhood, the value of the home will go up faster than you can save for a down payment. I would just go with zero down.

 

[dullard]

1) Stop buying the new things. Why would you want a wonderful new $3000 bedroom set that doesn't look good in your new house? Wait for the house and then buy stuff that looks good in a house (not stuff that looks good in an apartment).

2) 0% down loans are possible, but you pay more for them and at least one large bank has recently (ie on Friday) decided to end that practice. I suspect more banks will follow suit in the next year.

3) In the midwest, you can probably get a very nice home for $200k. 10% down would thus be $25k (after closing costs). At your $1k/month saving that you mention, you'll have the downpayment easilly in 2 years. That seems to line up with your 1-3 year plan.

Me: I borrowed 20% from my folks just after I graduated and then got an 80% mortgage. (Yes, I conveniently forgot to mention the 20% loan to the mortgage company). I'll have that 20% paid off in <4 years at this rate.

 

[FoBoT]

if you are in that good of shape, you should save up the 20% for a "normal" down payment


or at least 10%


your nice "furnishings" are depreciating (unless you bought some antiques, i guess) , so don't think that the money you put into them is somehow any different than buying a candy bar and soda for a snack at work

 

[Kelemvor]

Work with a mortgage broker who knows how to use the system to your advantage. You don't have to have much to put down. You can get a small loan and use that as your down payment. That way you don't have to pay any PMI which is just completely useless and equivalent to burning your hard earned money in the fireplace.

Your profile is locked.. Where in the midwest are you? Might be able to give you a referral or two.

 

[imported_weadjust]

I got a first time home buyers grant. I got $3,500 to buy the house.

So -$3,500 was my down payment.

 

[Mermaidman]

You should add a choice for 20% because that's the standard down payment. In your case, you should be able to pay 20%, especially in the midwest. Less than 20% and you end up paying PMI and getting worse interest rates. Resist the temptation to buy a house for which you can't pay 20% dp! The realtors and lenders want you to buy the priciest homes possible, but resist resist resist!

Also avoid buying furniture now. Not only will you save money faster, but it's nice to be able to get furniture that fits your new home. Good luck--you two sound like fiscally sensible people. I hope you get married before jointly buying a house

 

[fLum0x]

Originally posted by: FoBoT
if you are in that good of shape, you should save up the 20% for a "normal" down payment


or at least 10%


your nice "furnishings" are depreciating (unless you bought some antiques, i guess) , so don't think that the money you put into them is somehow any different than buying a candy bar and soda for a snack at work

True, although these are things we see in our living room/den of our first home. I know things change, but i would think it is nice to own some furniture so you don't have to buy the house and the furnishings all at once.

I have a co-worker that did this. He put little to zero down on the ~170k house and spent about 35k on furnishings for the house. All of this added up and I don't want to see all of that at once

 

[fLum0x]

Originally posted by: Kelemvor
Work with a mortgage broker who knows how to use the system to your advantage. You don't have to have much to put down. You can get a small loan and use that as your down payment. That way you don't have to pay any PMI which is just completely useless and equivalent to burning your hard earned money in the fireplace.

Your profile is locked.. Where in the midwest are you? Might be able to give you a referral or two.

Indianapolis

 

[dullard]

Originally posted by: dainthomas
In all likelyhood, the value of the home will go up faster than you can save for a down payment. I would just go with zero down.

Check here for the latest price movement. Midwest as an average went DOWN 4.2% in 2006. Indianapolis went down 4%.

True, in SOME areas, with increasing values, you can do well to rush in. But that certainly isn't true in many areas.

 

[fLum0x]

Originally posted by: Mermaidman
You should add a choice for 20% because that's the standard down payment. In your case, you should be able to pay 20%, especially in the midwest. Less than 20% and you end up paying PMI and getting worse interest rates. Resist the temptation to buy a house for which you can't pay 20% dp! The realtors and lenders want you to buy the priciest homes possible, but resist resist resist!

Also avoid buying furniture now. Not only will you save money faster, but it's nice to be able to get furniture that fits your new home. Good luck--you two sound like fiscally sensible people. I hope you get married before jointly buying a house

Engaged and planning to be wed on Sept. 22. We are currently in an apartment complex until 2/19 of next year. I just moved into a new place. I need to get pictures of it with the whole setup and post them for you guys/gals I got a new Sony KDS 50A2000 the exact day I moved in I think a digital camera is close if not next on the list of things to get for us.

 

[Homerboy]

20% on $168,000
ta hell if I was paying PMI

 

[meltdown75]

We put down 10%

 

[f1sh3r]

i put 3% down. almost everything we moved in was bought used or giving to us. i think it would have been better if we put more down because i hate interest. im hoping to have the house paid off in under 7 years if we dont move before then. its a relatively inexpensive home at ~60k but for two people with non-career jobs at the time, it was in our price range. now that shes making more money, and ill be out of school soon, our income should be more than enough to get this thing paid off in a hurry. then we can sit back and enjoy the appreciation. maybe rent it out and get a different place. real estate is the money.

 

[iamwiz82]

New legistlation has made PMI tax deductible, if you qualify.

http://www.lendingtree.com/smartborrowe...ayments/PMI-may-be-tax-deductible.aspx

 

[dainthomas]

Originally posted by: dullard

Originally posted by: dainthomas
In all likelyhood, the value of the home will go up faster than you can save for a down payment. I would just go with zero down.

Check here for the latest price movement. Midwest as an average went DOWN 4.2% in 2006. Indianapolis went down 4%.

True, in SOME areas, with increasing values, you can do well to rush in. But that certainly isn't true in many areas.

Guess I skimmed that. I live in the Portland metro area where any decent house is at least the high 200s, with probably 10-15% annual increases. I'd have to live under a bridge to save that kind of money.

 

[radioouman]

Originally posted by: dainthomas
In all likelyhood, the value of the home will go up faster than you can save for a down payment. I would just go with zero down.

Not in the midwest.

 

[nakedfrog]

Originally posted by: fLum0x
True, although these are things we see in our living room/den of our first home. I know things change, but i would think it is nice to own some furniture so you don't have to buy the house and the furnishings all at once.

I have a co-worker that did this. He put little to zero down on the ~170k house and spent about 35k on furnishings for the house. All of this added up and I don't want to see all of that at once

It's been just about two years since I bought my house, and we just bought nice furniture for the living room. There's nothing that says you have to do it all at once.
And I definitely can't understand buying $35k of furniture to put in a $170k house... but then again, I like to live within my means, not make payments on things (other than house/car--and hopefully not ever a car again once this one is paid off), and don't care about impressing folks with my furniture.

 

[TXHokie]

20% down and avoid throwing away $$$ for PMI.

 

[KK]

Originally posted by: fLum0x

My fiancee and I are really into our apartment and building a nice home with nice furnishings...which is why this is such an ordeal. Is it better to get nice furnishings for the house you don't own yet and put little down on a house...or is it better to save and get the house and work towards the furnishings? poll added

Not going to have kids, are you?

 

[Linflas]

0% VA loan FTW.

 

[fLum0x]

Originally posted by: KK

Originally posted by: fLum0x

My fiancee and I are really into our apartment and building a nice home with nice furnishings...which is why this is such an ordeal. Is it better to get nice furnishings for the house you don't own yet and put little down on a house...or is it better to save and get the house and work towards the furnishings? poll added

Not going to have kids, are you?

We will, but that will be another 2-4 years after we have a home and have established careers and financial abilities.

 

[HeroOfPellinor]

True, the market has cooled and is levelling off, but I would not count on prices falling. In reality, anything you'd have saved by getting a lower interest rate for putting more down will be lost in lost equity by the time the market start to tip up again.

I'd use this time frame to my benefit in this way. I'd look for the perfect house. A cosmetic fixer upper....the ugliest house on the street.....in a nice neighborhood and in a good location.....for what I could afford.......and I put down whatever I'd saved up by the time I found it and just go for it. I would not try to play the pricing game and try to guess when they'll bottom out or that they'll skyrocket. I would not wait for 3 years just so I'd have 20%. Use this time as a grace period that will hopefully buy you enough time to find the perfect house and when you find it, whether it be a month or two years from now, grab it and enjoy it.

 

[fLum0x]

Originally posted by: nakedfrog

Originally posted by: fLum0x
True, although these are things we see in our living room/den of our first home. I know things change, but i would think it is nice to own some furniture so you don't have to buy the house and the furnishings all at once.

I have a co-worker that did this. He put little to zero down on the ~170k house and spent about 35k on furnishings for the house. All of this added up and I don't want to see all of that at once

It's been just about two years since I bought my house, and we just bought nice furniture for the living room. There's nothing that says you have to do it all at once.
And I definitely can't understand buying $35k of furniture to put in a $170k house... but then again, I like to live within my means, not make payments on things (other than house/car--and hopefully not ever a car again once this one is paid off), and don't care about impressing folks with my furniture.

also realize that this co-worker is now about 300k in debt. He used to be in a band and spent a TON of money.

 

[olds]

On my first home, I put down $500.
On this one, 20% so I wouldn't have to pay PMI.