New homebuyer question - How much buffer should we leave ourselves

[LordSnailz]

My fiance and I are planning on a purchasing a house, one question that came up was, how much money should we leave for emergencies. The house is about 500k+, so we're trying to put as much down as possible but at the same time leave some money in our checking and savings "just in case".

The other thing is that we're both in the tech. industry so there are some risks in both our jobs ... any ideas?

 

[TranceNation]

leave yourself about 1 years of mortgage payments if you want to be on the safe side....

 

[mjquilly]

500K? nobody should be buying a house for that much and worry about financial problems

 

[PeeluckyDuckee]

I beleive keeping yourself afloat and having that extra buffer so as to not affect your credit negatively over the longer term is priority over how much less interest you'll pay if you put more money down. You can always put down extra later on (10% increase in monthly payments, double ups, 10% POP).

Too many people I see (I work in bank environment) have their credit ratings mucked up because they went in over their head and found out later that they can't afford the payments no longer and realise just how deep of a hole they've dug for themselves.

Take things one step at a time.

Keep enough for at least 3 months survival and other billing obligations. That should be good buffer. The longer the better.

 

[db]

It always seems that no matter what your plans, by the time all is said and done, you have about $800 left.

 

[db]

Originally posted by: mjquilly
500K? nobody should be buying a house for that much and worry about financial problems

That's almost average house price in SoCal

 

[marleymarl]

Ive heard that you should have 8 months worth of bills. Add up all your bills, including mortgage for a month. Times by 8.

You should have that in a nice liquid account "just in case".

 

[Mill]

How much depends on your income. What is your combined income and how much are you putting down?I wouldn't buy a 500k house unless I made over 100k a year combined or had a high networth.

 

[digitalsm]

Originally posted by: Mill
How much depends on your income. What is your combined income and how much are you putting down?I wouldn't buy a 500k house unless I made over 100k a year combined or had a high networth.

Actually, in all parts of the country, except CA. Id say I wouldnt by a $500k house unless the total yearly income was $200k or more. $100k is stretching it is to thin, unless you had a high networth as well. Typically its 3 times your yearly income, 2 times to be on the safe side.

 

[Mill]

Originally posted by: digitalsm

Originally posted by: Mill
How much depends on your income. What is your combined income and how much are you putting down?I wouldn't buy a 500k house unless I made over 100k a year combined or had a high networth.

Actually, in all parts of the country, except CA. Id say I wouldnt by a $500k house unless the total yearly income was $200k or more. $100k is stretching it is to thin, unless you had a high networth as well. Typically its 3 times your yearly income, 2 times to be on the safe side.

Oh, I agree and I had 200k but I edited it to change it to 100k, but being in Cali all bets are off. I wouldn't buy a 500k house unless I had to...or I had significant assets and income. It isn't worth it to have a nice house but not be able to have a life because you work 100 hours a week to pay for it.

 

[Ameesh]

personally i kept around 8 full monthly mortgage payments, if i lost my job with unemploymnt it could last me 14-16 months.

 

[T2T III]

[/i]
500K? nobody should be buying a house for that much and worry about financial problems

Not trying to single anyone out, but why do people live in a vacuum? Since this message board is a "worldly board" posters come from all over the place. Just because one might be able to get a mansion for $500K in some craphole town in the midwest doesn't mean that you can get a mansion along the coast for the same money.

Besides, a $500K house in California seems like a bargain - from the home prices I've reviewed in that state. Additionally, here on the East coast, we're seeing 20% price increases for both last year and this year, too. Our house assessments are going up that much so that means my property tax will be rising accordingly. With such increases, even the crappiest homes will be starting off at quite high prices.

 

[CPA]

6-8 months of living expenses should do it.

What type of mortgage are you going with?

 

[LordSnailz]

Originally posted by: CPA
6-8 months of living expenses should do it.

What type of mortgage are you going with?

Haven't really bottom out on that yet ... right now, we're planning on putting $15k down, and get a 80/5 loan. Combined income is about $130k, the $15k is from our savings and checkings, with about 8k left. Not sure if that'll be enough, I heard somewhere that we should plan for at least 1month of mortgage payments. But if we include all other payments, food, utilities and cc bill 8k easily goes away.

We're still looking for a mortgage lender, it's hard to find one that you can trust since everyone you talk to has their "best" mortgage person. Right now we're leaning toward First Horizon Home Lenders since they're the one recommened by the builder and plus they're providing financial planning as well which would be useful.

 

[CPA]

Originally posted by: LordSnailz

Originally posted by: CPA
6-8 months of living expenses should do it.

What type of mortgage are you going with?

Haven't really bottom out on that yet ... right now, we're planning on putting $15k down, and get a 80/5 loan. We're still looking for a mortgage lender, it's hard to find one that you can trust since everyone you talk to has their "best" mortgage person.

Right now we're leaning toward First Horizon Home Lenders since they're the one recommened by the builder and plus they're providing financial planning as well which would be useful.

I have First Horizon on my primary and secondary. Best rates I could get at the time. They still required me to contribute 3% at closing on an 80/20/0, but other than that I had no problems. One point of contention I do have with them is their lack of service. They list a phone number for refinancing on their invoices. I have called twice and left messages but noone has called back. I haven't been in a hurry to refinance so it's not that big of a deal, but it would be nice to get a callback.

 

[LordSnailz]

Originally posted by: CPA

Originally posted by: LordSnailz

Originally posted by: CPA
6-8 months of living expenses should do it.

What type of mortgage are you going with?

Haven't really bottom out on that yet ... right now, we're planning on putting $15k down, and get a 80/5 loan. We're still looking for a mortgage lender, it's hard to find one that you can trust since everyone you talk to has their "best" mortgage person.

Right now we're leaning toward First Horizon Home Lenders since they're the one recommened by the builder and plus they're providing financial planning as well which would be useful.

I have First Horizon on my primary and secondary. Best rates I could get at the time. They still required me to contribute 3% at closing on an 80/20/0, but other than that I had no problems. One point of contention I do have with them is their lack of service. They list a phone number for refinancing on their invoices. I have called twice and left messages but noone has called back. I haven't been in a hurry to refinance so it's not that big of a deal, but it would be nice to get a callback.

Hey thanks for the feedback, the reason I question First Horizon rate is because they really work with you on picking the right loan for you whereas the broker will just quote you the rate. I'm just wondering if there were any caveats. Also, I can get pre-approval letter from them and if down the line their rates are not competitive I can go with someone else right?

 

[ivol07]

I heard on the local news this weekend that the average home price in California, including Townhomes and Condos, is $398k. It was up like 20% from last year.

Good luck. I gave up on my house hunt when the 2 bedroom condo we were looking at went for $420k.:disgust:

 

[Budmantom]

Originally posted by: Tiles2Tech

[/i]
500K? nobody should be buying a house for that much and worry about financial problems

Not trying to single anyone out, but why do people live in a vacuum? Since this message board is a "worldly board" posters come from all over the place. Just because one might be able to get a mansion for $500K in some craphole town in the midwest doesn't mean that you can get a mansion along the coast for the same money.

Besides, a $500K house in California seems like a bargain - from the home prices I've reviewed in that state. Additionally, here on the East coast, we're seeing 20% price increases for both last year and this year, too. Our house assessments are going up that much so that means my property tax will be rising accordingly. With such increases, even the crappiest homes will be starting off at quite high prices.

I like my "craphole town in the midwest".

 

[Budmantom]

6 months is recommended.

 

[CPA]

Originally posted by: LordSnailz

Originally posted by: CPA

Originally posted by: LordSnailz

Originally posted by: CPA
6-8 months of living expenses should do it.

What type of mortgage are you going with?

Haven't really bottom out on that yet ... right now, we're planning on putting $15k down, and get a 80/5 loan. We're still looking for a mortgage lender, it's hard to find one that you can trust since everyone you talk to has their "best" mortgage person.

Right now we're leaning toward First Horizon Home Lenders since they're the one recommened by the builder and plus they're providing financial planning as well which would be useful.

I have First Horizon on my primary and secondary. Best rates I could get at the time. They still required me to contribute 3% at closing on an 80/20/0, but other than that I had no problems. One point of contention I do have with them is their lack of service. They list a phone number for refinancing on their invoices. I have called twice and left messages but noone has called back. I haven't been in a hurry to refinance so it's not that big of a deal, but it would be nice to get a callback.

Hey thanks for the feedback, the reason I question First Horizon rate is because they really work with you on picking the right loan for you whereas the broker will just quote you the rate. I'm just wondering if there were any caveats. Also, I can get pre-approval letter from them and if down the line their rates are not competitive I can go with someone else right?

Sure, you're not really tied into much until you put down an application fee, and even then if you back out you just lose that.

BTW, I worked my deal with First Horizon through a broker. probably wouldn't have gotten a much better deal going directly to the source.

 

[LordSnailz]

Thanks for the help guys - I'll plan to see if we can leave a 3-4month buffer .... ugh, it'll be tough. =(