Author Topic: When to buy my first house (does the FED play a roll?)  (Read 1623 times)

FoundPeace

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When to buy my first house (does the FED play a roll?)
« on: October 12, 2014, 11:52:09 PM »
I graduate from school last year and after 1 year of saving, I'm starting to think about buying my first house. I was planning on looking at the end of next year, but I'm worried about interest rates. This is where I stand:

income: $3,000/month take home pay
rent: $1,000/month -for me, my wife and two kids.
savings: $35,000 by the end of the year
projected savings: $60k by the end of next year
cost of house: $100k-$150k.

I am very interested in keeping a bit of money in the bank after the down payment (I would probably feel uncofortable with less than $8k in the bank for emergencies).

I understand that interest rates are going to start increasing soon http://www.forbes.com/sites/advisor/2014/03/27/fed-on-target-to-raise-interest-rates-in-spring-2015/. Should this push me to up my timeline? I would hate to have missed the crazy-low interest rates we've been experiencing.

surfhb

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Re: When to buy my first house (does the FED play a roll?)
« Reply #1 on: October 13, 2014, 12:43:14 AM »
You're going go to need at least $30k for a down payment so regardless of interest rates, you don't currently have the means to purchase.    No ones knows if rates will increase and if they do they will still be at historic lows for awhile.   

I say save up the down payment starting now.    You'll be in much better shape.    Better yet....Save the entire purchase price and buy cash .     You indicate you'll be halfway there by next year

Oh btw.....this was released yesterday.   Avoid daily financial news....it's all worthless noise :)

http://mobile.reuters.com/article/idUSKCN0I00T920141011?irpc=932
« Last Edit: October 13, 2014, 12:52:55 AM by surfhb »

FoundPeace

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Re: When to buy my first house (does the FED play a roll?)
« Reply #2 on: October 13, 2014, 02:09:48 AM »
I wouldn't even consider buying until the beginning of next year (after I have at least 20%). I just think it would be wise to have a bit more than the 20% for renovations and problems that are bound to come up when buying a home.

forummm

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Re: When to buy my first house (does the FED play a roll?)
« Reply #3 on: October 13, 2014, 11:43:39 AM »
You're going go to need at least $30k for a down payment so regardless of interest rates, you don't currently have the means to purchase.

You can get an FHA loan with only 3.5% down. You do have to pay PMI though, so it may be better financially to put 20% down if possible. Unfortunately, PMI stick with an FHA loan for a very long time now, even when you've paid down the loan balance.
http://portal.hud.gov/hudportal/documents/huddoc?id=13-04ml.pdf

If your credit is good, lenders have more generous PMI arrangements for non-FHA loans, starting at 5% down.