Author Topic: Saving for a house?  (Read 4330 times)

serpentstooth

  • Handlebar Stache
  • *****
  • Posts: 1217
Saving for a house?
« on: September 12, 2013, 03:26:22 PM »
 .
« Last Edit: May 17, 2016, 04:23:41 PM by serpentstooth »

naners

  • Stubble
  • **
  • Posts: 172
  • Age: 38
Re: Saving for a house?
« Reply #1 on: September 12, 2013, 06:37:59 PM »
Haha - Serpent, I notice you're going to the NYC meetup too. I'm in a similar boat and in fact just posted about, it although from a different angle. I have no answers for you unfortunately, but we can discuss when we meetup at the meetup!

Kira

  • Stubble
  • **
  • Posts: 168
  • Age: 36
  • Location: Columbus, OH
Re: Saving for a house?
« Reply #2 on: September 16, 2013, 08:02:55 PM »
If you have a down payment saved up, you will have the luxury of keeping an eye on the real estate listings and jumping on a good deal. If you wait to save, you will be stuck with whatever the options are at the time your rent jumps. If owning is important to you, I would try to save at least enough to get an FHA loan (3.5%) if nothing else.

simonsez

  • Pencil Stache
  • ****
  • Posts: 867
  • Age: 34
  • Location: Midwest
Re: Saving for a house?
« Reply #3 on: September 17, 2013, 08:07:58 AM »
I would try to save at least enough to get an FHA loan (3.5%) if nothing else.
Read the rules for FHA carefully.  You will have to pay PMI/MIP for the full term now since the new rules went into effect on June 3rd of this year.

    15-year loan term, LTV up to 90 percent : 0.45% annually
    15-year loan term, LTV greater than 90 percent : 0.70% annually
    30-year loan term, LTV less than, or equal to, 95 percent : 1.30% annually
    30-year loan term, LTV greater than 95 percent : 1.35% annually


Kira

  • Stubble
  • **
  • Posts: 168
  • Age: 36
  • Location: Columbus, OH
Re: Saving for a house?
« Reply #4 on: September 17, 2013, 12:48:46 PM »
I would try to save at least enough to get an FHA loan (3.5%) if nothing else.
Read the rules for FHA carefully.  You will have to pay PMI/MIP for the full term now since the new rules went into effect on June 3rd of this year.

    15-year loan term, LTV up to 90 percent : 0.45% annually
    15-year loan term, LTV greater than 90 percent : 0.70% annually
    30-year loan term, LTV less than, or equal to, 95 percent : 1.30% annually
    30-year loan term, LTV greater than 95 percent : 1.35% annually

I have no interest in paying PMI. According to my math, if I have to pay PMI, it's never going to be economically worthwhile to buy a home. We're looking at a minimum down payment of 20%.

Ugh, and I thought paying both upfront and annual MIP was bad enough! What did they go and do that for?

Well, keep in mind that if you save up even 5 or 10%, and you have good credit and little other debt, you can probably qualify for a good loan otherwise, and if you pay it down aggressively you won't pay PMI forever.

Rebecca Stapler

  • Pencil Stache
  • ****
  • Posts: 907
    • Stapler Confessions
Re: Saving for a house?
« Reply #5 on: September 17, 2013, 01:11:45 PM »
When do you renew your lease? It seems to me like there is no hurry to buy until (if) your LL jacks up the price of your apartment. With that in mind, I would consider hedging your bets by fulling funding your IRAs and 401(k)s, with the thought that, if the rent goes up or a good property comes along, you withdraw from your IRAs. BUT, I would set the bar really high for withdrawal from your IRAs at this point, and as time wears along, lowering the bar. Contributing to your retirements at the same time, though, so you don't lose any of the value of having it invested.

The reason why I suggest this, is that you may find yourselves in a different situation in 2 years, where you don't want to stay, so you haven't lost the ability to make your contributions for 2013, 2014, 2015. But if you do decide to stay, the money will be there. I would also try to cut from your expenses (if possible) in addition to maxing out your retirement accounts.

The big factor that would deter me from this plan is if your 401(k) investments are poor investments -- if your investing options are limited to the point where you wouldn't have chosen any of those funds if given the choice. If that's the case, then I would reconsider maxing the 401(k), because if you withdraw all your IRA funds that will be all you're left with in retirement savings.