[Sophia]

I have less than 20% so far so I need a bit more if I want a reasonable payment. I’d say I’m looking at 2-4 years in the future if the market stays the way it is.

Follow up question/clarification: my main motivation for buying a house at the moment is to lower my housing costs. I’m finding that even a 20% down payment on a small (900 square foot house or a larger house that needs considerable work) is not cheaper than rent. That being said I’m probably putting off buying a home until I can save enough to have a lower payment or at least a reasonable payment on a larger home because we will have 5 people and I would like to keep the house to live in long term.

It’s our first home so I do not have any equity to put towards it other than what I save.

So, do I just stack cash or is it better to hold off on buying a house at all for right now and just focus on dumping my money into retirement/brokerage account etc?

[Brian]

There’s multiple factors to include. Are you happy with your current living situation? Mental health is a real thing. What is the motivation for the home.

Is this primary residence or are you doing a live in flip? Do you want a complete Remodel or a fixer upper or in the middle.

Is purchase price or the monthly payment more important?

Time in the market beats trying to time the market. Just think “what if” interest rates rise and dint recover for another 5-8 years? Are you willing to sacrifice that or would you rather be locked in now. If rates go down you can refinance or find a bank that has a “buy down” option like we do. It’s $500 to buy down our rate when it is lower than our current.

Best of luck!

[Colin]

You don’t need 20%. I’d recommend 10%. It seemed to be a good balance of not having to save too much and the interest rate being only a tad higher. Plus there are some banks that don’t require PMI.

[Nicole]

I would start paying the expected mortgage payment. The difference save which can be part of the down payment (looks good to lender and you can decide if you can handle the mortgage).

[Dennis]

How’s your credit score? I bought with 15% down and my PMI was only $19/mo. Every year you wait, the overall cost of the house will go up. You can always overpay to principal to knock out PMI.

[Ian Em]

As others have said, you don’t need 20% down. The 20% mark is the line at which your mortgage gets rubber stamped without too much scrutiny. But there are lots and lots of options besides 20% down.

As far as interest rates go I would discourage trying to “time” interest rates and housing prices swings. If buying a house is the right decisions for your life, move forward with it. If interest rates go down in the future you can refinance your mortgage. If interest rates go up you will be thankful that you locked in at 6%.

There are some fundamental housing statistics that indicate prices are not going to go down in any significant amount. The number of new houses being build hasn’t kept pace with the number of new households being formed. In 2008 prices went up because financing was easy and anybody could get a mortgage. When those anybodys fell on hard times they went into foreclosure and housing prices then dropped. In 2023 lenders are being much more hesitant to give mortgages out, and the reason prices are going up is because even with buyers that have more saved and larger incomes there simply aren’t enough homes for sale for them to buy.

[Author]

Posts