ZOMG I JUST BOUGHT A HOUSE - Page 5

dmk · #41 10-03-2006, 03:35 PM

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oh yeah and congrats. I'm looking at buying a house in the next 2 - 3 years. Want to save up a nice big downpayment.

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don't bother. 80/20 and use that saved money to buy furniture and home improvement stuff

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nooooooooo

I don't want to get deep into a financial discussion here, but do NOT leverage yourself with a 100% mortgage at the start of a bear market. That would be BAD. If you can't afford a down payment, you don't really need a home anyway.. rent an equivalent house.

(US-only.. I know nothing about the Candadian housing market)

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meh, havne't been keeping track of interest rates or anything. i did an 80/20 about 1.5 years ago. was good for me then.

BluffBlank · #42 10-03-2006, 03:39 PM

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BB

Seriously - put down just enough on your house to avoid the mortgage insurance (that's 25% here in Canada). Put the rest aside to redecorate/renovate/whatever. Any left over after that you can put in an investment, at a higher interest rate than you're paying on your mortgage.

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yeah that's my plan. enough to avoid mortgage insurance. I need to do some looking, but I think its 25% here in the states too.

I also want to pay it with cash somehow. but only because i want to show up with a suitcase full of money once in my life.

dmk · #43 10-03-2006, 03:40 PM

its 20 in states

BluffBlank · #44 10-03-2006, 03:41 PM

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its 20 in states

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Then I should have plenty in a few years. But i'm in no hurry at the moment. Living with my friend in his house, paying cheap rent and having a blast. The extra money I have left over after the downpayment will go towards a pool table/ITG Machine for the basement.

Nicholasp27 · #45 10-03-2006, 03:43 PM

i did 80/20

i can afford the payments and also pay 250/month extra onto the 2nd (higher interest) mortgage for the 20 to save lots of money in interest and pay it off faster

i don't care if it's a bear market; i can afford my payments and i went FIXED, which is most important; those that went ARMs that come up when rates are higher and they are upside down in their mortgages will be in trouble

if u can't afford the fixed rate note, then u can't afford the house...also, mortgage interest is tax deductible

if i had the 20% to put down on the mortgage, i'd rather put it into something making interest...after all, why not pay the 6.5% - tax deduction and put the money into the index fund or some other investment that should do better than 6.5% - tax deduction?

Zurvan · #46 10-03-2006, 03:48 PM

Did you guys get a loan to pump up your down payment to 20%? Or am I misunderstanding something?

BluffBlank · #47 10-03-2006, 03:49 PM

yeah, I think so. I belive you can get a 2nd mortgage right away to make sure you put 20% down to avoid the mortgage insurance?

Nicholasp27 · #48 10-03-2006, 03:51 PM

yeah, u get 2 mortgages

one is for 80% of the loan
one is for 20% of the loan

that way no loan is for more than 80% of ur value, so u don't have to pay mortgage insurance

u pay a higher interest rate for the 2nd loan, but that's tax deductible and mortgage insurance isn't

sighing · #49 10-03-2006, 03:51 PM

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i did 80/20

i can afford the payments and also pay 250/month extra onto the 2nd (higher interest) mortgage for the 20 to save lots of money in interest and pay it off faster

i don't care if it's a bear market; i can afford my payments and i went FIXED, which is most important; those that went ARMs that come up when rates are higher and they are upside down in their mortgages will be in trouble

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A lot of 80/20's are pitched with some form of adjustable rate.. that's the biggest problem. Assuming you have a fixed rate, you should be okay unless some congressman jams through a provision to make your source of income illegal. But that's pretty unlikely.

Anyway, if you can't afford a 20% down payment, you shouldn't get the house, imho. That doesn't mean you need to MAKE a 20% down payment, but if you don't even have the option, you're setting yourself up for a whole lot of risk in the future.

Zurvan · #50 10-03-2006, 03:54 PM

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Anyway, if you can't afford a 20% down payment, you shouldn't get the house, imho. That doesn't mean you need to MAKE a 20% down payment, but if you don't even have the option, you're setting yourself up for a whole lot of risk in the future.

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Things in the US must be very different than here. Almost nobody I know with a house put down 20% on their first home. Most of them put 5%, a few 10%. Of course, the housing market around here has been booming for 10 years, with no sign of slowing down.