looking to buy a house. - Page 2

slambert · #11 07-27-2006, 04:16 PM

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where is the 'leverage'

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lev·er·age Pronunciation Key (lvr-j, lvr-)
n.

3. The use of credit or borrowed funds to improve one's speculative capacity and increase the rate of return from an investment, as in buying securities on margin.

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thanks. the point was realistically nobody is going to by their house with purely cash and generally if you can finance at 7%, your money is best served elsewhere at higher returns.

leto333 · #12 07-27-2006, 04:21 PM

That is definitely one opinion.

slambert · #13 07-27-2006, 04:44 PM

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That is definitely one opinion.

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yes, this is a board of opinions.

leto333 · #14 07-27-2006, 05:13 PM

Well an alternate opinion would be to pay off your house as fast as possible, and yes that does mean paying cash. This usually means that you will end up buying a smaller house than you would if you borrow the money from the bank, because the bank will approve you for more money than you can easily pay back, and the temptation is to use that leverage to buy a nicer home, which means that a lot of people find themselves owned by thier home, instead of owning thier home.

Likewise, if you use cash to "put to work" elsewhere while you are carrying a 7% note, your money is working for the bank and not for you, you are incurring all the risk and paying the bank 7% for the privilege. If you jsut paid off the house and then took the house payment and plowed that into an investment vehicle you can get that extra 7% on the full worth of your h ouse in a very short time (4 to 10 years). With the added benefit of not having to worry about the bank taking "your" house away .

The point being, leverage is leverage, whether it is margin in a brokerage account, or a mortgage on your house, and benefits and risks of leverage are the same in all cases.

prohornblower · #15 07-27-2006, 08:57 PM

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So my net worth is about 60k right now and I'm making about 30k-60kish a month. Does this change advice at all?

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No. Why would it? Your question was what % should you put down on a home. Replace $60K with $2K and 30k-60k with "ants on a log" and the advice is still the same.

Either finance as much as you can and leverage the free'd up cash for other non-guaranteed investments, or pay the house off sooner and sleep easier at night.

But congrats on the slick poker brag.

Thremp · #16 07-27-2006, 10:55 PM

Why are we [censored] arguing if we can put down 10% or 20%?

This kid has 60k and a pattern of income for like what a year at most? He probably can't even prove most of it on his taxes. He's probably gonna need a cosigner and need to plunk down a big portion of it on a down payment.

How the [censored] is gonna get a HELOC?

tommo · #17 07-28-2006, 01:25 AM

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Why are we [censored] arguing if we can put down 10% or 20%?

This kid has 60k and a pattern of income for like what a year at most? He probably can't even prove most of it on his taxes. He's probably gonna need a cosigner and need to plunk down a big portion of it on a down payment.

How the [censored] is gonna get a HELOC?

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thank you for addressing my situation

THAY3R · #18 07-28-2006, 09:11 PM

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I just started playing poker successfully and haven't saved up a lot of money. However in the past two months I've played about 100k hands and am up about 60k. I don't see any reason for this to stop (unless that damn bill gets passed).

So my net worth is about 60k right now and I'm making about 30k-60kish a month. Does this change advice at all?

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You've played for 2 months and made 60k, and you want to bank on your future and assume you will make 30-60k every month? Not a good idea.

I've made almost 300k in 2 months spans before, but I'm not off buying a 10 million dollar house.

RikaKazak · #19 07-29-2006, 09:41 AM

It's all what you want to do man.

The less you put down, the higher the interest rate, and the less your leveraged.

I suggest getting quotes, and seeing what the different rate options are.

If you truely can't decide, just get an 80/10. That's pretty much middle of the road on everything.

RikaKazak · #20 07-29-2006, 09:45 AM

I didn't read al lthe replies.

But as far as getting a mortgage, no worries, you can. They're call no doc loans. Nation point is a good one. Remember though, the less you document (verify) the higher your rate.

So talk to a bank (check out nation point they're good for no docs) and see how bad the rates are for "x amount of docs" at "x amount down" they'll galdly help you out.