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question about buying a home

B

BrApple

No Life But CEG
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Joined
Dec 23, 2001
Messages
21,731
Location
Gales Ferry, CT
well a post I made and a reply that Kim gave me over on NECO got me thinking and wondering. And since home prices and things are pretty regional I figured I would ask everyone here, more so knowing many of you purchased homes in the last few years.

If you want to share, how much did you have saved up before you purchsed your homes? Was it enough or should you have saved more?

In about 2.5 years of working I was able to save near 20k. When I started I had about 2k in my saving acount. After purchasing my SVT and some other things I am left with 14k in my savings account. Also the only debt I have is my student loan. but at 2% interest its better for me to pay the minimum every month and not rush to pay it off.

I plan to start saving more again, with nothing else car wise to purchase for awhile since this is where I spend alot of money and know it could be a source of savings. I also want to start contributing to my 401k this year.

Anyway, with the way the housing market is going it would seem that in the next 2 to 3 years will be a pretty good time to purchase a home since that appears to be when the market will be near the bottom. From speaking with people at work this is of course a good idea forthe long run and they agree that in a few years would be a good time to purchase.

I feel I am on a pretty good track to be able to make that happen in a few years, pending anything out of my control.

Am I off base or heading in the right direction based on what you guys experienced? I mean I don't want to live in an apartment forever ya know.
 
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the market is down now.. you should buy a house now. lol.. if you want i can set you up with my g/f she does realastate, loans and all that fun stuff. shell be able to tell if your in a good spot
 
well I'm not ready to purchase for at least a year from now since I jut signed another one year lease, but that would only put me in a better situation of having saved more.
 
I wish we had saved more before buying, but I don't regret when we bought, and how things have come thusfar. I think even if we had gone another year of saving, our monthly payments wouldn't be significantly different. Our sanity was wearing thin in that apartment, especially because we were amassing too much stuff! We didn't want to focus solely on the cash down issue, in that respect.

We put down 5% of the selling price, and went with a 30 year fixed rate mortgage. I didn't feel like messing with the two mortgage thing that some people do to avoid PMI, and an adjustable rate mortgage didn't make sense since the rates were already at an all-time low.
Having PMI kind of annoys me, but I think we'll be able to get rid of it faster than it'll expire on it's own, based on the improvements we've made to the house.

Sift around and look at the prices of homes in the towns you'd like to live in, and just do some number crunching to help give you an idea of what to expect. Most real estate websites have mortgage calculators available for that.
I think we shopped like that for about a year before we actually bought our house.
 
You've got plenty saved up already. My first house I only put out less than $2000.

Of course that was 10 years ago! Similar market though. Housing had not really hit full steam.

It is way down now and rates are very good. Fed may still drop them a bit more so I would say you may want to rethink your year or 2 jump in timeframe.

They could be back up a couple points by then and a couple percentage point can be a ton of money saved.

This house we built almost 3 yrs ago and we reinvested all of our gain back into it. This one is 3 times larger and 5.5 acres of land but our mortgage only went up a few hundred bucks.

Think about the equity you will have once you own...it will typically more than offset any "future" savings you are waiting to achieve.

Good luck!
 
You're not moving too far away are you Brian? :laugh:

I'll be keeping my eye on this thread because I'm not too far behind you! :shocked: Scary, isn't it? I wish I could ask my mom what went down with out house when we got it, but that was back in 1990. That wouldn't really be a good estimate of what you need, but good luck nonetheless!
 
Well, Brian, putting into the 401K is a good idea, but most of the time the loan companies look at that as potential money that can used to put down on the house... but you do have a decent amount saved already, so it could help you. Just why dump money into your 401K just to pull it out, and put into the down payment, and pay interest on that amount drawn from the 401K??

If I were you, I would save the money in your Bank account, and use it to either put down on the down payment when ready, or use it to buy points off of your interest rate. A friend at work bought 1.5 points off his interest rate, and his mortgage is much lower than it would have been and he only had to spend a few thousand (like 3K) to buy those points... Then with the money you are saving from a lower interest rate, you can now start dumping that extra cash into the 401K and build for retirement...

If you want to invest, try a IRA, or even CDs for now, so at least that money can help you invest in the house or whatever when you are ready to purchase your home. Save now for the house, then invest in your future. If you plan on buying a home in the next 2 years or so, this is what I would do, if I could.
 
aircougar said:
Well, Brian, putting into the 401K is a good idea, but most of the time the loan companies look at that as potential money that can used to put down on the house... but you do have a decent amount saved already, so it could help you. Just why dump money into your 401K just to pull it out, and put into the down payment, and pay interest on that amount drawn from the 401K??

If I were you, I would save the money in your Bank account, and use it to either put down on the down payment when ready, or use it to buy points off of your interest rate. A friend at work bought 1.5 points off his interest rate, and his mortgage is much lower than it would have been and he only had to spend a few thousand (like 3K) to buy those points... Then with the money you are saving from a lower interest rate, you can now start dumping that extra cash into the 401K and build for retirement...

If you want to invest, try a IRA, or even CDs for now, so at least that money can help you invest in the house or whatever when you are ready to purchase your home. Save now for the house, then invest in your future. If you plan on buying a home in the next 2 years or so, this is what I would do, if I could.
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agreed. if the money is sitting in a checking or savings acct, move it asap. i havent seen any savings acct give a decent rate in a long time. if u have a year or two before you'll need it, put it into a moneymarket account or a cd if u can find one with a decent rate. maybe even tbills. i havent checked recently if tbills are giving better interest than some of the competing financial instruments. a money market checking account or even a money market mutual fund would allow you to add money to the account and draw on it too if you want to keep quick access to the cash. nothing beats being debtfree, but if your serious about buying a house, keep saving to use for downpayment and continue with min payments to student loans. i'd hold off on the 401k til your settled with the house and know where you stand.
 
Two small comments:

1) Try to avoid PMI at all costs. It is a complete waste of money that could be well used for other things.

2) Get your credit reports and see how you're doing. If not well - fix the mistakes and build a higher credit rating. This will reward you with a better interest rate when you ultimately do apply for a loan. I was rewarded with a nice low, 30 yr fixed rate because of my credit rating.

Another to add: there are some great bargains to be found now and in the next couple years at least. Whatever you do - do not offer full price on any property. That is foolish in this market. Sellers still don't realize how little their home is worth right now and are still asking WAY too much.
 
The savings account is a great idea.
Look into an ING account right now they are around 3.65%
if you want a referral link let me know
 
thanks everyone for the replys so far. It backs up what I was thinking which is good, a good reality check for me. Glad I am not to far off.

I know and figure that the market will be good for the next year or to.

I was thinking about getting a high rate savings account or cd going seperate from my saving to get a down payment going. I want a savings of about what I have so I have some reserve cash if needed or can support myself if I have the bag luck of being with out a job for a few months.

I have heard and agree that PMI should be avoided.

401k was a side note. looking at my paycheck I would still take enough home contributing upwards of 10% based an a online calculator I used to check some numbers. I know you have to pay interest if you take money from it, but I am not planning to do this at all.

cerdit score, it was about 730 or so a two or three years ago, so i don't think that I have a problem there. I always pay off my cc's every month, normally without touching anything I have saved.

time to really start saving and start to look and research.
 
OK now that you have all that stuff figured out. Where are you going to be looking.

and make sure it has a big garage for winter motor swaps.
 
ctmystique said:
OK now that you have all that stuff figured out. Where are you going to be looking.

and make sure it has a big garage for winter motor swaps.
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not sure where I would look yet, kinda want a perminant job first but I suppose around this area would be nice. I want to stay in CT.

oh yeah, a two bay garage at a minimum if possible :crazy: :laugh:
 
Yup PMI = Lame as we found out. It keeps jumping around for us. When we first started making payments they were just south of $300. Now they are $350. That is with a fixed intrest rate of 5.5%. We went threw a first time home buyers thing so we didn't "need" to put any money down on the house. That is a good thing and a bad thing. We took that money and sunk some of it into the house in improvments, so that is good. But then we are paying intrest on that part of the loan that it would have covered. We are planning on moving in a year or two anywhos.
 
frenchblueC2 said:
don't settle for just two. We're regretting it. :D
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lol, ok, ideally I would want a 4 car garage and some apartment space above would be perfect :laugh:

well my parents have a two car garage and a cover it, works well at the moment ... although they only use half of the garage ...
 
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