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View Poll Results: How did you save for your down payment on first home
Paid 20% down on small starter home, built equity for future down payments 35 33.65%
Inheritance or other "family" help 12 11.54%
Paid less than 20% down 41 39.42%
Other 16 15.38%
Voters: 104. You may not vote on this poll

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Old 03-01-2008, 05:55 PM   #21
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Wow, 8.6% annual compounded appreciation and a 113% return on your down payment. Has that continued to be typical for Chicago?
Good question! And I'm hardly the person to ask since, as I stated, we've now been in our "new" home for 31 years. So...... hardly an expert on the local real estate market here!

Would four year periods of 8.6% compounded appreciation be unusual? I thought that recently some areas of the country were doing more than that.....until the RE crash.

113% return on our downpayment.... Hmmmm.... Hadn't thought of it that way. Maybe that's what our friends meant when they said we were nuts for putting so much down. Had we put down less, that return would have be greater.

BTW, that first house quickly became a "tear down." 1100 sq ft houses on one acre lots in swanky Chicago suburbs seem to be sucumbing to "bulldozer remodeling" these past years.

Maybe some of the other board members from the northern Ill area can comment. Have there been other four year periods when getting a 8%+ compounded return on your house occured? I know that would be too high a figure for a long time period, 20 - 30 - 40 years. But not sure it's that unusual for a relatively short burst.
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Old 03-01-2008, 07:15 PM   #22
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VA, FHA, VA, VA (spouse), VA, VA, 20%

VA was basically $0 down. I think FHA was 3% down.
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Old 03-01-2008, 07:43 PM   #23
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It was 37 years ago, and I don't have a clue how we made the down payment. But I do remember the price: $7,500. 30 year FHA loan, payments were $75 a month.
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Old 03-01-2008, 07:53 PM   #24
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We're in Central CA, Coastal. Five years ago put $85K down on a modest 2 bedroom condo and took a 5/1 ARM (at 5.5%) for $340K. That loan reset in October and they jacked the interest up to 7.5%, so we're refinancing and just locked in a 30-year fixed at 5.65%.

We had help with our down payment, from my very creative FIL. He has four kids, all of whom he would like to help with down payments, but only $70,000, which he also needed income from to supplement his retirement. Split 4 ways in CA, that money wouldn't go very far, and put into a savings account he wouldn't get much interest out of it. So he gave it to us first, and we pay him 5% straight interest on the loan, monthly. The deal is that when the next kid is ready to buy a house, we refinance or otherwise pay the loan forward, send the $70K to the next kid, who then takes over the straight 5% interest payment to him, and so on.

The other $15K we saved in one year by LBYM; If we'd had to do the whole down payment by ourselves we would have moved into a studio, ditched a bunch of our stuff, and worked our tails off for a couple of years. FIL made it come easier and quicker, and we're grateful for it. But we spent the last five years LBYM, saving like mad, and building equity in our condo so that we could pay the next kid off when the time came. So, in a sense, we saved our down payment in a few years by LBYM, but AFTER moving into our current home.

I love the ingenuity of this plan, and it's working well so far.

If you get some sort of deal like this with family, be aware that many lenders don't like or won't allow you to have a loan for a down payment (unless you're working out a 80/20 scheme with them or so forth). So you might need to figure out a way to work around those requirements.
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Old 03-01-2008, 08:06 PM   #25
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It was 37 years ago, and I don't have a clue how we made the down payment. But I do remember the price: $7,500. 30 year FHA loan, payments were $75 a month.

Wow! Usually FHA down was 3% or about $225 in your case. I did FHA in CA in 1986 right when they were changing the program and paid $5,000 total for a 85,000 loan. About a 12,000% return at my present market value.

So at 4% annual compounded appreciation rate you are living in a $32,000 house or at 8% annual compounded appreciation rate you are living in a $129,000 house. At 8% I'm thinking I can deal with the scorpions and chiggars, etc.

Texas appreciation, myth or fact?

4% Appreciation my *ss
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Old 03-01-2008, 08:21 PM   #26
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Bought in 1991 having saved for a downpayment for the previous 10 years. Put down 70% (yes, ladies and gentlemen), got a 6 month closed mortgage at 10%, paid some more down at the end of that term, got a 1 year closed at 8%, paid it all off 18 months after moving in.

Am now considering a move to a location with high property costs. Went to a presentation centre just for fun today. "We have two bedroom condos at $857K, one bedroom condos at $534K, and three bedroom penthouses at $1.2 milliion."

EEEk!



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Old 03-01-2008, 08:45 PM   #27
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Bought my first home in 1971 for $26,000 . We put down $5,000. We later sold that house for $110,000 . I rolled my profit into my second house and in 1995 I bought my third house for cash .
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Old 03-01-2008, 08:46 PM   #28
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It was 37 years ago, and I don't have a clue how we made the down payment. But I do remember the price: $7,500. 30 year FHA loan, payments were $75 a month.
Yeah but what were you making? $200/mo?

My dad loves to tell the same stories about how everything cost a penny when he was a kid. I have to keep reminding him that you had to work all day for a penny then, and by the next morning it was worth 10% less...

I made my first down payment the old fashioned way. I sold a business and paid cash for the house.
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Old 03-01-2008, 08:48 PM   #29
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Yeah but what were you making? $200/mo?
Hell no! I was making $325.
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Old 03-01-2008, 08:51 PM   #30
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All in ones, right?
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Old 03-01-2008, 08:54 PM   #31
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First house: in 1977, bought for $42,000 -- assumed the previous owner's mortgage (I don't think anyone does that anymore!). Payments were $270/month. Down payment of $10,000 was a combination of savings and $3,000 no interest loan from my parents. [House was in a great neighborhood, but was a disaster inside. Every door was broken and nearly every wall had a fist hole in it -- previous owner had a son with "anger management" issues! The house went unsold for nine months before we saw it; other homes in the neighborhood were selling on average in two weeks or so. Worked our butts off to completely redo inside and sold it eight years later for $120,000.]
Other houses since then we've rolled over the profit as the down payment.
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Old 03-01-2008, 08:55 PM   #32
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We bought our first house in So Cal in 2001 for $260K with 20% down. It's a small place in a nice neighborhood and needed a lot of cosmetic work. We saved up for the downpayment by living cheaply prior to that. My parents also loaned us 15K (paid back after a few years) that gave us some extra confidence about putting all our cash into the house. We could have done it without their help, but we would have worried more.

We're renting that place out now and we've moved to CO (it's nice! you'll like it! ). On this house (170K), we put down only 5% because the rates were still decent and with USAA we didn't have PMI.
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Old 03-01-2008, 09:08 PM   #33
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Hell no! I was making $325.

Waittaminnit! 1968, in school, totally not legal age, working as a professional janitor for Holiday Inns in Cincinnati 11pm to 7am. Hey, teach me something and I'll stay awake! Paid $1.75 an HOUR!!! equals $303 a month!! What were you? A nooculeer scientiest? Minimum was $1.00 and got all my buddies on board.
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Old 03-01-2008, 09:17 PM   #34
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First house: in 1977, bought for $42,000 -- Worked our butts off to completely redo inside and sold it eight years later for $120,000.]
Other houses since then we've rolled over the profit as the down payment.

WOW! Figuring you spent no more that 25% of your purchase price for interior repairs you had 11% annual compounded appreciation in the 80's in Michigan!!!

4% Appreciation my *ss
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Old 03-01-2008, 09:23 PM   #35
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Hey Bob...any chance you might find yourself a SECOND note? :

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Old 03-01-2008, 10:05 PM   #36
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Long and hard

I had roommates and saved much of my income for a long time and I really doubted I ever would be able to buy, but by age 33 I had amassed 25% down to qualify at a 36% debt to income ratio. I had no other debt, and it was the only way I could qualify by myself. Since the returns on my down payment had been so heavily taxed, within a year my tax adjusted mortgage payment on a 3 bed/2 bath was the same as rent on a 2 bed apt. Quite an easy transition, and when rates dropped a few years later, a refinance made it even cheaper. I paid it off 12 years later after I retired. I have made almost as much on it as on my investments. I am now a captive though since taxes would eat me alive if I moved. I am satisfied with it though.
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Old 03-01-2008, 11:29 PM   #37
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We rented for 3 years before we bought our first house. That was in 1977. As I recall the price was around $35,000. We paid 10% and paid PMI. I am still amazed we even found that much in the sofa to make a down payment at all. DW was not what you call a "saver" so saving was a distant dream.

We moved after a couple of years to a different state and the only house we could find was $50,000. We barely had enough for a down payment after selling the first house. We stayed there for 4 years and I moved out of the country for 3 years. We rented house #2 while we were renting a house in the other country.

After 3 years, we moved back to the states and sold house #2 and bought house #3 for $115,000. We moved two years later in the trough of real estate prices in our area and lost all our equity over the prior 10 years.

We moved to another state and rented for a year while we saved some $ and ultimately borrowed more than half of a down payment on house #4. We lived there for 3 years until we divorced. The house was sold and she took the gain on the house and bought a condo. I rented with an option to buy in a fixer upper. I bought the house (#5) after a year. Lived there for another year and then moved. Sold #5 and rented in new location for a while. Remarried and together we combined our previous equities and bought house #6. We lived there for 9 years. Moved to another state and sold #6 and some land we had purchased with the intent of building. Made a bit on the land and the house and bought house #7 with a 60% downpayment. I have lived here 5 years and the house is now up 40%.

We also bought a cabin (house # eight) in the mountains near here in 2002. Sold it in 2007 and made enough to remodel the house and buy a large chunk of a RV and put some in a MM for expenses.

We will be selling house #7 this year and will buy house #9. We will most likely sell it and buy something smaller in a few years. Who knows after that. We expect to have little or no mortgage on house # 9 and none from there on.
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Old 03-02-2008, 02:52 AM   #38
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I bought a vacant lot in 1977 for 13k - borrowed 10k. Paid it off in 1981, sold it and saved a little more to buy 5 acre lot for 20k in 1983. Built first house for 60k on the 20k lot in 1984. Also built detached garage. Saved 84k and bought 2nd 5 acre lot in 1993. Took out construction loan and started building on 2nd 5 acre lot in 1994. Sold first house in 1995 for 185k (135k in equity). Applied the 135k in equity to the 2nd house and ended up with a 115k mortgage.
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Old 03-02-2008, 07:24 AM   #39
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First house with 1st wife was $78K in 1979, I think 5% down with PMI, interest rate was 11 7/8%, money saved by living in an apartment on one income and saving the other - both of us made the same income. Sold that one during the divorce for $91K in 1984, when the dust settled I ended up with $7.4K, some furniture, my clothes and a 1970 Plymouth Duster. Moved back in with Mom, banked all I could for 18 months and bought another house in late '85 for $94K, again 5% down with PMI, interest rate 11.5%. Foolishly, I had also bought a new '85 Chevy pickup truck with a $315/month payment for 3 years. Those were lean times, but I worked overtime often and that paid for little luxuries like radio control airplane stuff. Brown-bagged lunch and ate a lot of spaghetti. Also had no employment-related expenses since the employer issued a car and all equipment. The house had almost no furniture in it for about 4 years but at the time I didn't care. I just wanted my own place, I figured the rest would come with time and it did. Very often a "date" with very understanding and patient 2nd-wife-to-be (didn't know it then) was renting a movie, spaghetti, bottle of wine and a fire in the fireplace.

Refinanced a couple of times as interest rates dropped and had it paid off in 14 years by paying extra on principal when able later on. That was a high-dollar area by then, sold it at retirement for $280K in 2002, (they're going for $500K now, aarrgghh!) moved to a less-congested area, wrote a check for the current house and two new vehicles to replace the 14 and 18 year old ones we had, both of which were falling apart.
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Old 03-02-2008, 01:46 PM   #40
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I'll be totally honest. We had saved enough on our own but both of our parents kicked in on both of our houses without us asking.

Thanks Mom and Dad.
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