What would you do?

[Nords]

Put down the 20% and you will earn a guaranteed 9 or 10% simply by not having to pay up for the loan.

I think that's one of the best explanations I've ever read of the justification of a 20% down payment.

To say nothing of the PMI premiums.

 

[Mary_From_Georgia]

Since I consider mortgage brokers to vy for last place in the ethical sweepstakes with used car salesmen, annuity hucksters, televangelists, and former Intel middle managers, I will assume you meant taht as a compliment...

Really, it is just my experience of having been at about the same income level and carrying a $240k mortgage.

Brewer, out of curiosity---what was your other expense load @ the time. I am not married or have kids....yet.

 

[Hamlet]

I think the most important question you need to ask is:

"Why do I want to own a home?"

I'm 35, and I didn't buy a house until Feb 2005. I shared an apartment with various friends and co-workers over the years (1996-2005), and my share of the rent started at about $400 and ended at about $600.

I could have bought a house at anytime, but it would have increased my expenses (and chores) dramatically. I didn't buy a house, funnelled my excess money into the stock market, and did very well financially.

In 2005, though, I purchased a house, because I wanted to live in a house. I now had a SO that I was serious about (now we're married), and I had developed hobbies that require a house (gardening and fish breeding).

My house is not going to be a great investment, IMO. I paid a little too much, it needed more work than I realized, etc. However, I didn't buy the house as an investment, I bought it as a place to live. I have 10 fish tanks in my basement and a decent sized (and growing) garden. We are able to afford the extra costs associated with owning a home and still live well below our means.

Buying a house has an investment component to it, but it is much more important to enjoy living there. I don't think of my home as an investment-- if I wanted to invest in real estate I would buy REITs. They pay nice dividends and I never have to mow a lawn for a REIT I own

I bought my home because I wanted to live in it.

 

[Meadbh]

financial leverage

Can you please explain how the loss would be any different depending on your down payment? Am I missing something?

Leverage (finance - Wikipedia, the free encyclopedia)

Financial leverage (FL)takes the form of a loan or other borrowings (debt), the proceeds of which are reinvested with the intent to earn a greater rate of return than the cost of interest. If the firm's return on assets (ROA) is higher than the interest on the loan, then its return on equity (ROE) will be higher than if it did not borrow. On the other hand, if the firm's ROA is lower than the interest rate, then its ROE will be lower than if it did not borrow. Leverage allows greater potential return to the investor than otherwise would have been available. The potential for loss is also greater, because if the investment becomes worthless, the loan principal and all accrued interest on the loan still need to be repaid.

Also, check out the link to The Retail Investor : How to Use Leverage and Measure Its Effect

 

[cute fuzzy bunny]

Since I consider mortgage brokers to vy for last place in the ethical sweepstakes with used car salesmen, annuity hucksters, televangelists, and former Intel middle managers, I will assume you meant taht as a compliment...

I'd trust a mortgage broker over a guy who pumps an investment, subsequently dumps his holdings just before it drops like a rock and then waits a week to tell anyone he got out.

Or, you could just look at my avatar...

 

[FinanceDude]

Since I consider mortgage brokers to vy for last place in the ethical sweepstakes with used car salesmen, annuity hucksters, televangelists, and former Intel middle managers, I will assume you meant taht as a compliment...

Tell us how you really feel, brewer...........

 

[Meadbh]

Mary, I would like to know....

If you are now earning $112K and spending $19K, what are you doing with the other $93K minus taxes? Basically, if you want to live in a house, you will have to spend some of it on the house. Up to you.

 

[jIMOh]

I make slightly over $100,000/yr excluding bonuses and am now interested in purchasing a home.

While beginning to explore the market, I'm noticing that my tastes gravitate to homes in the $280,000 to $400,000 range. The lower end being foreclosures.

I have no other debt obligations and given that this is a buyer's market:

1) Would I be over-extending myself purchasing in this range? *I hate owing someone money, so the fact that this would be "good debt" still doesn't appease me psychologically*

2) Get the most I can afford (guidance), and wait for the housing wave to pick back up.

I live in East Atlanta, am single, and 42.

Thanks,
Mary

A $950 mortgage payment suggests a value of around 100k on the mortgage at 6% creates a payment of close to $1000. These are aproximates at best.

I think single and age is the factor vs square footage of property.

Did you look at condo's? Do a condo at low end (1200 sq ft, $200k?) then trade up 5 years later after you have some equity.

If the 400k houses are 2000+ sq ft, I would ask how you intend to use all that room, then consider smaller places (like 1200 sq ft condos or houses). Wife and I have 3400 sq ft, with twins on the way, we are 34 and 33 yo. We have space for family to grow in without moving. Every situation is different, and moving is a pain. That being said, se did buy a condo, then move out 5 years later with close to 40k in equity when we only put $8000 down.

 

[dex]

Don't go with an condo (apt.) in Atlanta. It is overbuilt and you will not get your money back for many years.
Townhomes do OK but will not appreciate well as a single family home in the Atlanta area. I would not recommend a townhome outside of the Atl. Metro area.