Buying a house for the first time....

[suzbaby]

Is it better to save up at least 20% of the price of the house for a downpayment?

Or should one just go for the minimum $5-7k (roughly 2%) and bank off the equity you may make?

I am getting conflicting messages from people. Just curious to know what the DU homeowners had in the way of knowledge to impart.

Can I post this in the Lounge? :shrug:

[WCGreen]

1. Well, you are required to pay an extra insurance

in you mortgage if you have less than 20% equity...

But it really depends mainly on the rate of appreciation in your market and the over all shape your local economy is in....

[suzbaby]

3. I guess there's no easy answer.

Thanks for the info.

[sbj405]

6. Not necessarily

I did 5% down. And to mortgages (80%, 15%). The second has a slightly higher interest rate (7%), but it's interest is tax deductible and I can refi when I have the 80% in appreciated value.

My bank also offers straight up mortgages of more than 80% of the value. Again, slightly higher interest rates.

Be careful with mortgage insurance, once you have it, it's very difficult to get rid of.

I'm with WCGreen, depending on the market. You may be able to accur 20% equity in much shorter timeframe than you could ever save it.

[SoCalDem]

2. Don't tie up money you may need for "fixes"

You can always pay mortgage payments ahead, add to the principal as you like.. Closing costs will probably be waaaay more than they tell you too..

When we closed on this house, the agent called us the morning of the closing, that "we would need a bit more, to be paid at the closing....3 hours later".. The "bit more"??? $1200.00 more..

[RedCloud]

4. Try to get a low fixed mortgage rate.

The fewer years the better. I went from a 30 to a 15 yr. and pay about $250 a month more. It's worth it, as now I am under 12 years to go and the mortgage companies are begging me to refinance! Not a chance, suckers!

[AirmensMom]

5. You got that right, RedCloud!

Better to go for 15 yr. and even try to pay a little extra on the principal each month if you can (it doesn't take much to make a difference). We're down to 23 months to go and they actually send the refinance offers via FedEx ... to make them look urgent. Do they really think we're THAT stupid?

[Midlodemocrat]

8. We went from a 30 to a 15 and ended up paying

$11 a month less.

3 years to go....

:woohoo:

[Clintmax]

7. I've been told there are first time home buyers programs...

that give you $10,000 for your down payment. I've been thinking about buying also, but I don't have money for a downpayment. If this is true, that would SURELY help!

[LynzM]

9. Yup, there are some state programs

I don't know about Florida, but there are a couple different ones in CT. They will give you 100% financing and help with closing costs, and you pay a lower interest rate, but you also pay mortgage insurance, and roll the other costs into your loan. So, it's worth looking to figure out if it would really help you save, in the long run. For some people it will, depending on other offers you could get, and for some it won't. Good luck to you!