Mortgage Down Payments

[Fishindude77]

Put as much down payment as you possibly can, take a short term fixed interest loan, and pay the thing off as rapidly as possible. Then, no matter what happens with the real estate market, your job, etc. you have a roof over your head and no bankers beating on your door. You can sell at a loss and still walk away with money in hand.

I think most importantly, don't over extend yourself. If a $100K house will work for you, don't buy a $200K house just because it has some cool features. Being a slave to the bank is a no win deal.

[amastewa93]

Being a slave to the bank is a no win deal.

Yes! We both have a goal of being financially "free" so this is a must. We're also both pretty set on not having children (though that may change). So, a smaller, more affordable house is the goal.

[LivingAlmostLarge]

I think if you live in an area where 20% makes sense then it is probably better to do that. We live in California and unfortunately condo and home prices are so expensive you will never be able to have 20% down unless you buy a small condo and make money off of it a few year after you sell.

Caligirl since myself and Monkeymama started in CA we can speak with experience. Personally everyone we know in CA did what you are saying waited. They refused to think outside the box and accept less than something nice.

MM I think also bought a condo but that condo flipped into a huge money maker for DH and I. trust me two graduate students could not have saved enough to buy homes in the places we've lived if we didn't take the road less traveled. We bought asap with 10% DP and we flipped that into more homes and lived there. Each place we took a risk and we made a bunch of money.

We basically turned $15k into $400k in 14 years because of where we've lived. And we've had a place to live. We didn't put a penny more down than what we put down. Our equity built a little but mostly interest. We've also gambled on adjustable rate mortgages and have one now.

During those year the first five or so years we made a combined $40k. Sometimes you have to make sacrifices in HCOLA and buy homes that are perfect to get ahead. And then do things others would find inconceivable.

If you can do that you can make money. Now we're sitting pretty and relaxing. And yes I know we have a lot more income now, but because of our early gambles we're further ahead in our investments because we were able to focus our income on investing instead of buying a home.

[corn18]

I say barf on any plan that requires appreciation to work. Glad it worked for some, but past performance is no indication of future gains.

[LivingAlmostLarge]

I say barf on any plan that requires appreciation to work. Glad it worked for some, but past performance is no indication of future gains.

No in HCOLA areas you buy something you can afford and suck it up. Rents are expensive. When we bought our condo rents were $1200 and our condo about the same. So suck it up and buy a 1 bedroom condo.

Most people wouldn't live in a 1 bd condo for years with a spouse and then turn and flip it into something else.

You have to do things others wouldn't in a HCOLA. We didn't bank on appreciation. Actually thought we bought at the peak. But we knew we could afford it and that it was better than renting. And paying it down helped a lot.

[TexasHusker]

I say barf on any plan that requires appreciation to work. Glad it worked for some, but past performance is no indication of future gains.

I think most investments depend on price appreciation to work. While I don't consider a home an investment in the purist sense, certainly it is often the biggest wealth builder for families.

[prosper]

I live in a HCOLA and just broke even this year after buying in 2005. I did not put anything down and I had an adjustable mortgage. In addition, I was laid off twice during this period and have not worked a traditional 9-5 since 2012. Also, I had just financed two cars prior to the my 2nd layoff and my wife got laid off a year prior.

Cash flow, debt income ratio, and savings are very important me when making any financial decision. Fortunately, I did not lose my home because I had an adequate savings account. My biggest regret is not the terms of the loan but overpaying for my home.