[quote=ncounty4]We actually already own a house that has declined in value, so we would be walking away from any equity we built. We have a rapidly growing family and don’t see why we should have to live in a townhouse when we make a quarter million dollars a year. We can actually afford well over an $800k house from a monthly cash flow perspective, but still value things like savings and investing. We also have 20% to put down, but unlike most people, don’t want to liquidate absolutely every asset we have to get into a house.[/quote]
Seems to me it’s pretty risky these days that if you don’t have 20% to put down on a home, you are buying too much home.
I thought I read a posting by someone that says they won’t offer loans to anyone for a second home who doesn’t show 30% equity in the home they plan to hold on to. That very well may be your case.
If you take a step back, I think it’s actually a good think banks aren’t qualifying you, considering I’m a taxpayer and part of my tax bill is going into this bailout.
While your household income is “higher” than average, with all due respect, you are carrying a larger risk by holding onto a depreciating condo AND not having enough savings to cover the bigger home….You are looking at it from a cash flow, but that assumes best case scenario. In this economy, forget about raises,etc, you aren’t factoring in potential unemployment that may hit you or your spouse or both for which you will need to live on your savings (which folks tend to underestimate).
If you don’t have 1 year’s worth of savings set aside for your expenses in this economy, I call this big risk if you plan on holding onto a depreciating condo + buying a new home at the same time. Normally, I’d say have a 6 month buffer, considering most of the time you would get some unemployment from CA….except it wouldn’t surprise me if you start seeing IOU’s from CA instead of actual payments….I’m being serious here. CA is up a doodoo and there was an article about CA going IOUs to people that overpaid their taxes in 2008.
