Firstly, I agree with the Pigg camp that states you absolutely need 20+% to put down in order to buy. But given your ages, I don’t think it is prudent to borrow from your 401K/403b plans. You never know what will happen in your life that could prevent you from paying it back after you purchase your home.
I agree with sdduuuuude. Especially that PMI is a nightmare and will add another time-consuming and bureaucratic layer of “qualifying” to your mortgage application process. Your lender’s PMI company will likely put your monthly income and outgo, etc., under a microscope during your escrow. Later, you will waste many months haggling with your lender and paying for an appraisal while you attempt to terminate it, IMO.
[quote=UCguy]Our rent is about $2200 for a 1800 sf home in PQ. Yes, of course the rent may vary in the next 10 years.[/quote]
This is high rent for an 1800 sf house. I’m not advocating that you move to South County, but it is only about $1850 mo for rent on a 2200 sf house in my neck of the woods. If you only have one small child, do you really NEED 1800 sf right now? School district doesn’t matter until your child will be entering the first grade. Attendance at a public kindergarten would be a good experience for your child anywhere, IMHO. In addition, kindergarten attendance is not mandatory in CA.
Your daycare costs of $1000 mo for one child is too high. Have you considered a good private or home daycare situation? Many of these caregivers are trained teachers and some even have a credential in CA or another state. Many home daycare providers offer a pre-K program in the mornings and also will pick up your child from morning or afternoon public kindergarten. I would venture that you can get FT care (incl meals & snacks, 3 hrs pre-K and naptime) for $600 – $750 mo for one child in a licensed daycare home F/T (may be less for kindergarteners). The Neighborhood House Assn gives home daycare providers in SD County vouchers for Food-4-Less to enable them to follow a strict nutritional menu for breakfast and lunch. They can either use convenience food (peel-off jellos/puddings and toaster waffles, for example) or make these items from scratch and return the unused vouchers every month for “Little Tike” vouchers. These points are used to buy “Little Tike” playground equipment for their backyards. Here are a couple of links to get a referral.
If you can lower your rent for the next 2-3 years to =<$1500 and lower your daycare expense to $600-$700, you will free up another $1000+ per month to save for your downpayment.
I wouldn’t worry so much about accumulating a huge amt of cash reserves upon closing. Lenders requirements vary between 2 and 6 months. If your place isn’t perfect when you move in or (has an old frig, old carpet, etc.), I would just clean the carpet (if not done) and fix/replace minor things, paint as needed and move in, if there were no safety issues (i.e. a very old H/W heater). Contrary to popular belief, you don’t NEED to spend thousands the minute you take title to a house and before you move in. You can make repairs/improvements little by little.
And read the “Tightwad Gazette” as scaredy suggested here :=]
