How shall we buy our first house?

[sdrealtor]

Thanx Ted

[SD Realtor]

One simulation I would run would be to consider borrowing from the 401k to eliminate the PMI. The calculation is trivial, essentially add up the PMI and the differential in interest and then consider if you would be able to match that return for the amount of time it would take you to be able to remove the pmi. I know that the time period is somewhat arbitrary however (and this is personal) I cannot stand giving away money. PMI alone is 4800 a year by your calculation above so in 10 years you are close to 50k. Similarly with 20% down your origination costs will be less so you need to add that in as well. Add in the smaller amount of interest you will pay over (pick what is less, the life of the loan or the length of time before you sell the home)and it may be an eye-opener for you.

Now if you are the type of person that will walk away from the home should it depreciate or something like that, then disregard what I said and go 3.5% FHA. If not then running a simulation of what I proposed above may be useful unless you feel you will be making a substantially better return on the 401k.

Just food for thought.

[SD Realtor]

One simulation I would run would be to consider borrowing from the 401k to eliminate the PMI. The calculation is trivial, essentially add up the PMI and the differential in interest and then consider if you would be able to match that return for the amount of time it would take you to be able to remove the pmi. I know that the time period is somewhat arbitrary however (and this is personal) I cannot stand giving away money. PMI alone is 4800 a year by your calculation above so in 10 years you are close to 50k. Similarly with 20% down your origination costs will be less so you need to add that in as well. Add in the smaller amount of interest you will pay over (pick what is less, the life of the loan or the length of time before you sell the home)and it may be an eye-opener for you.

Now if you are the type of person that will walk away from the home should it depreciate or something like that, then disregard what I said and go 3.5% FHA. If not then running a simulation of what I proposed above may be useful unless you feel you will be making a substantially better return on the 401k.

Just food for thought.

[SD Realtor]

One simulation I would run would be to consider borrowing from the 401k to eliminate the PMI. The calculation is trivial, essentially add up the PMI and the differential in interest and then consider if you would be able to match that return for the amount of time it would take you to be able to remove the pmi. I know that the time period is somewhat arbitrary however (and this is personal) I cannot stand giving away money. PMI alone is 4800 a year by your calculation above so in 10 years you are close to 50k. Similarly with 20% down your origination costs will be less so you need to add that in as well. Add in the smaller amount of interest you will pay over (pick what is less, the life of the loan or the length of time before you sell the home)and it may be an eye-opener for you.

Now if you are the type of person that will walk away from the home should it depreciate or something like that, then disregard what I said and go 3.5% FHA. If not then running a simulation of what I proposed above may be useful unless you feel you will be making a substantially better return on the 401k.

Just food for thought.

[SD Realtor]

One simulation I would run would be to consider borrowing from the 401k to eliminate the PMI. The calculation is trivial, essentially add up the PMI and the differential in interest and then consider if you would be able to match that return for the amount of time it would take you to be able to remove the pmi. I know that the time period is somewhat arbitrary however (and this is personal) I cannot stand giving away money. PMI alone is 4800 a year by your calculation above so in 10 years you are close to 50k. Similarly with 20% down your origination costs will be less so you need to add that in as well. Add in the smaller amount of interest you will pay over (pick what is less, the life of the loan or the length of time before you sell the home)and it may be an eye-opener for you.

Now if you are the type of person that will walk away from the home should it depreciate or something like that, then disregard what I said and go 3.5% FHA. If not then running a simulation of what I proposed above may be useful unless you feel you will be making a substantially better return on the 401k.

Just food for thought.

[SD Realtor]

One simulation I would run would be to consider borrowing from the 401k to eliminate the PMI. The calculation is trivial, essentially add up the PMI and the differential in interest and then consider if you would be able to match that return for the amount of time it would take you to be able to remove the pmi. I know that the time period is somewhat arbitrary however (and this is personal) I cannot stand giving away money. PMI alone is 4800 a year by your calculation above so in 10 years you are close to 50k. Similarly with 20% down your origination costs will be less so you need to add that in as well. Add in the smaller amount of interest you will pay over (pick what is less, the life of the loan or the length of time before you sell the home)and it may be an eye-opener for you.

Now if you are the type of person that will walk away from the home should it depreciate or something like that, then disregard what I said and go 3.5% FHA. If not then running a simulation of what I proposed above may be useful unless you feel you will be making a substantially better return on the 401k.

Just food for thought.

[UCguy]

[quote=jstoesz]
Unless people like you demand more, sit out and keep renting like you are doing. This will never get better. If you are looking for a place to have paid off in your retirement, buy a sweet cabin on Mt. Laguna or Forest Falls or even further away (I bet you can find a sweet 1930 fixer for 130k).

That is my off the wall, probably unsolicited advice. Make your cabin your family’s constant. My favorite memories of my life, and of my parents life, have been time spent at the cabin.[/quote]

“Demand” more? What planet do you live on?! Hell, we are glad to have jobs! There are VERY FEW jobs in our area of expertise. I moved to industry because I demanded more. Do you know how little a PhD earns in academia if not a tenured Professor? My wife is paid relatively well for academia, and has enviable job stability, plus benefits galore.

In case we weren’t clear, we were looking for a HOME for us and our children and our parents, close to schools and shopping center and not TOO far from our work places, not a vacation home.
Maybe when the kids go to college, and our parents pass away, we move to a chepaer place. We aren’t in love with San Diego, too expensive, but so are all the major cities on the Coasts where we can both find jobs.

[UCguy]

[quote=jstoesz]
Unless people like you demand more, sit out and keep renting like you are doing. This will never get better. If you are looking for a place to have paid off in your retirement, buy a sweet cabin on Mt. Laguna or Forest Falls or even further away (I bet you can find a sweet 1930 fixer for 130k).

That is my off the wall, probably unsolicited advice. Make your cabin your family’s constant. My favorite memories of my life, and of my parents life, have been time spent at the cabin.[/quote]

“Demand” more? What planet do you live on?! Hell, we are glad to have jobs! There are VERY FEW jobs in our area of expertise. I moved to industry because I demanded more. Do you know how little a PhD earns in academia if not a tenured Professor? My wife is paid relatively well for academia, and has enviable job stability, plus benefits galore.

In case we weren’t clear, we were looking for a HOME for us and our children and our parents, close to schools and shopping center and not TOO far from our work places, not a vacation home.
Maybe when the kids go to college, and our parents pass away, we move to a chepaer place. We aren’t in love with San Diego, too expensive, but so are all the major cities on the Coasts where we can both find jobs.

[UCguy]

[quote=jstoesz]
Unless people like you demand more, sit out and keep renting like you are doing. This will never get better. If you are looking for a place to have paid off in your retirement, buy a sweet cabin on Mt. Laguna or Forest Falls or even further away (I bet you can find a sweet 1930 fixer for 130k).

That is my off the wall, probably unsolicited advice. Make your cabin your family’s constant. My favorite memories of my life, and of my parents life, have been time spent at the cabin.[/quote]

“Demand” more? What planet do you live on?! Hell, we are glad to have jobs! There are VERY FEW jobs in our area of expertise. I moved to industry because I demanded more. Do you know how little a PhD earns in academia if not a tenured Professor? My wife is paid relatively well for academia, and has enviable job stability, plus benefits galore.

In case we weren’t clear, we were looking for a HOME for us and our children and our parents, close to schools and shopping center and not TOO far from our work places, not a vacation home.
Maybe when the kids go to college, and our parents pass away, we move to a chepaer place. We aren’t in love with San Diego, too expensive, but so are all the major cities on the Coasts where we can both find jobs.

[UCguy]

[quote=jstoesz]
Unless people like you demand more, sit out and keep renting like you are doing. This will never get better. If you are looking for a place to have paid off in your retirement, buy a sweet cabin on Mt. Laguna or Forest Falls or even further away (I bet you can find a sweet 1930 fixer for 130k).

That is my off the wall, probably unsolicited advice. Make your cabin your family’s constant. My favorite memories of my life, and of my parents life, have been time spent at the cabin.[/quote]

“Demand” more? What planet do you live on?! Hell, we are glad to have jobs! There are VERY FEW jobs in our area of expertise. I moved to industry because I demanded more. Do you know how little a PhD earns in academia if not a tenured Professor? My wife is paid relatively well for academia, and has enviable job stability, plus benefits galore.

In case we weren’t clear, we were looking for a HOME for us and our children and our parents, close to schools and shopping center and not TOO far from our work places, not a vacation home.
Maybe when the kids go to college, and our parents pass away, we move to a chepaer place. We aren’t in love with San Diego, too expensive, but so are all the major cities on the Coasts where we can both find jobs.

[UCguy]

[quote=jstoesz]
Unless people like you demand more, sit out and keep renting like you are doing. This will never get better. If you are looking for a place to have paid off in your retirement, buy a sweet cabin on Mt. Laguna or Forest Falls or even further away (I bet you can find a sweet 1930 fixer for 130k).

That is my off the wall, probably unsolicited advice. Make your cabin your family’s constant. My favorite memories of my life, and of my parents life, have been time spent at the cabin.[/quote]

“Demand” more? What planet do you live on?! Hell, we are glad to have jobs! There are VERY FEW jobs in our area of expertise. I moved to industry because I demanded more. Do you know how little a PhD earns in academia if not a tenured Professor? My wife is paid relatively well for academia, and has enviable job stability, plus benefits galore.

In case we weren’t clear, we were looking for a HOME for us and our children and our parents, close to schools and shopping center and not TOO far from our work places, not a vacation home.
Maybe when the kids go to college, and our parents pass away, we move to a chepaer place. We aren’t in love with San Diego, too expensive, but so are all the major cities on the Coasts where we can both find jobs.

[UCguy]

[quote=SD Realtor]One simulation I would run would be to consider borrowing from the 401k to eliminate the PMI. The calculation is trivial, essentially add up the PMI and the differential in interest and then consider if you would be able to match that return for the amount of time it would take you to be able to remove the pmi. I know that the time period is somewhat arbitrary however (and this is personal) I cannot stand giving away money. PMI alone is 4800 a year by your calculation above so in 10 years you are close to 50k. Similarly with 20% down your origination costs will be less so you need to add that in as well. Add in the smaller amount of interest you will pay over (pick what is less, the life of the loan or the length of time before you sell the home)and it may be an eye-opener for you.

Now if you are the type of person that will walk away from the home should it depreciate or something like that, then disregard what I said and go 3.5% FHA. If not then running a simulation of what I proposed above may be useful unless you feel you will be making a substantially better return on the 401k.

Just food for thought.[/quote]

Excellent idea, SD R! Thanks. Yes, it is the risk of having to pay back 401k though within 3 months of leaving your job that kind of stops us. I also loathe the idea of paying PMI, though I understand the necessity. It seems that with my wife’s 401k (actually 403b for UCSD, same thing)loan you can keep paying even if you change jobs. I’d still keep around in cash the amount equal with whatever I borrow from my 401k, just for such cases. (we have equal amounts both in her 403b and my 401k). Not likely we will both lose jobs. If that happens, for a longer time, well, we might have to walk. But no, we are not walking away if we can make the payments, regardless of depreciation.

[UCguy]

[quote=SD Realtor]One simulation I would run would be to consider borrowing from the 401k to eliminate the PMI. The calculation is trivial, essentially add up the PMI and the differential in interest and then consider if you would be able to match that return for the amount of time it would take you to be able to remove the pmi. I know that the time period is somewhat arbitrary however (and this is personal) I cannot stand giving away money. PMI alone is 4800 a year by your calculation above so in 10 years you are close to 50k. Similarly with 20% down your origination costs will be less so you need to add that in as well. Add in the smaller amount of interest you will pay over (pick what is less, the life of the loan or the length of time before you sell the home)and it may be an eye-opener for you.

Now if you are the type of person that will walk away from the home should it depreciate or something like that, then disregard what I said and go 3.5% FHA. If not then running a simulation of what I proposed above may be useful unless you feel you will be making a substantially better return on the 401k.

Just food for thought.[/quote]

Excellent idea, SD R! Thanks. Yes, it is the risk of having to pay back 401k though within 3 months of leaving your job that kind of stops us. I also loathe the idea of paying PMI, though I understand the necessity. It seems that with my wife’s 401k (actually 403b for UCSD, same thing)loan you can keep paying even if you change jobs. I’d still keep around in cash the amount equal with whatever I borrow from my 401k, just for such cases. (we have equal amounts both in her 403b and my 401k). Not likely we will both lose jobs. If that happens, for a longer time, well, we might have to walk. But no, we are not walking away if we can make the payments, regardless of depreciation.

[UCguy]

[quote=SD Realtor]One simulation I would run would be to consider borrowing from the 401k to eliminate the PMI. The calculation is trivial, essentially add up the PMI and the differential in interest and then consider if you would be able to match that return for the amount of time it would take you to be able to remove the pmi. I know that the time period is somewhat arbitrary however (and this is personal) I cannot stand giving away money. PMI alone is 4800 a year by your calculation above so in 10 years you are close to 50k. Similarly with 20% down your origination costs will be less so you need to add that in as well. Add in the smaller amount of interest you will pay over (pick what is less, the life of the loan or the length of time before you sell the home)and it may be an eye-opener for you.

Now if you are the type of person that will walk away from the home should it depreciate or something like that, then disregard what I said and go 3.5% FHA. If not then running a simulation of what I proposed above may be useful unless you feel you will be making a substantially better return on the 401k.

Just food for thought.[/quote]

Excellent idea, SD R! Thanks. Yes, it is the risk of having to pay back 401k though within 3 months of leaving your job that kind of stops us. I also loathe the idea of paying PMI, though I understand the necessity. It seems that with my wife’s 401k (actually 403b for UCSD, same thing)loan you can keep paying even if you change jobs. I’d still keep around in cash the amount equal with whatever I borrow from my 401k, just for such cases. (we have equal amounts both in her 403b and my 401k). Not likely we will both lose jobs. If that happens, for a longer time, well, we might have to walk. But no, we are not walking away if we can make the payments, regardless of depreciation.

[UCguy]

[quote=SD Realtor]One simulation I would run would be to consider borrowing from the 401k to eliminate the PMI. The calculation is trivial, essentially add up the PMI and the differential in interest and then consider if you would be able to match that return for the amount of time it would take you to be able to remove the pmi. I know that the time period is somewhat arbitrary however (and this is personal) I cannot stand giving away money. PMI alone is 4800 a year by your calculation above so in 10 years you are close to 50k. Similarly with 20% down your origination costs will be less so you need to add that in as well. Add in the smaller amount of interest you will pay over (pick what is less, the life of the loan or the length of time before you sell the home)and it may be an eye-opener for you.

Now if you are the type of person that will walk away from the home should it depreciate or something like that, then disregard what I said and go 3.5% FHA. If not then running a simulation of what I proposed above may be useful unless you feel you will be making a substantially better return on the 401k.

Just food for thought.[/quote]

Excellent idea, SD R! Thanks. Yes, it is the risk of having to pay back 401k though within 3 months of leaving your job that kind of stops us. I also loathe the idea of paying PMI, though I understand the necessity. It seems that with my wife’s 401k (actually 403b for UCSD, same thing)loan you can keep paying even if you change jobs. I’d still keep around in cash the amount equal with whatever I borrow from my 401k, just for such cases. (we have equal amounts both in her 403b and my 401k). Not likely we will both lose jobs. If that happens, for a longer time, well, we might have to walk. But no, we are not walking away if we can make the payments, regardless of depreciation.

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