How shall we buy our first house?

[an]

I might be on the conservative side but if I’m in your shoes, I’d buy a cheaper house (~$350k) that would be at or close to cash flow neutral. If I have $52k to down right now, downing 20% for a $350k would mean you’d have to borrow ~$20k from your 401k. It’ll be much easier to pay off $20k than $50k. In the mean time your payment will be fixed at a relatively low number. With your income, I’m sure you can save another $100k easily over the follow 5 years. In 5 years, you can always move up and either sell your current place or rent it out if the price drops too much. Also, with a $350k house, it’ll give you breather room if one of you lose your job.

I tend to try and plan for worse case scenario and hope for the best. Although the above is not worse case, it’s still very conservative. With your hind of HH income, it would be too long before you save enough to buy a bigger house.

[UCguy]

[quote=AN]I might be on the conservative side but if I’m in your shoes, I’d buy a cheaper house (~$350k) that would be at or close to cash flow neutral. If I have $52k to down right now, downing 20% for a $350k would mean you’d have to borrow ~$20k from your 401k. It’ll be much easier to pay off $20k than $50k. In the mean time your payment will be fixed at a relatively low number. With your income, I’m sure you can save another $100k easily over the follow 5 years. In 5 years, you can always move up and either sell your current place or rent it out if the price drops too much. Also, with a $350k house, it’ll give you breather room if one of you lose your job.

I tend to try and plan for worse case scenario and hope for the best. Although the above is not worse case, it’s still very conservative. With your hind of HH income, it would be too long before you save enough to buy a bigger house.[/quote]

Thanks, AN, I always appreciate your practical, well-informed comments.

The only problem I see with your suggestion is finding that place that’s big enough, good enough that is rent neutral. My bet is that we won’t be able to sell it at original price in 5 years and don’t think we want to play landlords. But, yes, we could save 100k in 5 years for anothe downpayment.

Actually even if we could find something like that – if it’s not in the area we want to eventually buy we wouldn’t do it – we don’t want to move the kids again in 5 years when they are in middle and high school. By that time, to buy a bigger house it would be almost pointless. Another 5 more years and the kids will be (hopefully) out of the house….

But, thinking conservatively, AN, what do you think about continuing to rent for 3-4 years until we have 20% down – and buying only in PQ so the kids can continue in the same schools? Wouldn’t that be just as conservative?

[UCguy]

[quote=AN]I might be on the conservative side but if I’m in your shoes, I’d buy a cheaper house (~$350k) that would be at or close to cash flow neutral. If I have $52k to down right now, downing 20% for a $350k would mean you’d have to borrow ~$20k from your 401k. It’ll be much easier to pay off $20k than $50k. In the mean time your payment will be fixed at a relatively low number. With your income, I’m sure you can save another $100k easily over the follow 5 years. In 5 years, you can always move up and either sell your current place or rent it out if the price drops too much. Also, with a $350k house, it’ll give you breather room if one of you lose your job.

I tend to try and plan for worse case scenario and hope for the best. Although the above is not worse case, it’s still very conservative. With your hind of HH income, it would be too long before you save enough to buy a bigger house.[/quote]

Thanks, AN, I always appreciate your practical, well-informed comments.

The only problem I see with your suggestion is finding that place that’s big enough, good enough that is rent neutral. My bet is that we won’t be able to sell it at original price in 5 years and don’t think we want to play landlords. But, yes, we could save 100k in 5 years for anothe downpayment.

Actually even if we could find something like that – if it’s not in the area we want to eventually buy we wouldn’t do it – we don’t want to move the kids again in 5 years when they are in middle and high school. By that time, to buy a bigger house it would be almost pointless. Another 5 more years and the kids will be (hopefully) out of the house….

But, thinking conservatively, AN, what do you think about continuing to rent for 3-4 years until we have 20% down – and buying only in PQ so the kids can continue in the same schools? Wouldn’t that be just as conservative?

[UCguy]

[quote=AN]I might be on the conservative side but if I’m in your shoes, I’d buy a cheaper house (~$350k) that would be at or close to cash flow neutral. If I have $52k to down right now, downing 20% for a $350k would mean you’d have to borrow ~$20k from your 401k. It’ll be much easier to pay off $20k than $50k. In the mean time your payment will be fixed at a relatively low number. With your income, I’m sure you can save another $100k easily over the follow 5 years. In 5 years, you can always move up and either sell your current place or rent it out if the price drops too much. Also, with a $350k house, it’ll give you breather room if one of you lose your job.

I tend to try and plan for worse case scenario and hope for the best. Although the above is not worse case, it’s still very conservative. With your hind of HH income, it would be too long before you save enough to buy a bigger house.[/quote]

Thanks, AN, I always appreciate your practical, well-informed comments.

The only problem I see with your suggestion is finding that place that’s big enough, good enough that is rent neutral. My bet is that we won’t be able to sell it at original price in 5 years and don’t think we want to play landlords. But, yes, we could save 100k in 5 years for anothe downpayment.

Actually even if we could find something like that – if it’s not in the area we want to eventually buy we wouldn’t do it – we don’t want to move the kids again in 5 years when they are in middle and high school. By that time, to buy a bigger house it would be almost pointless. Another 5 more years and the kids will be (hopefully) out of the house….

But, thinking conservatively, AN, what do you think about continuing to rent for 3-4 years until we have 20% down – and buying only in PQ so the kids can continue in the same schools? Wouldn’t that be just as conservative?

[UCguy]

[quote=AN]I might be on the conservative side but if I’m in your shoes, I’d buy a cheaper house (~$350k) that would be at or close to cash flow neutral. If I have $52k to down right now, downing 20% for a $350k would mean you’d have to borrow ~$20k from your 401k. It’ll be much easier to pay off $20k than $50k. In the mean time your payment will be fixed at a relatively low number. With your income, I’m sure you can save another $100k easily over the follow 5 years. In 5 years, you can always move up and either sell your current place or rent it out if the price drops too much. Also, with a $350k house, it’ll give you breather room if one of you lose your job.

I tend to try and plan for worse case scenario and hope for the best. Although the above is not worse case, it’s still very conservative. With your hind of HH income, it would be too long before you save enough to buy a bigger house.[/quote]

Thanks, AN, I always appreciate your practical, well-informed comments.

The only problem I see with your suggestion is finding that place that’s big enough, good enough that is rent neutral. My bet is that we won’t be able to sell it at original price in 5 years and don’t think we want to play landlords. But, yes, we could save 100k in 5 years for anothe downpayment.

Actually even if we could find something like that – if it’s not in the area we want to eventually buy we wouldn’t do it – we don’t want to move the kids again in 5 years when they are in middle and high school. By that time, to buy a bigger house it would be almost pointless. Another 5 more years and the kids will be (hopefully) out of the house….

But, thinking conservatively, AN, what do you think about continuing to rent for 3-4 years until we have 20% down – and buying only in PQ so the kids can continue in the same schools? Wouldn’t that be just as conservative?

[UCguy]

[quote=AN]I might be on the conservative side but if I’m in your shoes, I’d buy a cheaper house (~$350k) that would be at or close to cash flow neutral. If I have $52k to down right now, downing 20% for a $350k would mean you’d have to borrow ~$20k from your 401k. It’ll be much easier to pay off $20k than $50k. In the mean time your payment will be fixed at a relatively low number. With your income, I’m sure you can save another $100k easily over the follow 5 years. In 5 years, you can always move up and either sell your current place or rent it out if the price drops too much. Also, with a $350k house, it’ll give you breather room if one of you lose your job.

I tend to try and plan for worse case scenario and hope for the best. Although the above is not worse case, it’s still very conservative. With your hind of HH income, it would be too long before you save enough to buy a bigger house.[/quote]

Thanks, AN, I always appreciate your practical, well-informed comments.

The only problem I see with your suggestion is finding that place that’s big enough, good enough that is rent neutral. My bet is that we won’t be able to sell it at original price in 5 years and don’t think we want to play landlords. But, yes, we could save 100k in 5 years for anothe downpayment.

Actually even if we could find something like that – if it’s not in the area we want to eventually buy we wouldn’t do it – we don’t want to move the kids again in 5 years when they are in middle and high school. By that time, to buy a bigger house it would be almost pointless. Another 5 more years and the kids will be (hopefully) out of the house….

But, thinking conservatively, AN, what do you think about continuing to rent for 3-4 years until we have 20% down – and buying only in PQ so the kids can continue in the same schools? Wouldn’t that be just as conservative?

[an]

UCGuy, I only gave the rental option because you seem to want to buy now. If continue to rent is an option, I’d do that. You said so yourself that you don’t think price is going anywhere, so why rush?

[an]

UCGuy, I only gave the rental option because you seem to want to buy now. If continue to rent is an option, I’d do that. You said so yourself that you don’t think price is going anywhere, so why rush?

[an]

UCGuy, I only gave the rental option because you seem to want to buy now. If continue to rent is an option, I’d do that. You said so yourself that you don’t think price is going anywhere, so why rush?

[an]

UCGuy, I only gave the rental option because you seem to want to buy now. If continue to rent is an option, I’d do that. You said so yourself that you don’t think price is going anywhere, so why rush?

[an]

UCGuy, I only gave the rental option because you seem to want to buy now. If continue to rent is an option, I’d do that. You said so yourself that you don’t think price is going anywhere, so why rush?

[UCguy]

AN, it is true that now seems like a good time because of the rates and you know, kind of got the itch to buy our long term house since over the years we saw many friends of ours buying and raising happy families there….I know, I know – sort of keeping up with Joneses…not a good idea.

I was actually expecting a lot more of conservative replies, and some heated ones bashing me for NOT putting 20% down AND borrowing from 401k…

It is a scenario worth considering – renting is CHEAPER than owning, after all. Saving enough to lower the financing under 417K might save enough in terms of interest – and then guarantee a lower monthly payment, even with higher interest rates. Besides, the prices may be lower then.

What would Piggs think about this case? If the rates are much higher, would you go for a longer (7-10 yr) ARM and then refi when rates drop more? Is that cost effective?

[UCguy]

AN, it is true that now seems like a good time because of the rates and you know, kind of got the itch to buy our long term house since over the years we saw many friends of ours buying and raising happy families there….I know, I know – sort of keeping up with Joneses…not a good idea.

I was actually expecting a lot more of conservative replies, and some heated ones bashing me for NOT putting 20% down AND borrowing from 401k…

It is a scenario worth considering – renting is CHEAPER than owning, after all. Saving enough to lower the financing under 417K might save enough in terms of interest – and then guarantee a lower monthly payment, even with higher interest rates. Besides, the prices may be lower then.

What would Piggs think about this case? If the rates are much higher, would you go for a longer (7-10 yr) ARM and then refi when rates drop more? Is that cost effective?

[UCguy]

AN, it is true that now seems like a good time because of the rates and you know, kind of got the itch to buy our long term house since over the years we saw many friends of ours buying and raising happy families there….I know, I know – sort of keeping up with Joneses…not a good idea.

I was actually expecting a lot more of conservative replies, and some heated ones bashing me for NOT putting 20% down AND borrowing from 401k…

It is a scenario worth considering – renting is CHEAPER than owning, after all. Saving enough to lower the financing under 417K might save enough in terms of interest – and then guarantee a lower monthly payment, even with higher interest rates. Besides, the prices may be lower then.

What would Piggs think about this case? If the rates are much higher, would you go for a longer (7-10 yr) ARM and then refi when rates drop more? Is that cost effective?

[UCguy]

AN, it is true that now seems like a good time because of the rates and you know, kind of got the itch to buy our long term house since over the years we saw many friends of ours buying and raising happy families there….I know, I know – sort of keeping up with Joneses…not a good idea.

I was actually expecting a lot more of conservative replies, and some heated ones bashing me for NOT putting 20% down AND borrowing from 401k…

It is a scenario worth considering – renting is CHEAPER than owning, after all. Saving enough to lower the financing under 417K might save enough in terms of interest – and then guarantee a lower monthly payment, even with higher interest rates. Besides, the prices may be lower then.

What would Piggs think about this case? If the rates are much higher, would you go for a longer (7-10 yr) ARM and then refi when rates drop more? Is that cost effective?

[Author]

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