Thread: ITT We figure out how to save the US Financial market.

The more you know - since everyone is so freaked out about the economy and the media is painting such a dim picture.. if you're in the market to buy a house (and qualify financially to be buying one), the next few weeks are going to be the best buyer's market we've had in a looooooong time. Even if you're building instead of buying a used house, the people in that industry are so hard up for work, and materials costs are down 20-30% so you can easily get a STEAL.
Too bad I'm still paying off some debt so I am not in the market for a house, otherwise I would be all over this like salt on a pretzel.

Originally Posted by DickStivers

what kind of debt are we talking here? have you actually talked with a lender to see what they would actually require you to pay off in order to qualify for a mortgage? it might be worth your time to do so. go FHA so you only have to come up with 3% down and then ask the seller's to pay all your closing costs, escrows and prepaids so you don't have to come up with an additional $4000 or so on top of of your 3% down. FHA allows up to 6% seller concessions, so they can pay all your closing costs and give you a credit for carpet or appliance upgrades if you like too. i'm seeing mortgages in the less than 125k price range here including principal, interest, taxes and insurance come in at like a grand a month, which is about what it costs to rent a shit 2/2 apartment here.

you are absolutely right about the buyer's market and interest rates are sick low right now

I am aware of that and while it would technically be financially feasible, I would not be comfortable with the risks associated with only having 3% down on a house. We've got our cars paid off but still have my credit card and we both have student loans. The gameplan is we'll start saving for a house once we get everything but the student loans paid off, which should be here in a next few months. I am not interested in either the risks associated with a 97:3 ratio of debt-to-equity or paying money for PMI by having less than 20% down.

Originally Posted by Rick Scarf

I am aware of that and while it would technically be financially feasible, I would not be comfortable with the risks associated with only having 3% down on a house. We've got our cars paid off but still have my credit card and we both have student loans. The gameplan is we'll start saving for a house once we get everything but the student loans paid off, which should be here in a next few months. I am not interested in either the risks associated with a 97:3 ratio of debt-to-equity or paying money for PMI by having less than 20% down.

what are you talking about risks? i understand not wanting to carry the pmi, but it'd only be like $60/month and you could earn that by investing your 17% that you don't dump into the house and keeping yourself liquid for an emergency. as long as you pay your note, there is no "risk", unless i'm missing something here. you guys can defer your student loans no prob. once you have 20% equity in the house, either through appreciation or adding a little extra $$$ to your mortgage payment every month, you can drop the pmi. i'd much rather keep my cash on hand in case a job is lost or an emergeny came up rather than put it into the house for no reason. the rates on FHA vs conventional are pretty competitive and FHA is sometimes lower. i just got someone 6.1% the other day.

i remember you posting on lws about your savings and investments - you seem pretty wise with money and not the type to run up a credit card, so i can't imagine you have much debt...

If my wife or I lost our job at our current incomes we could not afford a $1,000/mo payment, nor the upkeep/maintainence costs a house would require. Also, my job allows me great flexibility with promotions if I am willing to relocate, so there is a real chance that we might move 2-3 years from today and have to sell a house that may have gone down in value since we bought it - If I bought a house I would want to plan on being in it at least 5 years so it would have a better chance of increasing in value.
One of my co-workers is in a shitty situation because he had to move for work, 6 months or more ago, and still hasn't been able to sell his 1st home so he is very strained financially, paying for the house he owns but can't sell, as well as paying rent on his current house. I'm pretty conservative I guess so I just don't see the justification of "playing the system" by deferring student loans to temporarily liquidate funds that are not always guaranteed to be there. Too much risk for my taste.