Did you put 20% down?

[PilsnPinkysMom]

No need to share your home value... but did you put 20% down on your first (or latest?) home purchase?

Less? More? Either way, are you happy you saved as much as you did?

All mortgage calculators and finance websites say 20% is the magical number, but when you think of a $700,000 (or more) home, that''s a whooola lotta money. Then again, if you can afford a $700,000+ home, perhaps saving 20% isn''t a big deal... but isn''t it all relative?

Thanks for sharing

As a potential soon-to-be-homeowner, I''m curious about how many people stick to this 20% guideline, pay less, or pay more. TIA!

 

[kenny]

I put only 5% down 10 years ago.
Then I had to pay PMI for a while.

Six years ago I refinanced to get a 15-year fixed at 4.875%.
Nine years to go.

I think the rule are much more strict today than 10 years ago and don't know if you can even buy with 5% down any more.

 

[Octavia]

We haven''t purchased our first home yet, but when we do, we will put down at least 20% because we want to feel like we actually own a significant portion of our home from the start. Our preferred mortgage would actually require 25% down, so hopefully we''ll be able to swing that along with closing costs and such. This is part of the reason we''re waiting until I graduate and find a job before purchasing, though -- that amount would pretty much wipe out what DH has managed to save since he''s been working, and we''re not comfortable with that, so we want a bit more time to save before buying.

 

[elrohwen]

I don't have a home yet, but I have every single intention of sticking to 20%. Especially because starter homes in my area are $350-400k, the lower mortgage payments and additional security provided by 20% would be worth it. It's a ton of money though! Just the thought of saving up $80k makes me dizzy. We had about 25% of that total before I lost my job; we won't need to spend it, but I'm sad we'll have to put off saving very much for a while. It seems like it'll take forever!

 

[meresal]

Date: 1/5/2010 7:44:59 PM
Author: kenny
I put only 5% down 10 years ago.
Then I had to pay PMI for a while.

Six years ago I refinanced to get a 15-year fixed at 4.875%.
Nine years to go.

I think the rule are much more strict today than 10 years ago and don''t know if you can even buy with 5% down any more.

Some loans allow you to buy with as little as 3% down.

We are currently building and we will be putting at least 10% down. Depends on nhwo much we will continue to save towards it until the house is finished. We have a couple different "savings accounts" for different pruposes, but since you technically don''t NEED 20% anymore, we would rather hold onto alot of that money for now.

 

[NewEnglandLady]

I was just speaking with a coworker today about this. We are both house hunting and he was saying that no mortgage company is willing to secure a mortgage without at least 10% down and how it's difficult for couples to start out when you live in an area where homes start at $500K. He and his wife have been living with his parents for 2 years in order to save up their downpayment. I know it's been tough for them, but overall I think it's a much healthier lending practice.

We will be putting down at least 20%. We'll put down as much as is feasible because I want the mortgage paid off ASAP. We've been saving for a long time and I have to admit that it's hard to part with the money. We had a finalized purchase and sales agreement to sign last week and the deal fell through and already I'm thinking "Maybe we can live in 1,800 SF instead of 2,500 SF in order to take out a smaller loan." I hate to have to go into debt in the first place.

 

[kittybean]

We''re planning on putting 20% down and are really trying to stick to it. It''s actually not that hard at the moment because we can''t find anything we like, and we are both so busy that it''s hard to find time to keep looking. And more time working = less time spending = more time saving.

Good luck with your house search, Pils! Hope you find something near my house .

 

[searchingforemeraldcut]

This is an exciting time for you!!

My DP was 10%, then I had to pay low deposit insurance because the DP was less than the 25% required by the bank.

Make sure you shop around or go with a broker who can negotiate a better deal.

 

[joflier]

I put 0% down - 3 years ago. I didn''t have any savings back then, and it would''ve been nice to have been able to do so. But I was grateful for the option so that I could still own a home.

 

[Skippy123]

We put 20% down 9 yrs ago and then a year later the interest rates dropped I calculated that it would be worth it to refinance from a 30 yr to 15 yr mortgage, so we did. It is hard coming up with 20% I think; it took us saving a lot before we bought our house.

eta: we didn't want to pay PMI either!

 

[mimzy]

we put 15% down, then took out a (very) small second mortgage to pay the remaining 5% to avoid PMI. We''ll be able to pay off that second loan within a year or two, so it was no big deal

 

[purrfectpear]

20%, 20%, 30%, 5%, and the one I''m in now, I paid cash. No mortgage is heaven. It''s so freeing to know that in this economy, even if I lost my job I could make the HOA just flipping a burger at Micky D''s

 

[rainwood]

We bought our first home in 1978 and at that time, where we were, it was standard to put down 20% and we did. What is different today is that most people''s first homes are not the starter houses we were buying. Our first house was a 2-bedroom, 1-bath in need of major renovation, and that''s what most of our friends bought too. These houses were modest at best. The price tags were smaller (even factoring in inflation, housing boom etc.) because the homes were smaller. So a 20% down payment was doable. That''s not to say we didn''t have to economize and save to buy a house, but it was doable.

To me, the big difference now is in expectations of some first-time buyers. I blame the home renovation shows. All these couples walk in and talk about wanting master suites, granite counters, updated appliances, hardwood floors, etc. Most people starting out can''t afford all that unless they make a really small down payment. I think the 20% rule is a good way to keep people from buying more house than they should the first time out. Others may disagree, but I believe if we''d still had that rule in place, the housing market meltdown could never have happened. People would have bought houses only when they could truly afford to do so, and the houses would have been more in line with their budgets.

 

[Dancing Fire]

yes, when we bought our home in 1986. IMO... there should be a law that require at least 20% d/p.

 

[E B]

Date: 1/5/2010 8:00:40 PM
Author: elrohwen
I don't have a home yet, but I have every single intention of sticking to 20%.

This, absolutely. We don't own yet and most likely won't until we have enough saved.

 

[butterfly 17]

Our first home we did a 15%/5% so essentially 20% with no PMI. This home we live in now we did put a little over 22% down. And it did cost us a little over the price in the OP.

 

[Dancing Fire]

Date: 1/5/2010 8:27:28 PM
Author: purrfectpear
20%, 20%, 30%, 5%, and the one I''m in now, I paid cash. No mortgage is heaven. It''s so freeing to know that in this economy, even if I lost my job I could make the HOA just flipping a burger at Micky D''s

yea, b/c the law allowed you to screw your last creditor. no mortgage is heaven alright,but just remember somebody else is paying for it.

 

[that_someone_special]

Our home was essentially given to us- we owe 38% of what our home is worth (as of ''10).. though percentage wise we used to owe a lot less- until the home dropped 60K in 3 years

Let me tell you, it''s NICE not owing more on the mortgage than the house is worth...

 

[Dancing Fire]

Date: 1/5/2010 8:46:51 PM
Author: rainwood
We bought our first home in 1978 and at that time, where we were, it was standard to put down 20% and we did. What is different today is that most people''s first homes are not the starter houses we were buying. Our first house was a 2-bedroom, 1-bath in need of major renovation, and that''s what most of our friends bought too. These houses were modest at best. The price tags were smaller (even factoring in inflation, housing boom etc.) because the homes were smaller. So a 20% down payment was doable. That''s not to say we didn''t have to economize and save to buy a house, but it was doable.

To me, the big difference now is in expectations of some first-time buyers. I blame the home renovation shows. All these couples walk in and talk about wanting master suites, granite counters, updated appliances, hardwood floors, etc. Most people starting out can''t afford all that unless they make a really small down payment. I think the 20% rule is a good way to keep people from buying more house than they should the first time out. Others may disagree, but I believe if we''d still had that rule in place, the housing market meltdown could never have happened. People would have bought houses only when they could truly afford to do so, and the houses would have been more in line with their budgets.

very true!!

 

[studyer83]

I do not currently own, but plan on putting down a substantial downpayment. If you do not, it is a long time until you have ANY appreciable equity interest in your home--ie, until you are a homeowner. The 0% thing just changes your rent payments to loan payments, with some tax benefits.

I agree. If people had to save 20% before taking out a whopping sum, we wouldn''t be in this mess. It would also discourage people from walking away from mortgages. Although that is often the economically savvy thing to do (a sad state of affairs...) if people had to take more of an equity interest in the property interest, they would stand to loose more when defaulting.

 

[sparklyheart]

I put 10% down but took out an 80/20 loan so I didn''t have to pay PMI.

 

[Iowa Lizzy]

We just bought our first house in August. We put 20% down. FI wants to refinance our 30 year fixed mortgage to a 15 year fixed. I''d rather just win the lottery and pay it all off now.

 

[upgrade]

We were just shy of 20%- we wouldn;''t have been comfortable with any less than that. And I''ll add that we make *very* sure we had enough in savings to cover us for a long time in case of emergency. Thank God for that because my self employed, commission paid dh got very sick very suddenly and ended up off work for 6 months with literally zero notice. I had just had a baby (as in days before) and wasn''t working. We''d have been royally screwed if not for our savings.

 

[Bella_mezzo]

10% on a "no-doc" loan on my first place in 2004.

Things are a lot different now, but when we were researching options for our mortgage for our new place last Nov. there are still a lot of options with different down payments. 20% offers you the most mortgage products but there are other ones. Just be sure you can afford your mortgage payment and you read all the fine print.

 

[TravelingGal]

We would be putting 20% down, and here in LA that''s a lot. Of course, here in LA, homes aren''t affordable, which is why we are in a rental...and I love it!

 

[radiantquest]

We are looking to buy a house currently, but it is the 20% that is holding us back. We need another house so badly. I have a full dining room set that is awesome, but I have no dining room to put it in. We have too much stuff for our tiny house. I mean we just got married and don''t have $60K extra. There is a little equity in our current house, but not that much. I would love to be able to do it without, but DH refuses.

 

[Cehrabehra]

First house we put 0% down (VA loan) and our 2nd house we put 33.3% down. We still own both houses.

 

[Elmorton]

I think this question depends a lot on variables that you''re not asking.

If you''re buying a house at $100k, the difference you''d be paying a month between a 20% down payment and a 10% down payment is a mortgage of $700 vs $622, roughly. In a two-income household, frankly, there''s not a big difference there. Yes, I know it adds up over time, but this difference is what many US couples spend in going out to eat in a week, and continuing to rent could be a much bigger spending rut, as that money isn''t going toward your equity.

For my situation, we didn''t put 20% down because frankly, we weren''t planning on buying a house at that moment. We live in an area where the housing market is stable and housing is affordable. When we calculated our possible mortgage with what we did have to put down, it ended up being barely more than we were paying in rent. The way I see it, if your rent=your mortgage, it makes sense to buy in pretty much every situation. Even if we sold our house for the exact penny that we paid, we will essentially have lived here for free, whereas rent is money that you''re just handing someone else to go toward their investment, not your own. So, while it would have been nice to have more down, it was a smarter move to buy and get out of the losing cycle of renting.

And I don''t at all mean to imply that renting is a bad deal for everyone. But, where I live, the housing market is fairly stable, and housing is extremely affordable. In a metro area where rent is much cheaper than a mortgage, a person really can save money by renting. It just depends on where you live and what the market is like.

Now, when you''re talking a house that''s a half mil, the difference between 20% and 10% is what, about 1k? That is probably a difference to most people that is worth spending some more time saving to avoid. But, the bottom line is that you have to do the calculations for yourself, look at the difference between 10% and 20% and figure out what it''s worth to you - get in the house now and spend a bit more per month, or get in the house later and spend less, factoring in what you spend/save in your current living situation.

 

[Cehrabehra]

we are a single income household and have no real desire to have a huge mortgage - we want to move back to california but only have like a 300k mortgage which means on a 700k house we''d have to have 400k down and we don''t... it''s a lot to ask to save so much money to put down, but it''s also a lot to ask for seriously high monthly payments every month month after month lol

 

[movie zombie]

yes, definitely did put 20% down. paying PMI is throwing $ out the window.

i read an article today that said we should return to buying a home, not a palace....or an investment. it also stated that new buyers should purchase a home at 75% of what they have been approved for a loan. just because one is approved doesn''t mean one has to get that amount as a loan. it also stated that every effort should be made to pay off early and that even one extra payment per year can make a difference over the long run. the article was really about returning to our grandparents values and not overloading ourselves with debt. and the writer doesn''t buy the idea that things cost more now, etc. his point of view is that things weren''t easy for our grandparents either and the only thing many of them bought on credit was a home.


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