Posted on: 30th Apr, 2007 05:27 am
I am in my 20's staying with my mom and dad in their own home. I have a full time job and work overseas. I stay here only for 4 months in a year, so there's no use renting. I would rather like to buy a home. Currently I am saving so that I can get a home of my own. I have bought a car and cleared all payments on it. I am still paying for a student loan which I had taken while in college. The monthly payment comes out to $150 and the balance has come down to $15000. I have also applied for credit card and paying it fine, no outstanding debt on that.
I have been putting my savings into a high yield savings account earnings around 6%. And I earn a little above 45K. I have also invested into mutual funds and Roth IRA for 2006. I have also taken advantage of my company's 401k plan. The company matches dollar for dollar half of what I contribute and then an additional thousand/. Now, my questions I should I be strictly saving for 20% down payment to get a better mortgage rate so that I can get a decent home. Should I invest more into the Roth IRA for 2007 or add it to mutual funds or just kept it into the savings account?
I have been putting my savings into a high yield savings account earnings around 6%. And I earn a little above 45K. I have also invested into mutual funds and Roth IRA for 2006. I have also taken advantage of my company's 401k plan. The company matches dollar for dollar half of what I contribute and then an additional thousand/. Now, my questions I should I be strictly saving for 20% down payment to get a better mortgage rate so that I can get a decent home. Should I invest more into the Roth IRA for 2007 or add it to mutual funds or just kept it into the savings account?
Hi Melvin,
It will depend in how many years you plan to buy the home and which price range you are looking at for the home. You need to distribute the funds into all the investment options you have instead of putting higher percentage into one particular option.
Down payment can be very less in some of the mortgage programs nowadays like the mycommunity program and for fha loans, so if you qualify it will not be necessary to make 20% down payment.
Miller
It will depend in how many years you plan to buy the home and which price range you are looking at for the home. You need to distribute the funds into all the investment options you have instead of putting higher percentage into one particular option.
Down payment can be very less in some of the mortgage programs nowadays like the mycommunity program and for fha loans, so if you qualify it will not be necessary to make 20% down payment.
Miller
Hi Melvin,
Welcome to Mortgagefit forum.
You should divide your funds so that it gets distributed among all the open options you have. Saving for down payment will be quite helpful in keeping the rate down.
But in addition to it you need to calculate when you are going to make the purchase. And check in what price range you want to buy the house. Only then you will get a clear picture of how much savings you have and what amount you have to save to make a 20% downpayment and divide your funds accordingly.
Colin
Welcome to Mortgagefit forum.
You should divide your funds so that it gets distributed among all the open options you have. Saving for down payment will be quite helpful in keeping the rate down.
But in addition to it you need to calculate when you are going to make the purchase. And check in what price range you want to buy the house. Only then you will get a clear picture of how much savings you have and what amount you have to save to make a 20% downpayment and divide your funds accordingly.
Colin
Hi Melvin,
I think you should save more for a 20% down payment. There are advantages to putting down 20% of the home value. You'll be getting a favorable interest rate and you will also have a cushion in case the home value goes down. What I mean is that, if you have not borrowed above 80% of the home value, and the home prices are on a downward trend, then you need to pay an amount equal to or below 80% of the home value in order to clear the debt. And, you can get the money from the sale proceed itself.
I had also bought a home a few years back and had put down only 5%. And had to pay the PMI and at that time there wasn't any tax deduction on the PMI as has been declared by the federal government for the year 2007.
Thanks.
I think you should save more for a 20% down payment. There are advantages to putting down 20% of the home value. You'll be getting a favorable interest rate and you will also have a cushion in case the home value goes down. What I mean is that, if you have not borrowed above 80% of the home value, and the home prices are on a downward trend, then you need to pay an amount equal to or below 80% of the home value in order to clear the debt. And, you can get the money from the sale proceed itself.
I had also bought a home a few years back and had put down only 5%. And had to pay the PMI and at that time there wasn't any tax deduction on the PMI as has been declared by the federal government for the year 2007.
Thanks.