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this post was submitted on 03 Sep 2023
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Mildly Infuriating
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She could have used that $12k as part of a down payment on her own place.. what on earth is she thinking.
Might've been financed on credit - but even still, it takes a lot more than $12k for a down payment.
Assuming the median price for a home is $500k, you'd need $100k for a traditional 20% down payment. Sure, $12k is 12% of the way there... but it's nowhere near what is needed for an actual down payment.
Also shop around for mortgage lenders (hint: credit unions) that will give you a break on the mortgage insurance if you put down at least 5% down.
There are also closing costs and other fees. I bought a house in 2020 using the native American home loan program.
I had to put down two and a quarter percent as a minimum and on a $500,000 house that should have been $11,250, but the total to close was actually a touch over 20 grand.
It took me several years to save up that money and it disappeared in a flash.
FHA loans need 3.5% last I checked. So her $12k wasn’t far off for a $500k dollar place. Yes they also require PMI for a bit, but better putting money into something that causes gains for yourself than for a landlord. As this article so clearly proves.
It's not far off but in the current market someone will just offer more than you and you won't get it anyway.
Or they offer all cash.
People will often ignore FHA offers or take lesser conventional offers. FHA loans fall through more often and have additional requirements on the property. I've worked in mortgage for years. Took an offer for 5k less when I sold my first home to take a conventional loan offer....
Anyone who's dealt with real estate knows how much more likely the conventional offer is to close. In a seller sided market no one wants to take government loans.
You also need 2-6% for closing costs. People always ignore that.....
I doubt your pulled out of ass price for a house. And you don't need a 20% down payment. The highest down payment minimum is like 10% and most people don't need that much. All depends on the type of loan though.
The reason why people go for the 20% Mark is because once you clear 20% then you don't have PMI, or private mortgage insurance. That typically runs three quarters of a percent of the purchase price of the house until you have 22% of the house paid off, and you have to pay that on top of your mortgage, the interest, and the taxes and insurance.
For every $100,000 you finance that means that if you pay less than 20% down you will have to pay an extra $750 a year just as a "couldn't afford 20% down" fee.
And typically to get the first quarter of your mortgage paid off takes 10 years, so for many people that will be $7,500 per $100,000 they borrow to buy a house as the poverty cherry fee on top of everything else.
I'm aware, having bought my house about 2 years ago. It doesn't change any of what I said. 20% is nice for that reason but it is not a requirement and most people don't put 20% down because they don't have the money to do so.
Hell, I intentionally didn't put 20% down because my interest rate was under 3%. Was better off taking the extra money and sticking it in investments.
You can also work with the lender to perform an appraisal once you have 22% equity due to the property value increasing which may only take a couple of years depending on the market.
Nah you can put lower you just need mortgage insurance so you’re paying a bit extra on mortgage due to not having to save up for 5 years to afford it (which would mean the price probably rising by enough in those 5 years that you’ll need to save up for another year and now you’re 6 years behind on a payment lol.) if you’re saving up while renting you’re probably paying close to mortgage for rent (or more if you’re in certain areas) plus putting more aside to save for that down payment so you should be able to afford the slightly higher mortgage until you get to that 20%.
Depending on where you live that's way too high. That's like an NYC price or something.
Also depending on where you live that's way too low. Median home price in California is almost $800k.
https://www.redfin.com/state/California/housing-market
Almost like $500k is a good rough number used to make a point.
Hmm. Now I wonder what the average is. Where I live 200k CAD isn't unusual, but then again you don't want to live here. On the other hand, a house in Vancouver might be 2 million CAD, from what I hear.
It would be a fine estimate on it's own, but it was actually used as a comeback to someone else claiming you could use a smaller amount for a downpayment, so I don't think the indignance that I'm questioning it is justified.
For 2 million in Vancouver you're living in a cardboard box
@EnglishMobster@kbin.social was making the point that $12k is typically not enough for a down payment on a house. They did some rough math as an example showing that a $500k house would require a $100k deposit if you're putting 20% down. You nitpicked this number. However $500k for a house is a very reasonable number, so I'm nitpicking your nitpick. I guess we're all assholes here.
Anyway, USA median house price is $420k. For a 20% deposit you'd need $84k. Canada is worse than the US with an average house price of almost $670k.
Because I'm pendantic, the $420K USD is actually higher than the $670K CAD. $670K CAD is $491,321 , $420K USD is $572,854 CAD.
I wish you could buy a decent house for 500k in NYC…
What about a really basic house? I'll admit that was just a guess; USD is larger than CAD, and Canadian prices are already some of the largest in the world.
Some people don't want to be tied down with a mortgage and find renting to be better. It's similar to leasing a car.
People are dumb.
Think about how stupid the average person is and realize half of them are stupider than that.