Home Buying in Babylon>Question Details

Gina Santonas, Home Buyer in 11222

I am anxious to have an investment but I do no have the 20% down. Should I wait or put less down?

Asked by Gina Santonas, 11222 Tue May 27, 2008

I am a single woman renting from a relative. I am anxious to have an investment but I do no have the 20% down. With the market so good for buyers I am trying to decide is I should buy now with less money down or wait 5 years until I have the 20% down payment. I pay low rent now and have been saving $1000 a month. I would get a housemate and only use it as a weekend house for now since my present situation is so good and close to work.

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Gina, it appears you're in a good position now, saving $1,000 each month... that'll be a great way for you to save up the 20% you need, and it might not take 5 years.

While I'm not a big proponent of renting, I'm also not a fan of "jumping into ownership" unprepared, and part of being prepared (especially these days) is having an adequate down payment. That downpayment does two things #1) helps reduce your month-to-month costs of your loan #2) lowers your exposure, should the market continue to decline, and allows you the ability to sell without having to wait for the market to recover.

We're moving back to a lending marketplace, like those our parents experienced, and that means "if you don't have the downpayment, you should wait until you do". (IMHO).
1 vote Thank Flag Link Tue May 27, 2008
Alan May, Real Estate Pro in Evanston, IL
With an FHA insured loan, you can buy with as little as 3% down. If you buy wisely now, you should be significantly ahead of where you would be in five years. If you have a house-mate, all the better.

For about everything you may want to know, see the Home Buyer Info page of my Web site. The link to the "benefits of home ownership" will outline what you may miss out on if you wait.

For everything else you may need to know, meet with a mortgage loan officer and get yourself pre-qualified, and find a good REALTOR member of the MLS with whom to make a buyer representation agreement. None of this will cost you any more, and it could save you a lot of money and frustration.
1 vote Thank Flag Link Tue May 27, 2008
Do not listen to people who are telling you to buy now. Yes, the price of a house that was 400,000 last year , is 330,000 now, but next year it very well might be 250,000. Mortgage brokers, agents, etc are getting desperate these days and will tell you things that worked a few years ago like "this house will not last" , "its priced to sell", etc. Most respected investors will tell you bottom on LI will not hit until late 2009, maybe even 2010. For example, money magazine predicts a 14.4 percent drop in home prices on Long Island between May 08 and May 09. Look at the amont of inventory and forclosure rates and you will see. A good site for some truth to the real estate outlook on Long Island is longislandbubble.com. Good luck in whatever you decide to do.
0 votes Thank Flag Link Tue May 27, 2008
I have never been a fan of renting (except in certain exceptional situations) when one could easily afford home equity ownership. Live within your means. Start to build equity now in everything you can possibly get involved with on a personal investment level. A moderate house to live in on a full time basis is step one. Step two would be getting a conservative first rate saving and investment program going that you can build on throughout your life.
0 votes Thank Flag Link Tue May 27, 2008
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