First home purchase a bit earlier than we planned for...
February 8, 2014 7:38 AM Subscribe
My husband and I agreed a few months ago that in about three years we would purchase a house. We're being pushed out of our apartment, and we're considering doing it a bit earlier than planned. Problem: down payment savings. We don't have much of one. I kind of feel like we're special snowflakes, so it's ok. Are we?
posted by lup badik to Home & Garden (16 answers total) 7 users marked this as a favorite
The circumstances: After my last question, I was able to work out a better plan of action with my current job. Also, I found out that I might just be better at my job than I thought, and there's a lot of interest in me from other companies in the area that I've networked with. My husband is also very happy with his job, and geographically close to his family (which is pretty important to him). We live in an awesome city that has most of what we want, and that's growing pretty well. In short, we're really happy here. We had planned to spend about three years in our current apartment saving up, and then purchase a house here. Except our apartment was just bought, and the new owners want us out at the end of the lease so they can knock down our building. We love the neighborhood we live in, and would like to stay here, but it doesn't have a ton of rentals. My husband thinks we should just buy now, and I'm starting to agree with him.
The problem: We planned to save for our down payment over 3 years. At the point we're looking to buy we'll only have a year's worth set aside (for the down payment - we have other savings for other issues that we won't dip into for this). This translates to maybe 5%-10% down, plus closing costs and a few thousand more for emergency move in repairs. I know normal answers would be "don't consider it without at least 20%," but I think we may be an exception.
Why I think we're an exception: With a 15 year mortgage + taxes we'd still be halving our rent payment. The extra ~$600-$900/month would allow us to store up some money for emergency repairs and perhaps even pay extra on the house. After talking to our credit union, they've confirmed that we'd (probably) qualify for an FHA loan, and that they would also (probably) have other decent options that we'd qualify for as well, even with the smaller down payment.
My parents and in-laws are both encouraging us to buy, and it honestly feels like a pretty safe and logical move for us. I just know that everyone isn't as special of a snowflake as they think they are, and that might just be the case in this situation. So - is the at least 20% down a definite rule, or more of a suggestion meant to be seriously considered, but ignored in circumstances like mine?