Hi, My husband and I are currently saving up for our first home. We’re in our mid 20’s with no kids, both college educated with good careers, no kids (but 2 lovely dogs). We’re currently renting and paying off a car loan before looking into buying a home. I have a strong desire to save up 20% for a home, but I’m a little surprised how much discouragement I’ve gotten from friends and even our financial advisors.
Out of all our friends, only 1 has put down 20% or more on their home (much older, ~40) and only 1 other friend with home experience (10+ yrs) has said she wished she would’ve waited longer to put down more. The rest of our friends are our age and have put down less than 20% and are very defensive of that choice saying that anything more than 10% doesn’t really get you any advantages in terms of better credit scores, PMI was like $20/mo for them and would fall off when they hit 20% equity, payments weren’t significantly more, and they valued the liquidity in keeping more cash in their bank accounts. Now, I try not to pry into other people’s finances as a friend, so these are just the things they’ve offered up when I’ve asked for their advice, but it confuses me as a financial professional. I’ve run some numbers myself, but want to branch out to the community for fresh perspectives. My husband and I asked our financial advisors and they didn’t seem to feel very strongly one way or another. I couldn’t tell if it was because they thought we valued buying a home sooner rather than later (in which case we did not have 20% at the time we asked) or if they didn’t expect us to want to wait or what.
With that being said, do first time, or other, home buyers still put down 20%? Does that old rule still make sense? Arguments for and against.
Submitted May 25, 2020 at 06:56PM by Salahandra https://ift.tt/2ZALyF7
