Personal Finance Questions

[Radio Flyer1647545514]

Is there a book or a recommendation for someone to talk to so I can get a better understanding of how I should be prioritizing my personal financial goals?

 

My current goal is to obtain %20 for a house down payment but, I don't know how to prioritize how I save that money vs. what I put into my Roth IRA and my investment account and what I keep on hand in savings past my 6 month safety net.

[jerrodh]

If you have a good job/income and a good credit score you will not need close to 20% for a down payment.

 

I don't have my closing documents in front of me but we closed with a downpayment somewhere around 5%.

 

If you are renting the best possible thing you could do is get into owning as fast as possible. I rented for way to long. Could of had half my house paid off by now. Worst financial mistake I ever made was not buying sooner.

 

Now the bad part is it's a sellers market as home values are skyrocketing but I wouldn't let that scare you as long as you secure a great rate (which are out there now)

 

I would put every single penny you could reasonably afford towards your house goals. Because 100% of every rent payment goes to absolutely nothing you own. That just gives you a roof for another month. Soon as you start making mortgage payments at least a portion of that money goes directly to something you can sell and recoupe maybe even gain on if you do upgrades to your home and the market appreciates.

 

 

 

 

Edit: If you are thinking you want 20% so you don't have to pay PMI who cares. Again this goes back to renting vs. owning. Least some of the money you are paying is going to owning something. The measly PMI payment that is included in my mortgage is well worth working towards owning something. Not to mention property can be a great financial booster. My brother years ago bought a foreclosure in an up and coming area, did some updates (modest and almost all of it himself, normal stuff paint, affordable kitchen upgrades, etc.) then sold his house for easily 2x what he bought it for.

[Radio Flyer1647545514]

I'm looking to avoid a PMI payment.

[jerrodh]

Each to their own but are you renting or what?

 

I would take a PMI payment + home equity > rent anyday of the week. Not sure your exact situation but my mortgage is barely more than what I was paying in rent.

 

If I was you I wouldn't be to hung up on the PMI/20% down thing especially if you are renting.

[mmrmnhrm]

Talk to Marc. He did both of my purchases, and canexplain the pros/cons of several options. In your case, pre-paying PMI might make sense (it would have on our first/only had wifey not landed a tenured position barely a year after we bought), and definitely has on the second (which thankfully happened before TCJA screwed the middle-income homeowner landscape).

[iwashmycar]

Call Marc.

 

Yes PMI sucks and is kind of a gimmick IMO, but if you can get even a 0.25% better rate on the note, then that basically makes up for the PMI. In the grand scheme of it, and with the rates as low as they are, getting best rate is key. If your property value rises sooner than later you also may be able to reappraise the property and cut the PMI out before too long too.

[Coaster]

I usually point people to this guide as a general personal finance starting point that is solid.

 

While not having PMI is a good goal I wouldn't put off home ownership because of it. It can be removed once you pay the loan down or you can refi to get out of it.

 

[coltboostin]

I'm looking to avoid a PMI payment.

 

If your credit score is good, your PMI is next to nothing. I can guarantee that money would be better served in either 1) a reserve account 2) aggressive investments 3) a Combination of both.

 

Many Credit unions have in-house 10-15% down no PMI products.

[Geeto67]

I'm looking to avoid a PMI payment.

 

I felt the same way for a long time, mostly because PMI is basically you paying insurance on the banks behalf in case you default. But it really isn't something you should be afraid of.

 

In reality though, if you put 10% down it really isn't a lot of money (I think mine amounts to less than $30 a month) and if you can get a really good rate it more than offsets the payment. Also in this market, you can refinance after your house appreciates to eliminate the PMI and even lower your payments.

[Rally Pat]

PMI ain’t shit. It was an incredibly small amount on our mortgage payment.

[Second Gen]

Ryan - suggestion would be to buy what you need and not want. My first house was $32k and fixed it up and resold after 9 years and made a profit. Then bought a bigger house/more land and did the same (Made profit). Be careful buying too far out as traveling to work sucks in the Winter.

 

Also agree about PMI as it is a small piece of the pie.

[Not Brian]

laughs in VA loan

 

but seriously just call Marc.

[Tractor]

Ryan - suggestion would be to buy what you need and not want. My first house was $32k and fixed it up and resold after 9 years and made a profit. Then bought a bigger house/more land and did the same (Made profit). Be careful buying too far out as traveling to work sucks in the Winter.

 

This, is the secret. I did the same thing I have more house than we need, paid 60k for it and got an acre of land to put it on 5 miles from the beach. It's worth 4 times as much now and our mortgage is 600/mo. Only downside is some people don't like mobile homes lol. Tons of money left over every month to save or buy toys.