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Originally Posted by Xist
Dave says to not buy a house until you can afford 20% down and to pay it off in 15 years.
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He's wrong about that.
You missed the best opportunity to buy in recent times. VA loans are super good, and it makes total sense to buy with 0-5% down and accept the PMI when interest rates are 2.5% on a 30 year loan.
You don't want to pay off a tax deductible interest rate like that, you want to carry it as long as possible as a hedge against inflation.
So long as the government insists on screwing responsible savers, you want low interest fixed rate debt; the more the better.
My 4 bed, 2.5 bath, 2100 sq/ft house purchased in 2010 for $217k on a 30 year loan is $1,200/mo including taxes and insurance. I've never paid the $1,200 because roommates took care of it.
Zillow says it's now worth $500,000+ and I'm still only paying $1,200/mo. Low interest fixed-rate debt is your friend.
If housing prices fall (which is unlikely), it would be a good opportunity to buy and simply refi the loan once you have 20% equity and interest rates drop (to eliminate the PMI payments). You can always refi the loan, but you can never refi the purchase price.
Quote:
Originally Posted by Isaac Zachary
Don't pay more for buying (monthly) than you would on rent. If $2,000 per month is too much for renting, it's too much for buying. It doesn't matter if it's a 15 year loan or a 30 year loan.
Second, don't buy a house if you will probably move in a couple of years.
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If you're a single guy, you want to buy the biggest house the lenders will approve you for and rent out the other rooms, making your house free. You want the 30 year loan because the cash you save every month with a lower payment can go into the stock market, which outperforms the low interest you're paying on the loan.