Who here thinks putting down 20% on the downpayment of a home is crazy?

Question

Let's assume that a couple does happen to have $25,000 lying around for a $150,000 house.

It's too d**n risky to be risking your whole life savings on the down payment of a house. What happens if you or your child needs surgery? What happens if you car breaks down?

Putting that much down on a house is stupid and rediculous. You could put $30,000 in the stock market and you would get better returns than a house, especially in today's market.

Let's assume you buy a $150,000 house, you put down $25,000. That house lowers in value down to $130,000. Guess what chump, you just lost $20,000 and you are up-side down in your mortgage.

Answer 1

You are only looking at this from the buyer's perspective.  Why would a seller risk getting involved with such a shaky buyer.  Have you heard of earnest money?  Saving and growing your money is important.  Also, many people get a first home, sell it.  Then save to get their second and more expensive home.

Not crazy, reality.

Answer 2

How is it risky?  Sharemarket is way more riskier, shares go up and down all the time and you might not see a good return until years and years later.

A house is an asset.  And a house happens to be a stable asset.  So I don't see a problem in that.

Or, do you prefer the alternative - having a home loan for the rest of your life and possibly not being able to pay it off and having the bank claim your house?

Answer 3

I don't think 20% is realistic for most of the middle to lower earning class. It just isn't possible to save that amount while paying rent that is often higher then owning. There are plenty of people that could make the payment, but, are pretty much living paycheck to paycheck..

I still think a house is a better investment then the stock market. Most people lose money in the stock market, only a select few actually do well. At least when you put money down on a house the money you would pay to rent is pretty much being invested in yourself.

Think about it, let's say you rent an apartment for ten years. That's something plenty of people do. What do you have at the end of ten years paying $1000 a month? You own nothing.

Let's say you bought a house ten years ago instead of renting. Let's say you were smart and got a fixed rate mortgage. Where I live, ten years ago I could've bought my current house for $20,000. If I had started making payments ten years ago, then even with how high cost of living has gone, my house payment would still be about the same $200 it was when I started making payments ten years ago.. Let's say the lease is up at your apartment that you were in for ten years. Think you can get a new lease at the same rate? Forget that, rent has gone up, so now you'll be paying more and still not have anything to show for it..

Sure, people make huge mistakes buying a home. When you buy, you want to be sure your in an area where you can stick it out for the long term if housing prices do fall. You also don't want to buy at a record high. I got my house for less then the market value, and then with $5,000 I remodeled another $20,000 of value into it. That allowed me to get a home equity line in case of emergencies..Could I sell the house right at the moment? No, I can't with the current market. But, in the meantime, I have a place to live, a low payment that is paying an investment rather then a landlord, and in a couple years when the market stabilizes I can sell it if I wish.

Being upside down on your mortgage only becomes a big deal when you can't make your payment or if you're impatient to sell. Anyone who gets one of those interest only loans or adjustable rates needs to have their head examined..

Answer 4

I think 20% downpayment is alittle high to be putting down on a house.

I don't think to many people have that much cash laying around anyways to even invest in a house.

Answer 5

Considering what happened in the housing market recently I think people need to put down more than that.   Guess what chump, unless you are planning to sell you house, you can wait for the market to get better, and the more you put down, the lower mortgage you have.  You are not losing the money, it's in the house.

Answer 6

you can also lose on stocks,over time real estate appreciates you may find bumps such as now but over time it will come back

Answer 7

I take it you were not one of those people whining about the housing crisis and the foreclosures?

More people need to just rent. They are not responsible enough or intelligent enough to own a home.

20% is the minimum people should be required to put down.

Answer 8

No.

Don't think so.

Expose that only those who can really afford it to own one.

With the balance on repayment.

With time and growth on income.

Not with two empty hands.

Then stand and cry in the street.

When all along.

One can never even afford it without any savings.

But purchasing on estimate.

Sometime can never be achieve in time.

With self lack of knowledge.

That look impressive on paper.

Not on fixed income.

With the real thing.

Luke 6.39-40,41-45,46-49

What do you think?

Answer 9

If you can't afford it than you can't buy. It is that simple. As a want-to-be home owner you have to have a stake in the property that you buy. The absence of that personal  investment is why there is a sub Prime mortgage issue now. Smarten up. If a property is worth having, its worth you taking some of the risk. So stop whining and save your money.

Answer 10

By placing 20% down the house payments will be lower.

The banks and credit folks have gotten people so backward in their thinking that they think debt is safe. If you put nothing down or a very minimum down your payments will be a lot higher and probably put you into the risky finance area for a loan and that will get you a higher interest rate, which will cost you thousands more in the long run.

The best bet is paying cash, then you get a lower price and NO interest rate. WAY CHEAPER.

But 20% down is a SAFER bet than nothing down.

Put $30,000 dollars in the stock market and when your high dollar stock settles in to a normal price range, you go bust. or own paper worth $15,000.

I'll take the house, I can live in it, I can't live under paper.

Answer 11

The current housing crisis is a direct result of lenders NOT requiring the 20% down.  Lenders and buyers got used to the housing prices going up and assumed that they would always go up.  Many people got loans that they couldn't afford with no down payment and interest only loans under the assumption that the value of the house would increase.  These are the people that are now in foreclosure.  People that put the 20% down and had reasonable payments have a cushion to fall back on when the housing market slumps.

People that can't save for a 20% down payment shouldn't be buying a house.  It is true that rent is often about the same or even slightly higher than a mortgage payment but there are costs involved in owning a house that most renters don't consider.  If a person is living pay check to pay check and buys a house, how is he going to pay for a major expense like a roof, windows or furnace?  There are other annual expenses like landscaping, maintenance of furnace and air conditioning, and general upkeep like painting.  All of these can have considerable costs that renters usually don't pay.

The problem usually isn't that people can't save for a 20% down payment on a house.  The problem is that they can't save that much for the house they want.  People today think that they have to have big houses even as a first house.  Everyone wants the 3 or 4 bedroom, 3 bathroom, 2800 sq ft house.  People aren't willing to start at the bottom with the 1200 sp ft, 2 bedroom, 1 bath house that is affordable.