Mortgage Down Payment

[Irish Houstonian]

To play devil's advocate for PMI: (1) it's tax-deductible, (2) depending on your circumstances, you may want to save the liquidity for an emergency instead of dumping it all into a down-payment.

For example, if you lose your job, and don't have any savings to cover the house payments, you could end up losing the whole house, in which case not paying PMI was a pyrrhic victory.

 

[tdbaum1]

To reiterate what a few others have posted: 1) Don't buy a house unless you have 20% to put down and avoid the PMI. 2) Make sure you still have 3 to 6 months worth of expenses saved in an emergency savings account. Or else your dream home will feel like a curse whenever things break. 3) Get a 15-year fixed rate. It will save you tens of thousands over the duration of the loan. 4) Your mortgage payment should not exceed 25%-30% of your take home pay.

On a different note: I'm one that learned things the hard way. Buy now, learn later. Anyways, I've heard the banks did away with the automatic removal of PMI on FHA loans that pre-date (I believe July 2009). I've been told that your PMI will stay with you for the duration. This contradicts something I just read: PMI automatically drops at 78% value AND after 60 months of payments. Is this accurate? If so, I'm coming up on the 60 months criteria and would love to dump a few extra grand at the loan in the meantime if I knew for sure this thing was going to go away.

For FHA loans taken out before last year that is how it works. You have to have pmi for a minimum of 5 years and then it will fall off when the ltv hits 78%. For 30 year FHA loans taken out last year and on the pmi will be there for the life of the loan. Conventional is a little different. There is no minimum time frame it has to be on there. With a new appraisal that shows 80% ltv the pmi will come off. It will also automatically fall off at 75 or 78% ltv (depending on the investor). In that case your old appraisal from when you bought or refi'd is the basis of the value.

 

[ulukinatme]

2) Make sure you still have 3 to 6 months worth of expenses saved in an emergency savings account. Or else your dream home will feel like a curse whenever things break.

This is sound advice as well. I'd like to say I've reached this step, but as it is we've been saving all of our tax return cash each year and it slowly dwindles away through the year to pay medical bills and to pay the Mrs. car payment when she needs to take off work (She's mostly stay at home mom, works one day a week to cover her car and school loans).

 

[IrishinTN]

Like Wooly said, if you can afford it, do it. Always better to get out of debt sooner than later. And take the lowest year term that you can afford, as well. If you can do a 15 year, do that, too.

No reason to give those bankers more money with those 20 or 30 year loans!! I keed, I keed...

 

[Monk]

As many others have said, it is hard to give you advice on your specific question, because we don't know your financial situation. That being said there are a few things I considered while going through the process.

1. Taxes. I live in New York so a huge addition to the mortgage cost is property tax. I do not know what the taxes are in Florida (or wherever you are planning on building), but it may be something to consider when determining the size and value of the house.

2. Down payment. While considering how much to put down this also goes hand in hand with how much to spend on a home. My thought process (which many people will disagree with) was if I can't put 20% down to avoid the PMI and still have cash leftover for emergency use then I probably should find a less expensive home. In your specific case it all depends on what you are getting for a return on your investment whether you should pull money out or not (but I'm sure you have run those numbers).

3. Length or the loan. In order to determine what I could afford for a monthly payment, I first had to do a budget to determine my exact monthly expenses before purchasing the house. I have no problem with a 30 year loan but that is a very long time to me. I figured to do a 20 year loan to cut the interest I would pay. Also I was expecting to start a family so in about 18 years I would have the cost of college to pay for. My plan is to have the mortgage payment gone by the time the college payments start to arrive. The biggest thing is to have a monthly payment that does not eat up all your cash and a substantial amount can still be saved.

All of this is just how I did it, it does not mean it is the right way. Just thought I would give you my two cents. Good luck.

 

[wizards8507]

To reiterate what a few others have posted: 1) Don't buy a house unless you have 20% to put down and avoid the PMI. 2) Make sure you still have 3 to 6 months worth of expenses saved in an emergency savings account. Or else your dream home will feel like a curse whenever things break. 3) Get a 15-year fixed rate. It will save you tens of thousands over the duration of the loan. 4) Your mortgage payment should not exceed 25%-30% of your take home pay.

Hello, Mr. Ramsey.

 

[RDU Irish]

Liquidity is king. Go 80/10/10 (or even 75/15/10) to avoid PMI and keep yourself financially flexible. I have heard that 75% LTV on a first mortgage is an eighth of a point less than 80% which might make it worthwhile to carry 5% more on higher interest 2nd mortgage. HELOC provides extra liquidity so you have a resource for major unexpected expenses such as losing your job, car or furnace blows up, whatever.

As far as the 15 year loans, you are not precluded from paying a 30 year loan down faster but you may not slow payments on a 15 year loan. Some may howl at ARMs, but if you make the same payment on a 7 or 10 year ARM your keep the flexibility of a much lower REQUIRED payment and by the time you are subject to a rate increase your balance will be much lower so you don't get pinched. Besides the fact that you likely won't live there long 10 years (particularly if you are already talking about work relo possibilities).

Regardless of the loan, at minimum round your payment up to the nearest $100. It will shave months off the loan and you won't miss it. If you are too strapped to round up, you shouldn't buy a house b/c the first unexpected expense will kill you.

 

[wizards8507]

Liquidity is king. Go 80/10/10 (or even 75/15/10) to avoid PMI and keep yourself financially flexible. I have heard that 75% LTV on a first mortgage is an eighth of a point less than 80% which might make it worthwhile to carry 5% more on higher interest 2nd mortgage. HELOC provides extra liquidity so you have a resource for major unexpected expenses such as losing your job, car or furnace blows up, whatever.

As far as the 15 year loans, you are not precluded from paying a 30 year loan down faster but you may not slow payments on a 15 year loan. Some may howl at ARMs, but if you make the same payment on a 7 or 10 year ARM your keep the flexibility of a much lower REQUIRED payment and by the time you are subject to a rate increase your balance will be much lower so you don't get pinched. Besides the fact that you likely won't live there long 10 years (particularly if you are already talking about work relo possibilities).

Regardless of the loan, at minimum round your payment up to the nearest $100. It will shave months off the loan and you won't miss it. If you are too strapped to round up, you shouldn't buy a house b/c the first unexpected expense will kill you.

An ARM in this interest environment? Rates are still near historic lows, meaning there's nowhere to go but up. There's no upside to an ARM because a refinance is always an option. All an ARM does is expose you on one side without any benefit on the other.

Know what provides more liquidity than a HELOC? Cash. Rather than expose yourself to the temptation of throwing away your equity to debt, save enough so that you can put 20% down and still have an emergency fund set aside.

 

[Monk]

Liquidity is king. Go 80/10/10 (or even 75/15/10) to avoid PMI and keep yourself financially flexible. I have heard that 75% LTV on a first mortgage is an eighth of a point less than 80% which might make it worthwhile to carry 5% more on higher interest 2nd mortgage. HELOC provides extra liquidity so you have a resource for major unexpected expenses such as losing your job, car or furnace blows up, whatever.

As far as the 15 year loans, you are not precluded from paying a 30 year loan down faster but you may not slow payments on a 15 year loan. Some may howl at ARMs, but if you make the same payment on a 7 or 10 year ARM your keep the flexibility of a much lower REQUIRED payment and by the time you are subject to a rate increase your balance will be much lower so you don't get pinched. Besides the fact that you likely won't live there long 10 years (particularly if you are already talking about work relo possibilities).

Regardless of the loan, at minimum round your payment up to the nearest $100. It will shave months off the loan and you won't miss it. If you are too strapped to round up, you shouldn't buy a house b/c the first unexpected expense will kill you.

Excellent advice, but I have to agree with Wizard8507 about an ARM. Interest rates are just to low.

 

[BleedBlueGold]

Hello, Mr. Ramsey.

Hello.


I teach FPU locally. Hard to not comment on such topics when brought up.

 

[RDU Irish]

Interest rates are so low you have to consider the opportunity cost of paying down your mortgage too fast. If you are sacrificing tax advantaged retirement savings and especially not getting your employers 401k match you are better off dragging the mortgage out. Consider being 40 with your mortgage paid off and all the ability to contribute to your 401k or IRAs, but the gubment limits how much you can put in per year.

You also get flexibility in managing your other debts, example double up on student loan payments, pay off a car or whatever before attacking the mortgage aggressively.

$100,000
$506.69/month - 30 year 4.5% fixed - $91,150 remaining after 5 years
$714.88/month - 15 year 3.5% fixed - $72,300 remaining after 5 years

$449.04/month - initially on a 30 year amortization on 3.5% ARM - $89,700 balance remaining after 5 years

If you pay down an ARM instead of making minimum payments, I think they provide the best of both worlds. It is very hard for the ARM to adjust so high down the road to make it a worse deal since you owe less, the odds of staying in the house that long are lower and most ARMs have limits on increases and ceilings that protect you from a Welcome Back Carter interest rate spike like the 1970s.

Also be honest about your tax savings from home ownership. I do Volunteer Income Tax Assistance (great program, look it up on IRS website if you want to get involved) and see tons of people get ZERO tax benefit from interest and property tax deductions because it is less than their standard deduction. Even if it is, folks don't consider the MARGINAL benefit. Say you have $10,000 of deduction versus a $6000 standard deduction, you really only have $4000 working to your benefit, at a 25% tax bracket your marginal benefit is $1000, not $2500 most people assume. In the case of a 4% mortgage, you might think your after tax is 3% (25% tax bracket) when reality is probably closer to 4%.

 

[wizards8507]

You also get flexibility in managing your other debts, example double up on student loan payments, pay off a car or whatever before attacking the mortgage aggressively.

I agree completely. Pay minimum mortgage payments and clean up that other debt first. The mortgage is likely at a much lower interest rate and if your personal finances went to shit, you can always sell the house. You have no way out of an unsecured debt like student loans or car loans that go underwater the second you drive off the lot.

 

[RDU Irish]

An ARM in this interest environment? Rates are still near historic lows, meaning there's nowhere to go but up. There's no upside to an ARM because a refinance is always an option. All an ARM does is expose you on one side without any benefit on the other.

Know what provides more liquidity than a HELOC? Cash. Rather than expose yourself to the temptation of throwing away your equity to debt, save enough so that you can put 20% down and still have an emergency fund set aside.

You are missing one point, ARMs typically have a maximum increase and maximum total interest rate. Your max is likely to be 5% - 6% more than your initial rate, while that would suck, it isn't going to 20% like many would have you believe and relative to the late 70s, early 80s - counts for something. Those terms vary widely and are to be shopped and compared relative to what is important to the borrower.

I see a lot of benefit in 1% lower interest rate if the odds of A) Being in the house more than the ARM term are low and/or B) you are paying substantially more than the minimum payment. That is $1000 per year of interest that can be applied to principle for every $100,000 of loan value.

I also see value in flexibility. HELOC and lower required loan payment provide that. If you don't have the discipline to use a HELOC appropriately, what makes you think you will manage cash any better? In effect, a $0 balance HELOC can act as your emergency fund while that extra cash is put to work paying down debt, i.e. 4.5% mortgage versus 0.5% in some credit union savings account. That would be $400 per year of interest on a $10,000 account.

But yes, if you are completely undisciplined and a slave to temptation you should do the 15 year loan and hope you and your local housing market don't come on hard times. I would rather see folks (in this example) put $1400 more to work for themselves per year than the banks through some basic financial engineering. Compounding those savings over a 5, 7 or 10 year ARM pretty much covers any contingency for rising interest rates if you are paying the savings into principle. That $1400 of savings over 7 years is $9800 - 10% of the loan value. Add at least $1000 for the value of compounded interest.

30-Year Fixed Mortgage Loan Or An Adjustable Rate Mortgage (ARM)? | Financial Samurai

 

[wizards8507]

You are missing one point, ARMs typically have a maximum increase and maximum total interest rate. Your max is likely to be 5% - 6% more than your initial rate, while that would suck, it isn't going to 20% like many would have you believe and relative to the late 70s, early 80s - counts for something. Those terms vary widely and are to be shopped and compared relative to what is important to the borrower.

I see a lot of benefit in 1% lower interest rate if the odds of A) Being in the house more than the ARM term are low and/or B) you are paying substantially more than the minimum payment. That is $1000 per year of interest that can be applied to principle for every $100,000 of loan value.

I also see value in flexibility. HELOC and lower required loan payment provide that. If you don't have the discipline to use a HELOC appropriately, what makes you think you will manage cash any better? In effect, a $0 balance HELOC can act as your emergency fund while that extra cash is put to work paying down debt, i.e. 4.5% mortgage versus 0.5% in some credit union savings account. That would be $400 per year of interest on a $10,000 account.

But yes, if you are completely undisciplined and a slave to temptation you should do the 15 year loan and hope you and your local housing market don't come on hard times. I would rather see folks (in this example) put $1400 more to work for themselves per year than the banks through some basic financial engineering. Compounding those savings over a 5, 7 or 10 year ARM pretty much covers any contingency for rising interest rates if you are paying the savings into principle. That $1400 of savings over 7 years is $9800 - 10% of the loan value. Add at least $1000 for the value of compounded interest.

30-Year Fixed Mortgage Loan Or An Adjustable Rate Mortgage (ARM)? | Financial Samurai

I agree with your math, but that's the problem. It's just math. It doesn't factor in two things: risk, and human nature. Sure, you might get 10% in the market if you invest the money instead of pay a larger monthly payment, but that 10% is NOT guaranteed. Avoiding morgage interest is risk-free. Also, most people simply WON'T invest the delta.

 

[RDU Irish]

I agree completely. Pay minimum mortgage payments and clean up that other debt first. The mortgage is likely at a much lower interest rate and if your personal finances went to shit, you can always sell the house. You have no way out of an unsecured debt like student loans or car loans that go underwater the second you drive off the lot.

Student loans are the worst. 6.8% interest now and it survives bankruptcy. CCs at least will be negotiated for pennies on the dollar if you get behind and wiped clean if you go BK.

Anyone struggling with managing debt should, at minimum, find Dave Ramsey on the local radio stations and start listening. I think he is a bit extreme on a number of issues but facilitates a great conversation.

 

[RDU Irish]

I agree with your math, but that's the problem. It's just math. It doesn't factor in two things: risk, and human nature. Sure, you might get 10% in the market if you invest the money instead of pay a larger monthly payment, but that 10% is NOT guaranteed. Avoiding morgage interest is risk-free. Also, most people simply WON'T invest the delta.

First of all, the 10% is the amount of the principle you could pay down over 7 years by saving 1% on the interest rate and putting a $10,000 savings account toward a mortgage instead of sitting in the bank. Since you are struggling to understand the context of that number, I start to understand your mocking of mathematics and investing. It sounds like you found a way to manage your finances that works for you. Kudos. You are better than most who wander randomly through life and never get ahead. I mean that sincerely, over half the battle is actually fighting to get ahead instead of wandering aimlessly.

Second, you place zero risk on being stuck with a higher payment? Other expenses can increase, outside of your control too. I could think of a hundred but I will pick on healthcare. Last year my costs went up 25%, which I was happy with all things considered. Plenty of others saw their costs double. If you run a tight budget and something like this increases a couple hundred bucks, better to cut back mortgage prepayment than run in the red.

A few scenarios:

1) Employer match - So your employer matches 3% of the first 5% you put in your 401k. You don't participate b/c you think the market is voodoo and are obsessed with paying down your mortgage. Instead you give up a guaranteed 60% one day return on your investment. Also don't know how you plan to save for retirement if you only invest in Folgers cans to bury your Ben Franklins. Further, Roth 401k early in your career while you are in lower tax bracket gives you 40 years to grow, likely requiring a less aggressive approach to reach your goals.

2) If you are horrible at math, have the mortgage broker calculate a 30 year fixed payment or 15 year if you want to be conservative. Apply that amount to your 7 or 10 year ARM instead of the minimum and enjoy the faster paydown. If you get hit with unexpected expenses (which you will because you are admittedly inattentive to details and budgeting), you have the flexibility to reduce your payment and survive. Through

Road to hell is paved with good intentions. Especially at 22 (as the OP says) it is pretty hard to account for all contingencies for the next 15 years. It is particularly easy at that age to feel indestructible. I would also be hard pressed to find someone in their 40s who lives in the same place since their early 20s. These are key factors in my belief that a 7 year ARM is probably a pretty good idea for most people in that situation.

 

[RDU Irish]

Like I stated earlier, I am getting as many opinions as possible. There are quite a few people on this board.

I haven't started the process with the builder yet, because I'm still trying to decide how big, how nice, how much I am willing to spend. Kinda figured I'd figure out how much of my investments to liquidate before starting that process.

As far as building - Try to be one of the last houses in a new neighborhood if that is an option. Don't want to get stuck in a stalled neighborhood and builder inventory will cap appreciation potential until they are done. If you are one of the last ones, builder might be more motivated to get done and move on, less concerned with protecting the value of his next sale.

 

[BleedBlueGold]

RDU, can you point me in the direction of a mortgage calculator that allows input of an additional monthly payment? I'm trying to run a scenario like the one you describe: Pay extra on the principal during the early stages of the ARM and get the balance down faster for when the increases kick in... Basically I want to see the total interest paid and compare it to the total interest paid via 30 year fixed and 15 year fixed. I'm not having luck finding a calculator that allows me the extra money variable up front though.

Thanks.

My example:

$250,000 mortgage. 30 year term. 5/1 ARM with intro rate of 2.865%, increasing after first 5 years by 2% to a max cap rate of 8.865% for the remainder of the term (I'm sure it's possible for those rates to dip down, but I'll assume they won't for this example). With this scenario, my lowest monthly payment would be $1037 and my highest monthly payment would be $1816. The difference of $779 can be budgeted into my additional mortgage payment for the first 5 years, when the rate adjusts. Then I'd like to find the difference between that new payment and the max $1816 and add that to the monthly mortgage payment, etc. I hope this makes sense (and is possible to figure out)...but I'd like to know 1) The total interest paid and 2) Will there not be an early pay-off by going this route? How does that play into this situation?

 

[BleedBlueGold]

The overall conclusion would be to decide which route pays off my home the quickest and with the least amount of interest. And also, at which point during this process would someone in the finance world recommend holding on to that mortgage and begin using the "extra money" to invest (assuming I'm already maxing out the Roth IRA and Roth 401k) instead of paying off the loan.

 

[RDU Irish]

My BAII Plus calculator has been doing my heavy lifting for twenty years now. Building a spreadsheet in Excel wouldn't be a bad idea if you are up to it, easier to run scenarios side by side. Otherwise this one seem decent:

http://www.bankrate.com/calculators/home-equity/additional-mortgage-payment-calculator.aspx

 

[connor_in]

OK guys...what is best way to go about looking into whether to refi or not?

Pretty sure I would come out better since rates is lower but had some financial probs and score might be in the mid 600's range or so right now. If I could get the mtg pymt down I could pay off other items tho. The old financial chicken or the egg problem.

(current mtg rate just over 6%...want to look at approx first before it actually hits my credit score so I don't make it go any worse)

 

[BleedBlueGold]

Math error.

 

[wizards8507]

OK guys...what is best way to go about looking into whether to refi or not?

Pretty sure I would come out better since rates is lower but had some financial probs and score might be in the mid 600's range or so right now. If I could get the mtg pymt down I could pay off other items tho. The old financial chicken or the egg problem.

(current mtg rate just over 6%...want to look at approx first before it actually hits my credit score so I don't make it go any worse)

It depends on what rate you could get, what your closing costs look like, and how long you plan on staying in the house. For example, if you save 1% on a $100,000 loan, you're saving $1,000 in interest per year. If closing costs are $2,000, you'd need to stay in the home for two years to make your money back. The longer you plan on staying in the home, the larger the benefit of refinancing.

 

[wizards8507]

The overall conclusion would be to decide which route pays off my home the quickest and with the least amount of interest. And also, at which point during this process would someone in the finance world recommend holding on to that mortgage and begin using the "extra money" to invest (assuming I'm already maxing out the Roth IRA and Roth 401k) instead of paying off the loan.

You're going to get two wildly different answers depending on who you ask. I'm guessing RDU Irish is the Finance / MBA type and I'm the Accounting / CPA type so we're both "finance world" people and we're probably going to tell you opposite things.

Risk being equal, paying off debt at 5% interest is exactly the same as investing that money and earning 5%. Avoiding interest expense has the same effect on your net worth as earning interest revenue. That being said, I'm a big believer of paying off your home as soon as possible assuming you're already making those contributions to your retirement. The reason, as I've said before, is risk. The bank is going to charge you 5% on your mortgage with 100% certainty. You could invest that money and probably earn 8% to 12% in the market, which would mathematically "beat" paying off the mortgage early, but for the sake of risk avoidance and peace of mind, I'd opt for the latter. It's a psychological thing.

Try this thought exercise: If you had your home 100% paid off, would you take out a new mortgage to invest the cash? Most people would say no, even though the math says you can earn more from investing than you'd pay in interest. That "gut feeling" that you wouldn't borrow on a paid-for house to invest is part of the psychological reasoning behind getting out of debt completely first.

 

[Wild Bill]

OK guys...what is best way to go about looking into whether to refi or not?

Pretty sure I would come out better since rates is lower but had some financial probs and score might be in the mid 600's range or so right now. If I could get the mtg pymt down I could pay off other items tho. The old financial chicken or the egg problem.

(current mtg rate just over 6%...want to look at approx first before it actually hits my credit score so I don't make it go any worse)

IMO, you should apply for a loan modification before you do anything. You can probably do it yourself and it won't cost you anything but time. They won't rely on your credit score to determine eligibility, rates or term either.

 

[ACamp1900]

OK guys...what is best way to go about looking into whether to refi or not?

Pretty sure I would come out better since rates is lower but had some financial probs and score might be in the mid 600's range or so right now. If I could get the mtg pymt down I could pay off other items tho. The old financial chicken or the egg problem.

(current mtg rate just over 6%...want to look at approx first before it actually hits my credit score so I don't make it go any worse)

We just refi'd... (Mentioned earlier in the thread)... We got rid of PMI and took out 20k to pay off our last Credit Card (higher interest than new home loan) and two of our student loans (Also MUCH higher interest than the new home loan)... have a few grand left over for savings, a small vaca for my daughter's B Day and landscaping...

It made all the sense in the world for us because we lowered our house payment, got rid of a couple of student loans payments (together saved us 300ish a month AND it won't get us on the back end of the loan) and still had money left over to do a few things. That's what you look at though, will you lower your overall monthly payments AND will you not have to pay more in the long run in interest or extended payments etc? It was the correct answer to both in our case.


Sidenote: It's amazing how easy the refi process is compared to the initial home loan... night. and. day.

 

[RDU Irish]

Nice call Wizard - finance vs. accounting. I wouldn't say either of us are wrong or right. The type of person and their own approach to managing finances and personal discipline are huge factors in which approach will work better for them.

Conner - Look up the HARP program, might be a good option for you. Your current loan should be open for modification which is a complete no brainer if you are eligible.

BBG - $250k loan at 2.875% for five years and making an $1800/month payment instead of $1037 would result in a balance of $172,600 after five years. If the next five years are at 4.875%, your balance after 10 years would be $98,100. Increase to 6.875% for the next five years would bring balance to $9750 at the end of 15 years. So if the loan has five year locks on increases, you are pretty much same boat as the 15 year fixed loan in the worst case scenario for rate increases. I doubt the resets lock for five years, in which case your worst case gets less appealing.

7 year ARMs look like they are about 1/8th to 1/4th percent higher than the 5 year. 10 year ARM looks 1/4th to 3/8ths higher than the 7 year and the same or slightly higher than a 15 year fixed. If the 1800/month is pretty much maxing out your budget - I think it is important to keep the cash flow flexibility of an ARM with a lower minimum payment in trade for the risk of rising interest rates. In that case, you are really comparing 30 year fixed versus the ARMS since the cash flow risk of the 15 year takes that option off the table.

If cash flow is not a concern, I would do the 15 year fixed.

EVEN IF the rate went to 8.875% after five years, you would be paid off 14 years later (19 years total) for total payments of about $410,000 versus about $320,000 total payments on a 15 year loan.

 

[wizards8507]

7 year ARMs look like they are about 1/8th to 1/4th percent higher than the 5 year. 10 year ARM looks 1/4th to 3/8ths higher than the 7 year and the same or slightly higher than a 15 year fixed. If the 1800/month is pretty much maxing out your budget - I think it is important to keep the cash flow flexibility of an ARM with a lower minimum payment in trade for the risk of rising interest rates. In that case, you are really comparing 30 year fixed versus the ARMS since the cash flow risk of the 15 year takes that option off the table.

If cash flow is not a concern, I would do the 15 year fixed.

EVEN IF the rate went to 8.875% after five years, you would be paid off 14 years later (19 years total) for total payments of about $410,000 versus about $320,000 total payments on a 15 year loan.

If cash flow is so tight that fiddling around with interest rates and mortgage terms will make or break your budget, you're probably buying too much house in the first place. If you can't afford a 15-year fixed at $250,000, rather than go to the ARM, buy a $200,000 house.

 

[Wild Bill]

If cash flow is so tight that fiddling around with interest rates and mortgage terms will make or break your budget, you're probably buying too much house in the first place. If you can't afford a 15-year fixed at $250,000, rather than go to the ARM, buy a $200,000 house.

What if you really want that master bath and bonus room, though?

 

[ACamp1900]

What if you really want that master bath and bonus room, though?

Got to have that indoor/outdoor pool too....