People always say not to be “House Poor” which I totally get, but the reality of it is that we all have to have some place to live. Renting is great, but eventually I think everybody wants to own their own place. Curious what % of your NW you would feel is good to tie down in a house, specially for a Downpayment. I feel like somewhere in the ballpark of 25-50% is acceptable but curious what others think. I’m not talking about how much to put down on the house, I know 20% is pretty much the standard to avoid paying PMI and these days it seems like you’d either have to be really rich or want to be house poor to put down more than 20% of the price for Downpayment.
Depends on your age and the market / location too
Also depends on your income. If you make 100k, you don’t wanna put 400k for a 400k house. But if you make 200k, it might be okay since you replenish savings quickly. Exaggerated example, just trying to make a point
Agreed. Unless your NW greatly exceeds your income in which case you can do whatever
Using a large portion of NW to down payment doesn’t mean house poor. Buying too much house for your income and NW is house poor. eg. person 1 with 300k TC 1M NW buys a 1M house cash. Is not house poor. Person 2 with 300k TC 1M NW buys a 2M house with 20% down payment and 10k per month mortgage. Is house poor
Are you all counting 401k or any retirement money towards your NW?
Probably not in this case since you would get taxed heavily, or even if it’s your first house rule or whatever from what I’ve seen it’s some trivial portion you’re allowed to take out without getting taxed like $10k or something. I could be wrong though.
If you use your NW for down payment on a home it really shouldn’t impact your NW, except that it will increase as the home appreciates.
Not really answering your question but as an fyi: Right now there are programs and ways to qualify for a better rate if you put the minimum down payment initially. Close escrow THEN apply what you originally had to put down (20% etc) towards your principal after your closed locking in a better rate. Stuff is ass backwards right now.
You mean refinance?
Nope. I don’t mean refinance. I don’t think refinancing will be a solid option for a while. But regardless no that’s not what I mean.