And there still is, it's called PMI. My insurance payment would have been $250+ a month if I had put under 15% down, and my interest rate would have been higher as well. I'm not sure how you could ever get out from under that (but I think that's really the point). My PMI is only $50 a month, and that will be going away next year. I could have paid cash if I wanted to wipe out my savings; which is probably why the bank even gave me the loan in the first place. But again, I've worked pretty hard to build them to where they are.
We do pretty well, both my wife and I work which puts us in a good place. I bought my house as a foreclosure and refinanced a 3.5%, so that's pretty cheap. But my wife got her bachelor's and master's at a private college, so student loans cost us about the same as the mortgage and at the current payment rate we'll be paying that for 15 or so more years. I really don't have plans to pay that sooner though since most of the loans are at 2.5% and we can get better returns investing any extra money we have. I'm fortunate that I was able to pay my way through college and graduate with only $5k in loans, which were payed off in 6 months. But the cars are all paid off, we have no other debt, I'm maxing out my 401k, and we're still able to save a decent amount of our paychecks each month and upgrade the house when we want to. What worries us is we're talking about having a 3rd kid within the next year. Another $225/week in daycare is severely going to impact our ability to save. My wife is 100% against asking if my mom would want to watch the kids, I figure I've got about 12 months to convince her that's our best option, and then hope my mom is open to the idea.
I bought my house and only put down 3% so I wouldn't wipe out my savings. As I mentioned in the prior post, I bought it as a foreclosure so after 3 years the home value was high enough that I had enough equity to refinance and wipe out PMI. It did suck paying for PMI for those few years, but it was also nice not having to cash out my Roth IRA contributions to reach a 20% down payment. I'm still not sure what I'd do if I could do it all over again.
^^^ THIS ^^^ (I wish they would learn this in DC.) Regularly we hear of people with "set for life" windfalls or extraordinary incomes who go bankrupt, astonishing as it is. A good income can be very helpful, but controlling wants, and controlling expenses is where the battle is won.
I have been debt free since I was 46 when I paid off my home. Never believed in credit card debt and always paid for cars and stuff when we saved up enough cash to buy it. Always felt that if I didn't have the money, I couldn't afford it. I would encourage anyone that would like to reduce or eliminate your debt that it is doable. A Dave Ramsey class would be a great first start.
Just a heads up that since the housing crash they have changed the pmi rules. There are exceptions but for the most part pmi will last the life of the loan. You can't have it removed at 20% equity. You can refinance with another type of loan but you can't just have it taken off now.
I am in your age group, and see plenty of that mindset in both our generation and older. And I see hard workers in the 20-somethings group as well. So, it is a mindset unrelated to age.
Just like anything else in life it has very little to do with age but the values instilled upon them by their parents and/or a larger society. Millenials didn't invent consumer debt...in fact it peaked in 2007/8 when a lot of 20-somethings were still in high school.
Another way of looking at it is in financial crisis of 2008 banks were forced to change rules and debt was a lot harder to get! not saying teenagers did not see troubles of adults and make different choices because of foreclosure epidemic etc.. prior to that crisis equity lines were too easy as many forgot house prices could go down.
I don't disagree but how many 16-20 year olds in 2006 had a concept of how easy it was to get a mortgage for 125% of a homes value? Then 4 years later...when those same people wanted to buy a house.... knew nothing other than 20% down. I'm not tryimg to indict or defend any generation here....
I've always said this mindset started with the "greatest generation". WWII vets came back from the war and the economy was strong. Suddenly things that had previously only been available to the rich were available to everyone. Every house had a car, a TV, a washing machine, etc. The suburbs really started booming. The boomers grew up in this time of not "wanting" for much of anything. By the time they started their own families those kush union jobs that their parents had were disappearing, but they continued to buy what they wanted, often living above their means. Now households had 2 cars, house sizes became way larger, wives often picked up jobs to pay for the things they wanted. At the same time it became more and more common to buy things by borrowing money, which just meant you could buy more things you didn't need. Now the millennials are growing up and starting families and trying to live like they were raised, but there's even more crap to buy now. A flat screen TV in every room, iPhone's and iPad's for all the family members, house sizes are larger still. But, on the flip side there's still a lot of people in all age groups that do well, live below their means, and retire early.
no offense taken.. respect your common sense... I guess in my area very few 20 to 25 yo buy houses.. starter homes... start at 200k property taxes at least 250 a month.. takes times to develop that kind of resources... most kids out of college head south for better jobs and cheaper living..
I believe that's only the gubmint sponsored low/no money down loans that are like that, or at least that's how it was when I took out my mortgage. That's why I ponied up the extra cash for the down payment. Just about any bank or credit union will issue the paper if you have 20% and your credit is not in the toilet. The underwriter wanted 17% to carry mine.
None of that cheap living down here. I own a 200k property that prob won't be worth that again for another 5-8 years. Taxes are 4K/yr and that is dirt cheap for the area. Go 5 miles in any direction and they double on similar property. I wish I was kidding.
If that is what you want (and I do not know your age), start saving 10% or more of your income as early as you can, hopefully in your 20's. Then bump it up continuously, with a goal of 25% or more. If you do, and start early enough, and choose reasonable investment options, it is completely possible.
Being 29yrs old (wife 28yrs old) in my eyes, I have to go into debt in order to get out of debt earlier. I'm almost finished building my own home (1400sq ft ranch, attached garage, nothin fancy) my wife and I both make (what I consider) very good money, we do not live above our means, that's being said, I don't own a credit card, we both have brand new vehicles, and we will own a brand new house, attached garage, and a 32x56 pole barn sittin on 11 acres in a very rural setting. (Exactly where I want to be the rest of my life) The mortgage will be a 15yr mortgage and will be paid off by the time I'm 44 or 45, we both put 11% into our 401k's and also have other investments. I love staying busy and cannot stand to sit around and watch tv, but my goal is to be retired by the time I'm 50-55 (hopefully) Just my opinion and my goals in life. To each his own. Sent from my iPhone using Tapatalk
I just turned 35. Didn't get real serious about saving until my late 20s....but even then I was still pretty good about it. Without getting too detailed....I'm well over 25%. Every time the subject of real estate comes up with my coworkers from NE...they get confused....then angry. An all-in payment (taxes, insurance included) on a NICE 4 BR, 2BA on 2-3 acres can be had for under $1k/mo....not too far from what some of them pay for taxes.
