Buying a First Home: The Feedback
Sep 3rd, 2009 by Carlos
Yesterday was a crazy day: work was busy, my sister and brother-in-law were in town, our real-estate broker was putting the squeeze on us about this one place M and I both like, I wrote a post here that got some great comments, I wrote a post on Wisebread that got tons of comments (more than I’ve ever gotten), and we had to do laundry, which I despise.
Phew!
Now that the storm has passed, I want to sift through a lot of the comments people left behind because there were some solid points on both sides of the “buy a home without a 20% down payment” debate.
Oh and stay tuned: at the bottom of the post I give an update on what we told our broker last night.
Go For It!
I was surprised at how many people encouraged me to buy despite my reservations. Josh was one of the more vocal proponents of buying:
BUY the place, especially if you and your wife both like it. If you like it, than do not wait. I would take the money out of your Roth if you worry about the big payments. You are young, you can always save later.
I’m not a big fan of taking money out of the Roth, but that’s always an option.
I really liked what Jimmy Day had to say because I kept seeing the word “risk” in his comment:
It doesn’t make you a bad personal finance blogger, nor does it make you a bad person. What it does make you is someone who’s willing to go against conventional wisdom and take a risk. Many, many people have done the same before you and have benefited immensely. If you’re comfortable taking that risk and have defined a feasible contingency plan, I say go for it and don’t worry what other people / bloggers think about it. Best of luck to you.
It’s all about knowing the risk and having a plan to deal with the worst-case scenario that comes with that risk. Well said, Jimmy.
Gayle chimed in on Wisebread with some encouraging feedback:
In my view, your reasonings are sound. And presuming you’re not buying way more house than you actually need, having one mortgage is not the end of the world. Especially if you have no other long-term debt.
Go buy your house, make it a home.
And then get on a track that allows you to pay it off early.
Good luck!
Don’t Do It!
On the other side of the coin, there were a LOT of people begging me not to pull the trigger. It’s not hard to see why—there were a lot of cons going against me. From Meg:
Can you afford to lose your income for 6 months or more and still keep the house? Can you afford to have your income substantially cut for possibly years and still keep the house? People got into big trouble because they thought their incomes would only go up, but the truth is that incomes aren’t guaranteed like that.
The answer to those questions? Nope, we’d be screwed if any of those things happened. Which is one of the main reasons this whole idea of buying a home makes me so nervous. At least the place we were in love with last night.
Another reader on Wisebread makes a good point about not forgetting that buying a home isn’t always a smart financial decision.
Buying a house is not a smart *financial* decision unless those costs are less than the cost of renting. This is true in a few markets, like Detroit, Pittsburgh, but in the overwhelming number of markets, it is not. It may be a good decision for you to buy in other ways (you can buy exactly the house you want, make improvements, keep a permanent address for a while, etc.), those ways are just not financial.
And he’s right, it’s not about making money like the stock market is about making money.
Rob kind of goes in that same direction:
The whole situation has caused me to rethink the idea of owning a home. Is it really the American dream? We’ve done a lot of work ourselves to the house to improve it to how we want it. We probably won’t get that money back.
What it all comes down to is controlling your emotions. You get very emotional because you’re thinking about the biggest purchase you’ll ever make, and of course that’s a big deal. All the comments on both sites really helped us get through the day and we ended up telling our broker that if he needed an answer in such a rush last night, then our answer was no.
We’re still going to keep looking, but it feels like we know what’s going to happen: we’re going to save up more money and set ourselves up to buy a home in a responsible manner. With a proper emergency fund and more of a down payment.
The stress of anything going wrong and ruining everything just isn’t worth it.
Thanks to everyone that commented!
Image by Nicko’
Hey WC – I’m so glad you aren’t going to risk detonating your finances! This is great news!
Actually, check back at Financial Samurai around 1 PST/4EST, as I actually wrote a post highlighting your site, and answering your question. At the end of the day, it is an important one!
Best, RB
Slicing Through Money’s Mysteries