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Give me 10k, and I'll refinance my mortgage, to remove the PMI I'm currently paying, and then spend an additional $150 per month on Amazon.

by douche 9y ago

rubidium 9y ago
Having a PMI means you're living beyond your means already.
- douche 9y ago
  There's virtually no way for a 20-something to amass a 20% down-payment in a reasonable area, without postponing home ownership into the mid-30s.
- zaroth 9y ago
  Instead of downvoting, I will just say, there are absolutely situations where a down payment of less than 20% is perfectly financially reasonable. Interest rates are extremely low.
- exclusiv 9y ago
  Not necessarily. You don't have enough information to make that claim. If you're smart and have assets (not living on the edge), then you put as little down as possible because your return will be higher than the PMI or general debt service. As an example: I bought an investment property about 2 years ago with 10% down and was able to do it because I took a HELOC with a higher rate. I could have put way more down but my goal was cash on cash return. The higher rate for the HELOC is kind of like having PMI. The rate can adjust upwards too. The property does 80K/yr and cash flows. After I bought it I used cash to do some upgrades. I refinanced a year later (low fixed mortgage, no more HELOC) and they did a new appraisal at that time. It has ~22% equity now. I just put an offer out to buy a second property. 10% down again and I'll put cash in to get it ready to rent. I was approved for the first property as a second home actually so I can afford it with no income. Now that it has income, I got approved for another home. Point is - leverage is a great idea if you know what you're doing. Don't fear the PMI; there's plenty of ways to beat it. Example: you can do state muni bond funds with the preserved cash - it's tax free income if you buy funds from your state and it's easy to get out if you need the cash back for anything.

Give me 10k, and I'll refinance my mortgage, to remove the PMI I'm currently paying, and then spend an additional $150 per month on Amazon.

by douche 9y ago

Give me 10k, and I'll refinance my mortgage, to remove the PMI I'm currently paying, and then spend an additional $150 per month on Amazon.

rubidium 9y ago

Having a PMI means you're living beyond your means already.

douche 9y ago
There's virtually no way for a 20-something to amass a 20% down-payment in a reasonable area, without postponing home ownership into the mid-30s.
zaroth 9y ago
Instead of downvoting, I will just say, there are absolutely situations where a down payment of less than 20% is perfectly financially reasonable. Interest rates are extremely low.
exclusiv 9y ago
Not necessarily. You don't have enough information to make that claim. If you're smart and have assets (not living on the edge), then you put as little down as possible because your return will be higher than the PMI or general debt service. As an example: I bought an investment property about 2 years ago with 10% down and was able to do it because I took a HELOC with a higher rate. I could have put way more down but my goal was cash on cash return. The higher rate for the HELOC is kind of like having PMI. The rate can adjust upwards too. The property does 80K/yr and cash flows. After I bought it I used cash to do some upgrades. I refinanced a year later (low fixed mortgage, no more HELOC) and they did a new appraisal at that time. It has ~22% equity now. I just put an offer out to buy a second property. 10% down again and I'll put cash in to get it ready to rent. I was approved for the first property as a second home actually so I can afford it with no income. Now that it has income, I got approved for another home. Point is - leverage is a great idea if you know what you're doing. Don't fear the PMI; there's plenty of ways to beat it. Example: you can do state muni bond funds with the preserved cash - it's tax free income if you buy funds from your state and it's easy to get out if you need the cash back for anything.