Anyone bought new homes in Irvine with less than 20% downpayment recently?

[notTHEoc]

Buying sooner is better than saving up and buying later, especially at the rate Irvine prices go up.

+1. If you qualify at <35-38% DTI, have reasonable reserves and bank is willing to provide the loan at a decent rate, nothing wrong with putting less than 20% down.

For that matter, I think a 0% down, interest-only loan (if it existed) is not irresponsible either if the borrower has a good DTI ratio and some reserves. Just a matter of deciding if the rate on such a loan is acceptable.

 

[Paris167]

If you are a physician they have 5% loan programs without PMI.

And not putting 20% down doesn't mean you can't afford the house. If you want more cash capital for other investments that give you a better ROI then by all means put 5% down and pay the higher monthly mortgage. 20% down is for the lay person who's biggest investment is their residence.

There is a problem with your statement, because monthly CASHFLOW is important. If you only put 5% down, your monthly mortgage will be higher vs. someone that put down 20 percent and also you would have to pay PMI for the life of the loan for an FHA loan. (Unless you refi to conventional at a certain point)

In addition, if you spend more on your mortgage you have less diposable income for food, entertainment, etc.

Sure someone can invest that extra money in stocks instead of putting 20%down vs 5% down, but let's be honest not all the middle/lower class are not doing that.

I know all about the importance of cash flow. If we prefer to invest a chunk of $$ in a business that is not only an asset but provides me more cash flow than the extra monthly mortgage - well then it's a no brainer. I still have more cash flow per month in addition to an asset that I bet will appreciate more than the current appreciation rate of a house.

And like I said certain 5% loans do NOT require PMI like physicians loans.

 

[paperboyNC]

If you are a physician they have 5% loan programs without PMI.

And not putting 20% down doesn't mean you can't afford the house. If you want more cash capital for other investments that give you a better ROI then by all means put 5% down and pay the higher monthly mortgage. 20% down is for the lay person who's biggest investment is their residence.

There is a problem with your statement, because monthly CASHFLOW is important. If you only put 5% down, your monthly mortgage will be higher vs. someone that put down 20 percent and also you would have to pay PMI for the life of the loan for an FHA loan. (Unless you refi to conventional at a certain point)

In addition, if you spend more on your mortgage you have less diposable income for food, entertainment, etc.

Sure someone can invest that extra money in stocks instead of putting 20%down vs 5% down, but let's be honest not all the middle/lower class are not doing that.

I know all about the importance of cash flow. If we prefer to invest a chunk of $$ in a business that is not only an asset but provides me more cash flow than the extra monthly mortgage - well then it's a no brainer. I still have more cash flow per month in addition to an asset that I bet will appreciate more than the current appreciation rate of a house.

And like I said certain 5% loans do NOT require PMI like physicians loans.

If you are paying 4% on your mortgage + 1% PMI your overall rate on that extra 15% you borrow is 11%. You'd be better off putting 20% down and then either getting a HELOC or a business line of credit. Your rate will likely be a lot lower than 11%.

 

[Paris167]

If you are a physician they have 5% loan programs without PMI.

And not putting 20% down doesn't mean you can't afford the house. If you want more cash capital for other investments that give you a better ROI then by all means put 5% down and pay the higher monthly mortgage. 20% down is for the lay person who's biggest investment is their residence.

There is a problem with your statement, because monthly CASHFLOW is important. If you only put 5% down, your monthly mortgage will be higher vs. someone that put down 20 percent and also you would have to pay PMI for the life of the loan for an FHA loan. (Unless you refi to conventional at a certain point)

In addition, if you spend more on your mortgage you have less diposable income for food, entertainment, etc.

Sure someone can invest that extra money in stocks instead of putting 20%down vs 5% down, but let's be honest not all the middle/lower class are not doing that.

I know all about the importance of cash flow. If we prefer to invest a chunk of $$ in a business that is not only an asset but provides me more cash flow than the extra monthly mortgage - well then it's a no brainer. I still have more cash flow per month in addition to an asset that I bet will appreciate more than the current appreciation rate of a house.

And like I said certain 5% loans do NOT require PMI like physicians loans.

If you are paying 4% on your mortgage + 1% PMI your overall rate on that extra 15% you borrow is 11%. You'd be better off putting 20% down and then either getting a HELOC or a business line of credit. Your rate will likely be a lot lower than 11%.

I wouldn't 't do it if I needed to pay PMI - that's a waste of $$, I agree