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January 26, 2006

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David-I agree with you. Yes there are risks but given the right location, timing and temperant of the buyers it can be a great start to playing the money game. Steve

Although I put down 10%, I feel 0% down is a fine idea for a first time home buyer. Being 23, I new my income would grow a little, but if something went down job wise, I had a cushion. I had more money but the full 20% standard would have strapped me a little. I would had to have bought all the furniture/repairs I needed basically on credit with no cushion in case I lost a job. I realize having those costs essentially rolled into a mortgage is still "credit" but it can be paid off over a longer period of time or shorter if I had the extra cash and tax deductible. Not bad. Go fixed or go home!

Although I put down 10%, I feel 0% down is a fine idea for a first time home buyer. Being 23, I knew my income would grow a little, but if something went down job wise, I had a cushion. I had more money but the full 20% standard would have strapped me a little. I would had to have bought all the furniture/repairs I needed basically on credit with no cushion in case I lost a job. I realize having those costs essentially rolled into a mortgage is still "credit" but it can be paid off over a longer period of time or shorter if I had the extra cash and tax deductible. Not bad. Go fixed or go home!

I've been told by a lawyer that she gives the advice that if you can't put the full 20% down, don't put anything down at all (something to do with PMI if its less then 20%, but no PMI if you pay nothing down). Anyone care to shed light on this?

BullishBear --

Check this out and see if it answers your question:

http://www.freemoneyfinance.com/2006/01/how_to_get_rid_.html

FMF

My loan consultant was trying to get us to do a 0% down offer because my fiance and I both have really high credit, and would not need PMI with what he was offering. We have some fairly unique circumstances, however, and don't think that that is a good idea for us.

If your credit is really good, you can get a second mortgage so no one loan is more than 80% of total value. The second loan in some cases can be under 100 basis points higher than the 1st loan. Pay extra on that loan first. No PMI in this situation.

My husband and I pretty much fit the profile for the recommended types of people for a zero down loan, and after going around and around with this question for months, we've decided to go ahead and do what it takes to get a house as soon as we pay down a little more credit card debt. For us, the major factors are 1) that real estate in our area is expected to keep growing strong and we're afraid that if we wait to save up to buy, we're going to be gradually priced out of the neighborhood we like, 2) our rent is going up, and since we're expecting to hit a higher tax bracket next year, we'll get more bang for our mortgage deduction buck (we'll see increases in insurance, maintainance, and repair costs, but rent and mortgage will be about the same), and 3) our quality of life will increase as we'll be able to buy our own home in neighborhoods closer to friends and family.

want to get some appreciation on our asset, 2)

A zero down loan was the only way my wife and I were ever to get into the California market. Five years ago, we were both one year removed from college. Two graduate degrees and very good jobs, but homes were appreciating over $10k/month. There was no way were going to ever save up for a decent down. We did an 80-20 loan (80% first, 20% second) to avoid PMI. We were able to refinance in one year to get rid of the second. We now have over 50% equity and are pretty happy about our decision. Not happy because we think we're rich (like many of the false beliefs out here - we know it's all paper, and it only benefits us if we move somewhere with lower housing costs), but that we were able to quickly get into the market that was heading north fast. Today, with the current market conditions, my thoughts are a little different, but at the time it cetainly made sense.

Yes...I'm bad with money. I admit it. I first started looking for a good debt consolidation company in 1995. I was beyond broke and our debt was more than out of control....it was insane. My wife was working for two companies and sleeping about 4 hours a night. I was working for a company in Seattle and another company in Portland and we still couldn't keep up on the endless bills and interest payments. We gave up seeing each other a regular basis and were slaves to our mounting debt. We had a mortgage payment of $2,500 per month, two car payments for $500 each, a line of credit for $20,000 and 4 credit cards just getting worse each month as the interest piled up. (I won't even tell you the balances on the credit cards)

My wife Jill finally said, "It's like we ceased to be married the way things are going.....we never see each other". I was sick of it too. We decided to sell the car and truck, crack down on our spending, and begin searching for a debt consolidation deal with the local banks. The companies we looked at locally were fairly good but it seemed like we would be subject to massive interest payments and a long drawn out payment schedule. We needed to find a consolidation company that specialized in debt management alone. We didn't want to use a general finance company that spread itself too thin, in order to compete in every single financial market.

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