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Jose Valasquez posted:Like everything with financial planning it is all about balancing risk. You balance the risk of being fired with the risk of having to pay the 10% penalty. If you are in a stable job with little chance of being fired a short term (1-2 years) 401k loan makes more sense than reducing contributions in my opinion. I've done it twice, both times I've been in very stable jobs where the only thing that would end my employment was a huge economic meltdown (bigger than 08). If the market crashed enough for me to lose my job losing 10% of a small chunk of my savings would have been a steal and the least of my problems. When I was much younger I borrowed 5k out of the ~$11k I had in my 401k at the time to buy a totally unnecessary 2nd car. The company I worked for then went under and they called the full debt, which I couldn't pay, so they treated it like a withdrawal and reported it to the IRS. I either ignored or didn't notice this fact and a few years later the IRS came after me for $2k in back taxes, which they allowed me to pay in installments which was pretty great (the IRS folks were actually really nice and helpful). So, you know, moral of the story is I'm dumb.
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Oct 16, 2018 14:57
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Jealous Cow posted:When I was much younger I borrowed 5k out of the ~$11k I had in my 401k at the time to buy a totally unnecessary 2nd car. The company I worked for then went under and they called the full debt, which I couldn't pay, so they treated it like a withdrawal and reported it to the IRS. I either ignored or didn't notice this fact and a few years later the IRS came after me for $2k in back taxes, which they allowed me to pay in installments which was pretty great (the IRS folks were actually really nice and helpful). See, 401k loans are great!
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Oct 16, 2018 15:13
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While they may have potentially valid uses, I'd still rather default to providing general advice of, "Don't consider using a 401k loan" and allow people with very specific circumstances through which only with a 401k loan can they achieve their quantifiably valuable goals to figure out how best to use one. They're a hammer you can easily and inexplicably cut yourself on if you're not careful and I'd rather not laud their benefits. I feel like it's irresponsible as a home-buyer to stretch yourself juuust a little further using a 401k loan in order to be able to afford a home purchase. Very rarely is your situation so special that you shouldn't just wait until you have enough.
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Oct 16, 2018 15:25
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Hammer...cut yourself on...
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Oct 16, 2018 15:39
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silvergoose posted:Hammer...cut yourself on... 
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Oct 16, 2018 15:40
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Oh okay that makes more sense then. Carry on.
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Oct 16, 2018 19:40
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I took a 401k loan back in 1998 for 5k to buy my house. The stock market tanked right after so I ended up with a nice profit by selling high and buying low.
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Oct 16, 2018 20:48
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Boo-yah, was searching Redfin for houses in my price range. Saw one at the higher end of my realistic budget, but it has been on the market for 55 days, offered $20k less than asking and got it. Inspections on Wednesday, closes in time to have Thanksgiving at my new house.
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Oct 20, 2018 22:30
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Well, inspections came in on my house. Minor electrical fixes and the sewer needs to be jetted. Big ticket items are the stuff I knew going in (windows need to be replaced, heating/cooling are older systems). Even if I replace the windows and hvac I land dead center in my budget, though I'll be busting my rear end doing cosmetic improvements for a while. Any thoughts on good resources for certain home improvement tips? I learned from family but some refreshers on things like drywall would be nice.
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Oct 21, 2018 02:28
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Blindeye posted:some refreshers on things like drywall would be nice. The refresher on drywall is "if you haven't done it a bunch recently and it's more than a small patch get some else to do it." I felt really proud of myself skim coating an entire wall at the new house (there was a dart board there and I had to take care of drunk throws) but I just rocked and taped an entire room a few years back. Even at that it took some time to get back into it and not make a disaster of sanding and therefore dust. Mudding is a trade, but it's more importantly an art. If you don't do this for a living you suck at it and will pay in sandpaper and cleanup if you don't recognize that. I'm' barely competent enough to make this work, and unless I build something else and actually rock it myself soon (I won't because it sucks) I will contract out forever. I enjoyed what I learned, but it's not worth it for the average person. This is a job to contract out. Motronic fucked around with this message at 02:49 on Oct 21, 2018 |
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Oct 21, 2018 02:46
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Hi thread! My wife and I are thinking/saving/planning on buying a house in the next year, although we aren't under a particular clock. Right now we have no significant debt other than student loans. Our take home pay is $130,000 and we have roughly $40,000 saved. We are saving between $2,000 - $2,800 a month towards a down payment. What's a good 'goal' in terms of down payment %? Houses with what we're looking for in our area range between $325,000 - $375,000 -- ideally we'd want to be in the lower end of this range. Is 10% down bad? 15%? Clearly we don't want to clean out of all of our savings to buy a house. This is a very dumb question, but is there more 'value' in say, buying a $290,000 house and spending $20,000 on improvements (which I assume won't be part of the mortgage?).
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Oct 21, 2018 03:22
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It all depends on how much work/time/money/effort you are willing to put into your house. Our first house was cheap because it needed serious updating. At the time, it was what we could afford, and we were willing to DIY it. Doing your own work takes ten times as long as you think it will, and hiring someone else is really expensive. Know your limits with effort and money before going for a cheaper house that needs work. I’m glad we made that choice with our first place because we were able to save up and buy a house that was move in ready six years later. If you’re happy to put in some work, getting a cheaper house can be really rewarding. If you’d rather not deal with a bunch of projects, paying more for a move in ready house might be worth it.
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Oct 21, 2018 04:34
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We are definitely not doing any work ourselves. I think our options would be either buying move in ready, or buying $20,000 cheaper and hiring a contractor for the projects (i.e. new cabinets, not a full kitchen reno).
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Oct 21, 2018 04:41
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Seven Hundred Bee posted:We are definitely not doing any work ourselves. I think our options would be either buying move in ready, or buying $20,000 cheaper and hiring a contractor for the projects (i.e. new cabinets, not a full kitchen reno). You're fine either way. 20% down is the standard, more is better and less is worse. Going below 10% gets really expensive very quickly. Make sure you have a cash buffer for ~3 months expenses post closing costs.
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Oct 21, 2018 04:47
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I always recommend having 25% in cash/assets and putting 20% down. This is kind of unreasonable for many people, but it's a good litmus test for how ready you are to buy. 20% down is the sweet spot for mortgages, you avoid PMI, you probably won't have to default on your loan if you need to move sooner than you thought, a housing crash probably won't trap you, you're probably not buying a place you can't afford to keep,  The extra 5% is for the expensive thing that's likely to break immediately after the purchase, and also because if you put your last penny into the down payment you don't have an emergency fund. If you don't have an emergency fund you are in a bad place. Again, that is a really large amount of funds to come up with for people in a lot of very reasonable cases, and many people buy with 10% down. But for mitigating the worst risks of home ownership, I still think 25% in savings is a good goal to have.
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Oct 21, 2018 05:39
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We ended up buying towards the bottom of our price range with the intent to spend more on fixing up - we decided on the unrestored century-old house with only one bathroom because it was 100k cheaper than similar houses in the area that had been fixed up and had bathrooms added. We also didn't want to pay a premium for remodeling work that we didn't like and would have to fix/undo (we saw so much dumb and bad "updating" it wasn't even funny). We have an assload of work and expenses ahead of us, but at least we can do it right and have the amazing house of our dreams. The move-in ready houses in the lower end of our range were just too far out and too small or had some irreconcilable defect like high voltage power lines going through the backyard (or being a flip). The ones we really liked that were done right and in the right area were waaay more expensive. If the right move-in ready house had come along, we probably would have jumped on it and paid a good deal more, but it didn't so we went with the fixer upper.
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Oct 21, 2018 05:43
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Trying to give a friend some advice, he has about $150k cash in the bank and is house hunting in New Haven CT. Would it be better if he: a) Buy a 150k condo in cash with $300/month condo fee (he can save bank closing fees and probably get a lower bid accepted because he's all cash) b) Use the 150k for downpayment on a $500k 2 or 3 family house, there's a few of them for sale in New Haven where they are actively rented for $4500/month income when the mortgage is only $3000/month. Essentially he can take one unit and break even or still make money. He's interested in being a landlord so he's strongly considering option b, if he were in the Boston area like me I'd wholeheartedly tell him to go for b, but New Haven completely revolves around Yale and nothing else going for it, so the housing values have apparently gone down in the last 4 years while Boston climbs unchecked. Anyone here know the New Haven area?
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Oct 21, 2018 05:53
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Seven Hundred Bee posted:Hi thread! The best goal is 20%, but plenty of people do less. Doing less means probably paying PMI or a higher interest rate, which sucks, and having less equity, which also sucks. Having less equity at the start means a larger fraction of your payments is going towards interest, so the break-even point for selling the house becomes longer (normal advice is to assume that you'll have to live in a place 5 years before you break even on the sale, assuming the price stays the same; having 15% or 10% down can stretch that period out by a few years). The upside to buying a house with less down is that you get to buy a house sooner. You have $40k saved and want to buy a ~$350k house, so to reach 20% + closing costs you'd need to save an additional ~$40k. At $2k/month that's 20 months. If you can wait a year and a half, then you'll be setting yourself up in a much better financial position; if you can't, then that's fine you'll just be paying more in the long run and carrying some additional financial risk in the short-term. There's hypothetically more value in buying a fixer-upper and renovating it, some people do this and do well at it. I used to have a coworker (who is now retired) who used to do that frequently with his primary residence but his husband is also a contractor. It's a huge time investment and you may wind up spending more than you gain in home value if you don't already know what you're doing. So there's some financial risk but if you're okay with that then you could keep your eye out for properties that need TLC
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Oct 21, 2018 06:54
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Zero VGS posted:Trying to give a friend some advice, he has about $150k cash in the bank and is house hunting in New Haven CT. Never buy a condo
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Oct 21, 2018 06:56
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QuarkJets posted:Never buy a condo Or a house.
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Oct 21, 2018 12:38
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One thing to keep in mind in many areas of the country is the lack of quality labor for fixing up houses. Between the bustling economy, expense of living in many areas of the country, flippers bringing large projects, and lack of new workers entering the trades, many competent tradespeople just aren't interested in 3-4 figure jobs. They're not interested in dealing with people who want estimates but never call back or who want to nickle and dime a $2000 job. They'd rather be working on -- and don't have much trouble finding -- a $75,000 kitchen remodel where they can easily bake in $15,000 in profit for themselves. What's generally leftover are the large, ripoff companies (the ones with door-to-door salespeople) whose quotes are eye-wateringly outrageous or independent guys who really don't want the work, but will bid for the moon in the off chance that you'll bite. Even getting a plumber out for something small will end up with a bill that looks more like what a heart surgeon would charge than a guy who shows up in tattered clothing reeking of booze and cigarettes. Luckily, I'm a pretty handy person, but if you're not and you're buying a non-brand-new home, you better learn. Either that, or you better budget at least the oft-quoted 1-2% of the house's market value yearly for maintenance.
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Oct 21, 2018 15:14
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I think what shocks me is that I work with people who I know make less money than I do, have kids, more expensive cars, etc., yet own huge $500,000 homes. Are they just house poor? Parents paying the down payment? Struggling under a huge mortgage? I also recognize how fortunate I am to be in a position to save up $60,000 for a down payment. How are most people in this country buying homes? Seven Hundred Bee fucked around with this message at 15:50 on Oct 21, 2018 |
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Oct 21, 2018 15:48
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Seven Hundred Bee posted:I think what shocks me is that I work with people who I know make less money than I do, have kids, more expensive cars, etc., yet own huge $500,000 homes. Are they just house poor? Parents paying the down payment? Struggling under a huge mortgage? You pretty much have it nailed. Something is giving with those folks. Probably retirement savings, followed by cash savings, and likely light credit card debt loads. People can make payments all day long, it's why things like Netflix, Spotify, etc, have come to prevalence.
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Oct 21, 2018 15:57
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I'm 31, my wife is 30 and we're often wracked with guilt over not having a home at our age, but we have no CC debt, ok retirement savings (although the Zaurg thread has inspired me to open a 401k to supplement my employer pension pan), and are trying to have a down payment... I guess our 'extra' piece is family has offered to lend us money to help with the down payment, but that'd be an interest free loan, not a gift.
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Oct 21, 2018 16:10
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Seven Hundred Bee posted:I'm 31, my wife is 30 and we're often wracked with guilt over not having a home at our age, but we have no CC debt, ok retirement savings (although the Zaurg thread has inspired me to open a 401k to supplement my employer pension pan), and are trying to have a down payment... This isn't 1955. Renting is fine and has advantages. If I'd rented a few years more rather than buying my overpriced house in 2004 I would have been much happier.
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Oct 21, 2018 16:26
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Something like half the country couldn't come up with $500 to cover an emergency, the median amount saved in retirement accounts at the time of retirement is around $170K, and the vast, vast majority of peoples' net worth (if they have any at all) is tied up in housing. Most families are literally one unexpected expense or prolonged unemployment period away from total financial devastation. I don't know how people sleep at night with such a sharp sword of Damocles hanging above their head, but I refuse to live like that.
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Oct 21, 2018 17:04
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Medullah posted:This isn't 1955. Renting is fine and has advantages. If I'd rented a few years more rather than buying my overpriced house in 2004 I would have been much happier. For us we're only buying because of two reasons: 1. tired of having to deal with neighbors (living in a condo right now) 2. detached homes that we'd want to rent are rare and very expensive buying just makes more sense -- I'd rather pay a $1700 mortgage than $2400 in rent.
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Oct 21, 2018 17:18
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Seven Hundred Bee posted:For us we're only buying because of two reasons: Just a heads up about this: When you are a renter, you are only responsible for whatever is stated in your lease. Everything else is on your landlord financially. When you own a home, everything is your responsibility, no matter what it costs. Therefore, think of your rent as the ceiling, and your mortgage as the floor. If there is no gap, then it's likely more expensive to own a house in that market in the short term.
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Oct 21, 2018 23:35
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Tricky Ed posted:20% down is the sweet spot for mortgages, you avoid PMI, you probably won't have to default on your loan if you need to move sooner than you thought, a housing crash probably won't trap you, you're probably not buying a place you can't afford to keep, The extra 5% will barely cover closing costs in most areas.
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Oct 22, 2018 00:56
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Seven Hundred Bee posted:For us we're only buying because of two reasons: Not saying you're wrong about it making financial sense, but bad neighbors can still exist and are much more expensive to deal with when you have the ought-to-be criminal transaction costs for selling and moving.
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Oct 22, 2018 16:24
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You're absolutely right but to his point the bar for "bad neighbors" is significantly raised when you don't share a wall, floor, or ceiling with them. One of my neighbors has a barking dog and screaming bird and if I'm in my house they're not keeping me awake until the early hours of the morning like when I lived in an apartment. Not to mention that you don't have to deal with hearing peoples screaming fights, stomping, throwing things, kids running, doors slamming, and midnight vacuuming. Only like 10% of the population knows how to live considerately.
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Oct 22, 2018 16:35
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My neighbor's barking dogs absolutely keep me up at night, and I have double-glazing throughout. Also because it's the suburbs I get to listen to people running leaf blowers at 8 AM. It's an improvement over having a shared wall, but only an incremental one.
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Oct 22, 2018 22:55
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Leperflesh posted:My neighbor's barking dogs absolutely keep me up at night, and I have double-glazing throughout. Also because it's the suburbs I get to listen to people running leaf blowers at 8 AM. Yeah, when I moved from my apartment to my house I traded a guy who played guitar above me at 2am for neighbors that scream at each other constantly, and light off fireworks til 2am every "holiday" that they can for 2 weeks straight.
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Oct 22, 2018 23:15
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Sometimes at night I can hear the fog horns from the container ships passing up the sound. Really early in the morning I can hear the roar of all the Harleys unloading in a massive group from the nearby state ferry dock. Other times there's a coyote screaming in the untamed hillside in my back yard. All of these things are just part of society. Man I hope that coyote doesn't eat my kids.
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Oct 22, 2018 23:23
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Leperflesh posted:My neighbor's barking dogs absolutely keep me up at night, and I have double-glazing throughout. Also because it's the suburbs I get to listen to people running leaf blowers at 8 AM. I mean, 8 AM seems like a reasonable time for leaf blowing, if I'm leaf blowing one day in my future life I imagine I'll want to get it out of the way in the morning. 8 seems like the earliest possible considerate time, to be fair.
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Oct 23, 2018 04:47
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If you have kids you've already been awake for two hours at that point.
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Oct 23, 2018 04:49
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poo poo POST MALONE posted:If you have kids you've already been awake for two hours at that point. Two. Yes. Totally.
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Oct 23, 2018 05:00
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I hate all forms of two stroke lawn toys
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Oct 23, 2018 05:01
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Something Offal posted:I mean, 8 AM seems like a reasonable time for leaf blowing, if I'm leaf blowing one day in my future life I imagine I'll want to get it out of the way in the morning. 8 seems like the earliest possible considerate time, to be fair. I think "how early is reasonable to do stuff outside" is proportionate to loudness. Chainsawing, leaf blowing, and jack hammering are so loud that you're assuming everyone within half a block of you is up now. The only polite time to use those things is when you can be sure everyone is awake. Rule of thumb, if the thing you're doing requires hearing protection for the operator, it's loud enough that you should probably do it as close to mid-day as you can, and really try to avoid doing it early or late in the day, because it's loud enough to penetrate even well-insulated buildings to the point of annoyance.
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Oct 23, 2018 06:32
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Construction noise is legal in my county at 6 AM, so I kind of figure a leaf blower isn't too out of line at 8. It kind of sucks for me because I work from home so even if the neighbor's landscapers come by around noon it is probably going to be annoyingly loud for a while when I am trying to work. But that is part of living in society and unless I decide and can convince my wife to move out to some wooded acreage I am going to have to live with it.
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Oct 23, 2018 06:49
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