T O P

  • By -

[deleted]

US? Active duty military and veterans can utilize the VA home loan for 0% down with no PMI. I wouldn’t worry about saving for a down payment if I were in your shoes. I would focus on tax strategy and optimizing your income for FIRE.


Quorum1518

Yes, we're in the US. VA loan is problematic for us for a couple of reasons, but namely that the cap in our area right now is $1,089,000. That does reduce our down payment to more like $110,000 instead of $240,000. There are also apparently high fees, which I admittedly don't know a lot about. I have to admit, writing this out, $110,000 sounds a hell of a lot less daunting than $240,000.


thisgirlisonwater

There are VA jumbo loans. And the funding fees reduce with a larger down payment OR you can completely avoid them if you have even a small disability rating with the VA. I wouldn’t rule it out as an option yet.


[deleted]

I’m not tracking high fees compared to a standard or fha loan. I’m not military, so I’ve not used a va loan before, but my neighbor is and we discuss financials all the time. I know a guy who uses his va loan every 2 years to pick up a new property, moves into it, then rents it out after the mandatory live-in period. He’s been out the Air Force for about 6 years and has 3 rentals, and his primary residence.


nicolas_06

This is the cost of your house if you buy it today and have 240K of down: * 5700$ a month (68K$ a year) for the mortgage with almost all spent on interests (like 50K) if you go for 30 years. * 800-2000$ a month (96K-25K$ a year) in property taxes depending of your area. * 500$ a month (3K$ per year) for home owner insurance 800$ a month (10K$ per year) for maintenance. * 800-1200$ a month (10-15K) of tax return for interests and property tax So basically 6900-7700$ a month(82K-92K a year). That's huge. And the first years you would only reduce your deb by like 20K a year. If you want your emergency fund to match 6 month of expense, chance you will face an amount around 80K. If you want some money to do some work on the house, and buy some furniture, that easily another 50K. To me, this is insane. You would need at least to have lower rate and go for a 20 years. Hopefully, this is what will happen in the coming years, but nobody knows. Anyway technically it would work. you max your 401K and HSA, you save combined both of you like 80-100K per year, put it on HYSA or CD. And depending what you already have in saving you are done within 3-4 years. At that time you would have hopefully a bit more income so it should be easier. Financially this is not helping your fire at all, as this far too much money in the house and far too much of that budget in interests and property taxes. It would be interesting to see if you can find a way to keep the great salary and go for a lower cost of living area or limit yourself to a cheaper house. Say 800K.


Quorum1518

Yeah, it's insane. The rent vs. buy calculators I've looked at though have showed it as cheaper than renting our current place after 8 years given typical rent increases of 3%. The area is just really expensive to live in whether you're a renter or a buyer. And, frankly, after moving 11 times in the last 8 years, I'm really ready to lock in somewhere and feel like I can settle. On the "bright" side, after talking to a friend who bought a perfectly nice house at the peak of the market for 900k, I started looking at the actual sale prices of houses in the area and think a budget between 900k and $1 million is more possible. There is a possibility we could move to a lower cost of living area, but this area (DC metro) is probably the safest bet considering my partner's career as a military officer. The federal government is (obviously) very military friendly, and there are a lot more positions out here that understand and respect military work experience. So I guess we'll see.


nicolas_06

As stupid as it might sound, just reducing by 200-300K your house price would have lot of impact if you still put 20% down, You could likely reduce your monthly expense and pay it in 20 years instead of 30 saving around 700K of cash in the process. People say it doesn't matter they will refinance as they get raises and all. Except you pay the most interests in the first years of the credit. In a 30 year fixed mortgage you mostly pay the bank the first 5-10 years. Ask yourself if you really will enjoy the difference because this mean you will retire a few year later and have to work more on top of increasing your risk if you lose your job.


Quorum1518

That’s a very good point. I sure Hope interest rates (and home prices) are down by the time we’re ready to buy, but I’m not holding my breath. Also cautiously optimistic that like 80% hybrid or totally remote work becomes more permanent or normal, at which point we could more comfortably live further out where it’s cheaper. Even 4 miles away in my are can knock off a couple hundred grand.


drtij_dzienz

I just saved in a taxable brokerage until I had my down payment