Is it bad to borrow your downpayment?

[haulingthescoreup]

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MrsQ wrote:

I am asking because I saw this question on a mortgage application.

Is it "bad" to borrow your downpayment?  Does it show that you are not ready to get into a home?

I have about $2500 saved up for my downpayment, but we would want a house around 130-140k.  The 3.5% would put us close to 5k.  I am just wondering if this moves fast, would it be a bad thing to borrow the rest?

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MrsQ, I hate to sound all dreary and mom-ish, but I would strongly advise having more in savings than that. Even if you don't need all your savings for closing costs and all, there are always (always, always, always) expenses involved in moving into a new-to-you house. You're going to sleep a lot better at night if you have a decent savings cushion to give you wiggle room when the water heater blows up or the stove goes out.

I wish you the best in your house hunt, but if you could postpone it until you have more stashed away, you'll be a lot better off.

It's not just about satisfying the lender; it's about financial prudence, too. I'd hate for you to wind up being one of those frantic folks who're being drowned by home-ownership.

[MattH]

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@haulingthescoreup wrote:

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@Anonymous wrote:

I am asking because I saw this question on a mortgage application.

Is it "bad" to borrow your downpayment?  Does it show that you are not ready to get into a home?

I have about $2500 saved up for my downpayment, but we would want a house around 130-140k.  The 3.5% would put us close to 5k.  I am just wondering if this moves fast, would it be a bad thing to borrow the rest?

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MrsQ, I hate to sound all dreary and mom-ish, but I would strongly advise having more in savings than that. Even if you don't need all your savings for closing costs and all, there are always (always, always, always) expenses involved in moving into a new-to-you house. You're going to sleep a lot better at night if you have a decent savings cushion to give you wiggle room when the water heater blows up or the stove goes out.

I wish you the best in your house hunt, but if you could postpone it until you have more stashed away, you'll be a lot better off.

It's not just about satisfying the lender; it's about financial prudence, too. I'd hate for you to wind up being one of those frantic folks who're being drowned by home-ownership.

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I strongly agree!  In seven years of ownership my wife and I have replaced (among other things) two toilets, one water heater, one A/C, one furnace, one range, one dishwasher, one water heater, and various minor things.  Also since we live in a condo there have been several special assessments to pay for things like repaving the parking lot and fixing the roof.

Home ownership can be a very good thing; my wife and I are glad we bought our current residence.  But we are also very glad we saved for ten years before buying so we had ample reserves.  Houses and cars can be extremely dangerous unless one plans carefully, because they represent expenses that cannot easily be cut back on short notice if circumstances change.  If you spend a lot on eating out and entertainment and suddenly money becomes tighter, you can instantly stop doing those things.  But you cannot instantly cut car or housing expenses should you need to.

[CreditGuy03]

 one could buy a newer house with warranty to avoid breakdowns. Also within that warranty period more cash can be saved up for a rainy day

[Anonymous]

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@CreditGuy03 wrote:

 one could buy a newer house with warranty to avoid breakdowns. Also within that warranty period more cash can be saved up for a rainy day

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I agree, but I also agree with trying to save more.  I just dont want to miss out on this credit!  I know I dont want to be in foreclosure in 4 years either, so....