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How much savings do you need?

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#1 Zicher

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Posted 22 March 2012 - 11:03 AM

When spending money from your savings on a down payment for a house, how much should you retain in savings? Is there a specific amount, or is there a formula based on your income and expenses? To what extent can you rely on the ability to take out a home equity loan if you need additional liquidity?

#2 LoveToLaugh

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Posted 22 March 2012 - 03:26 PM

I think its somewhat normal for people to have very little left in savings after buying a home. I mean in theory, its great if you have extra $$ saved up but folks are often scraping together the last amounts of $ they have for the down payment and closing costs. That said if there is work that needs to be done to the house, obviously there needs to be untouched money for when its needed.
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#3 Zicher

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Posted 23 March 2012 - 08:49 AM

I think its somewhat normal for people to have very little left in savings after buying a home. I mean in theory, its great if you have extra $$ saved up but folks are often scraping together the last amounts of $ they have for the down payment and closing costs. That said if there is work that needs to be done to the house, obviously there needs to be untouched money for when its needed.


So I guess those people have to refinance to pay for simchas?

#4 ThoughtCounts

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Posted 12 April 2012 - 10:36 AM

When spending money from your savings on a down payment for a house, how much should you retain in savings? Is there a specific amount, or is there a formula based on your income and expenses? To what extent can you rely on the ability to take out a home equity loan if you need additional liquidity?


Lots of factors are involved. A few thoughts.

1) The vast majority of homebuyers should have 6 months of living expenses in savings (cash or cash equivalent) left after using money for a downpayment.
2) One should not count on having the ability to take out a home equity loan at a reasonable interest rate. This is due to, credit tightening, one's house could lose value and no equity would be left to borrow against.
3) Orthodox Jews who plan on sending children to private school should be very careful on how big of a loan they can handle relative to their current and future (expected) income.

#5 Szydlowski

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Posted 03 May 2012 - 12:20 PM

Consider that you may have to "fix" things in your home such as pipes broken or a new kitchen or other expenses related to your house.I have money just saved for those expenses. Make a budget is my advice!
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#6 Pinchas

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Posted 04 May 2012 - 01:17 AM

I agree... I had to redo just about everything... electric, gas, water, floor, bathroom, kitchen and I didn't even had money left for the windows...

You could also do the repairs more slowly rather than all at once if it's livable though... but anything you'll need to fix try to deduct from what you are bidding on the house and tell them why!

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#7 33948

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Posted 18 June 2012 - 02:08 PM

To what extent can you rely on the ability to take out a home equity loan if you need additional liquidity?


This is the problem. During the bubble they were giving loans to everyone. Now the banks make it very difficult to get a loan. It depends on your income. If you have a huge income and don't really need the loan, then they are likely to give it to you. I thought typically with older homes a person could get a loan that exceeds the cost of the house and then use the additional money to fix things if needed. Then if you don't need the money just use it to pay on the loan.




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