Reply to How do I calculate what a house will cost in five years? Ten years?

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[quote=Anonymous]Not that I would encourage you to be house poor but we only put down 15% and it wasn't that big of a deal. People act like it's the worst thing in the world, but we stretched our budget a bit to get a bigger house, and here's how it went down:

For 2 years we had to pay a $220 monthly PMI. After two years, mostly due to house appreciation but in part to paying down our principle a bit, we were able to demonstrate that we had more than 20% equity in our house and get the PMI removed. All told it cost us 220x24 months  = $5280.

Obviously avoiding that payment would have been better but it would have taken us literally years to save up the last 5% of our down payment. Instead, we got into our house and watched prices go up around us a lot more than $5k over two years, I guarantee that. Plus we got a great mortgage rate (late 2012) but that was luck.

Alternatively, maybe we should have gotten a smaller house. But our family has grown from 2 to 4 in that time, and we feel zero pressure to move, which wouldn't have been the case otherwise. We'll stay in this house at least 3 years longer than we could have a smaller house. I'm confident those three years with our  (now relatively) low mortgage and interest are worth more than the $5k we paid in PMI.

Obviously a lot of this is specific to our situation but I wanted to mention it because people act like putting down less than 20% is on par with, like,  payday loans or something in terms of financial irresponsibility. But I'm really confident that it was a great option for us that will yield us 10s of thousands of dollars in the long run. [/quote]

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