Real Answers for Life’s Money Challenges
Ive been shopping around with my partner to buy our first home.
Well likely put down the same nominal amount of money for either option.
Is there a golden ratio?
-A.
Dear A.,
Theres no magic ratio here.
And as someone whos hoping to eventually buy a home, I wish there was.
All those rules make it easy to think theres some magic in those numbers.
Save X% and its 100% guaranteed youll never run into financial trouble.
Renting often gets dissed asthrowing away moneyeach month.
It buys you the right to check that expensive repairs will be someone elses problem.
No Interest Til Almost 2027?
While Im not a fan of most rules of thumb, there are a few exceptions.
That isnt going to be realistic advice for everyone.
If you dont have that three-month emergency savings, Id keep saving before buying a home.
Youre trying to make a $7,000 down payment.
Your Roth IRA contributions are yours to withdraw tax- and penalty-free at any time.
But the IRS defines first-time homebuyer as hasnt owned a home in at least two years.
Often at this stage of life, your Roth IRA consists mostly of your contributions.
Down payments are more affordable than ever, with many first-time homebuyers choosingFHA loansthat require just 3.5%.
Take it all from your savings without touching your Roths.
You didnt ask me for advice about which house to pick, but Ill give you some anyway.
Homeownership is almost always more expensive than people expect.
So focus on the affordable aspect, even if that means your starter home wont be your dream home.
Robin Hartill is a certified financial planner and a senior editor at The Penny Hoarder.
Send your tricky money questions to[email protected].
Probably not as good as youd like.
It always seems like an uphill battle to build (and keep) a decent amount in savings.
But what if your car breaks down, or you have a sudden medical bill?
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