So Many Ways To Buy

Patrick is thinking ahead to buying a house, but isn't sure what his options are to finance it.

QUESTION: Patrick wants to know, once he’s debt free, how he can best approach buying a house. He makes $70,000 a year. There are many ways to do it, says Dave.

ANSWER: First, be debt free and have an emergency fund, and be married at least a year. After that, there’s a spectrum of things. The best plan is 100% down, and with your income, you could live in a small apartment over a garage, save up and pay cash for a home in 3 years as an example. The other end of the spectrum is a 15-year fixed rate where the payments are no more than a fourth of your take-home pay. Don’t do 80/20 loans, and have at least 20% to put down to avoid private mortgage insurance. Anywhere in that spectrum, and you’ll be in good shape.