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Author: Rayvt Big gold star, 5000 posts Top Favorite Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 127262  
Subject: Re: When can I qualify for a loan? Date: 4/26/2013 3:24 PM
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You are not gonna want to hear this ---- but the best thing that could happen to you is if they turned you down for a mortgage.

The overall tenor of your questions and remarks reveal that you have very little experience in the real-world outside of college.

Picture a tenderfoot in the Yukon heading out into bear country with a backpack full of salmon, confident that the pepper spray and bells will keep him safe. Picture a newbie sitting down at a Las Vegas game of Texas Hold'em with a little 3x5 card of the rules.

Yeah, you are that guy.

You don't know what you don't know, and that's gonna kill you.

looking at houses that are in a $130-170K range
Means that the house you buy will be around $200K - $225K. [1st thing you don't know that you don't know: Houses *always* cost more than you think they should.]

Maybe I'll toss around the idea of putting a little less down so I've got a bit of money at least.
Means that you will be in the position of standing in water up to your nostrils. The least little bobble will drown you.

I'll be well into the 28% bracket,
You have no idea what tax bracket you'll be in. Things are *always* different than you think they'll be. Since you have no real-life experience with collecting a large-ish paycheck, making 401K contributions, etc, you have nothing to base an opinion on.

I would get another $250 or $300 as a mortgage interest deduction...
Don't fall for this. Real-estate agents like to tout the interest savings. For most people, the actual dollar amount of the savings is small.

You didn't say what kind of house you are planning to buy. Many first-time buyers buy the cheapest house they can get by with. Like a 2 bedroom house or a condo/townhouse. And then they get stuck when they go to sell, because the only potential buyers are other foolish first-time buyers with no money.

And it also ignores the equity part of the "buy" scenario.
Keep dreaming. [This is the N'th thing you don't know that you don't know.]

Rule of thumb: the overall costs to *buy* a house are 5% of the price. The overall costs to *sell* a house are 10% of the price. That's 15% round-trip transaction costs. Maybe you get lucky and you can do it for 10%.

That's 10% of the house price, not 10% of your down payment.
That means that your ENTIRE 10% down payment is GONE. Actually, real-world, it means that your entire $20K down payment is gone, plus another $10K -- 'cause real-world it's really going to be 15%.
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