How The Hell Does Someone Save Up For a House?

Summary: Buying a home is still the American dream for many people but with home prices going up and up, how can you save up for a house without sleeping in your car? With the median home price in the U.S. at $188,900, it seems impossible. How the hell does someone save up for a house?<br> It’s the American Dream<br> Buying a home is such a part of the American dream. It seems like once you reach certain milestones that are considered part and parcel of being an adult, every which way you turn, someone or something is telling you to buy a house, you must buy a house! But should <a href="https://www.huffingtonpost.com/entry/american-dream-home-ownership_us_5b2c5736e4b00295f15ae32a">buying a home</a> still be a part of the American dream?<br> The dream of home ownership was something that came after World War II when everyone came back and they built all these houses. Homes came to represent personal success and security, an ideal real estate and mortgage agents perpetuated.<br> <br> “It’s good for the economy to buy houses, but that doesn’t mean it’s actually good for the person that buys it.”<br> <br> Home prices in Boulder, Colorado are up roughly <a href="https://www.zillow.com/boulder-co/home-values/">69%</a> over the past ten years and up around <a href="https://www.zillow.com/hoboken-nj/home-values/">43%</a> in Hoboken, New Jersey for the same period. With so many people struggling with <a href="https://www.listenmoneymatters.com/go/nationaldebtrelief/">credit card,</a> <a href="https://www.listenmoneymatters.com/go/earnest/">student loan,</a> and <a href="https://www.listenmoneymatters.com/when-medical-bills-attack/">medical debt,</a> how does anyone save up the 20% down payment? Is buying a home still a good idea and if it is how can you save for a house?<br> <br> Do You Really Need 20% Down?<br> You can certainly buy a home <a href="https://www.listenmoneymatters.com/how-to-buy-a-house/">with less than 20% down.</a> Through an FHA loan, you can do it with just 3.5% down. But should you buy a home if you don’t have 20% for the downpayment?<br> No, you shouldn’t. Without 20%, you’re going to be stuck paying PMI, primary mortgage insurance. PMI typically costs from 0.5%-1% of the entire mortgage amount on a yearly basis.<br> You can ask your lender to remove PMI when the mortgage has been paid down to 80% of your home’s original appraisal value, and once the mortgage balance is down to 78%, the lender is required to remove PMI.<br> PMI isn’t the only reason at least 20% down is ideal. A bigger down payment means a smaller monthly payment and paying less interest over the life of the loan so putting 20% down saves you money in the long run.<br> There is a workaround though, and it’s called a piggyback loan. Your first mortgage is for 80% of the cost of the home, a down payment of just 10% is made, and the remaining 10% comes from a second mortgage loan that comes with a higher rate of interest. This strategy allows a buyer to avoid PMI.<br> Hidden Costs of Buying and Owning a Home<br> It’s not just the down payment you need though. People feed their numbers into a mortgage calculator and see that they could be paying the same or sometimes less each month for a home than they are for their apartment.<br> Those calculators don’t tell the whole story though. There are a lot of <a href="https://www.listenmoneymatters.com/buying-a-house-hidden-costs/">hidden costs</a> in buying and owning a home. Inspection costs, closing costs, property taxes, and maintenance are just a few of them.<br> <br> A much more realistic calculator is<a href="https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html"> this one</a> from the New York Times. Plug your numbers in the NYT calculator and then a generic mortgage calculator and see how different the numbers are.<br> I did that. The generic calculator showed my only cost as the downpayment which wa...