Don't use a bank, use a credit union. When I refinanced my house last year I put $40K down, which the CU drafted from my account. The money was from an insurance settlement so I only had to provide documentation stating where that came from.

Also, no escrow for taxes and insurance. I pay those when they are due and prefer it that way. My loan was for 10 years at 3.25% and I'm getting ready to kick it in the *** with two payments per month so I can have the house paid off in two years.

Anyone who tells you to keep a mortgage for the tax deduction is bad at math.

 

I'm already locked in with the bank and it doesn't seem like a bad deal to me. The bank won't give a loan without an escrow account. Three or four years ago they would give out loans like candy on halloween but since the credit crisis with so many people getting foreclosed on in such a short amount of time it has gotten a little more annoying to get a mortgage.

We did the smallest down payment we could because the size of the down payment ($1800 vs. $5000) just barely makes a difference on the mortgage payment and we still need furniture and need to fill up the cabinets with food and dishes.

We already plan on taking half of the tax returns every year and putting it into the loan. We will also consider throwing about $50 more at the payment every month for principle.

 

Sounds like you have an excellent plan. Vw seems to be comparing apples to oranges. Credit Unions have a lot of really good points though and I prefer to do business with them as much as I can. I have one that I have been a member of since I was in the Army. VW, sounds like you are taking some really responsible steps with your 40 grand settlement. I know a lot of people that would have squandered that money and had nothing to show for it. Now you should be set for some time as long as nothing forces you to change your plans in the two years you need to pay off the house.

 

If you're getting money back each year then you'll be better off diving that amount by 12 and adjusting your W4 by the result. That way, you're getting the money each pay period, which I would then recommend throwing toward the house payment. It's better to owe a few hundred than get thousands back.

The sooner the house is paid off, the more stable you are. Losing a job doesn't mean losing the house, plus the house payment can then be socked away each month toward retirement.

One more bit of advice - start a savings account for emergencies. Trust me, home ownership is a bitch. You might also want to check out what Dave Ramsey's site has to offer. I've done lots of stupid with money before I finally woke up. No credit cards here nor car payments or any other debt besides the mortgage. I can't wait to get the house paid off.


Also -- congrats!

 

That is the way to live. I have no credit cards, trucks mine and in a few years I will buy a home. I have known several people that do not make any deductions out of their pay and deposit the money into a good yeild account or invest it. You do not get interest on any money you have withheld and if you are responsible you can pay the few hundred at the end of the year for sure. Dave Ramsey is an awesome guy. Been to one of his seminars in the past. It was at a huge baptist church in moore.

 

I know that is better to adjust your w4 to make you break even at the end of the year and get little to no refund and I know that it is basically an interest-free loan to the government but it sure is nice getting that big chunk of your money that you never saw in the first place at the beginning of every year.
My tax return is sure to change once getting the house and it's sure to change again once I get married so I'm going to see if it will change for better or worse before I make any changes to the w4.

I don't care for credit cards and I have never had one, it's too easy to get careless with one, forget to pay a bill or put off paying the bill and get charged a really high interest rate.

I already plan to save. At first we're going to start off with $50 a month then after a couple months of paying bills like neither of us have ever had then we'll look into how much extra money we have left after bills and go from there on the adjustment for what goes into savings.

I also have a plan for the bills and making sure they're always covered. Right now we have separate bank accounts and it will stay that way. I plan to open another account and using it as the bill account.
At first we will put at least $1000 in that account for padding to cover variable bills like power and water. Then we will both put 25% of what it will cost for the monthly bills with each check since we get paid every two weeks (estimating that percentage on the high side of each bill).
Doing it that way will ensure that there isn't any, "you spent $50 on groceries? we only had $40 in there because I stopped to get gas!". I've seen that with married couples that have joint accounts quite a few times. We will know what is left in our bank accounts for food/gas/play money because we will continue to keep track of it and if the either of us needs money out of the others account then there will be confirmation before accessing that account.

 

Kids = NICE Income Tax Refund... So if you don't have any.... (don't know if you do or not)

 

We never got any nice tax refunds from having kids (we have 2)...we have our deductions set just right where we might get a couple hundred back or owe a couple hundred. I'm not letting the government save my money interest free for me, I want all the money I can get out of my paycheck. Now, once my eldest went off to college....thats when we got a nice fat refund check from paying his tuition.

 

The amount spent raising children offsets any potential refund or tax credit.

 

Of course.

But it's still nice getting $,$$$ back each year. Two years ago my brother in law got back $$,$$$.