The Money Mentor

I’d like to buy a home but the down payment is $20,000 and that’ll leave me with zero savings. Should I buy the home or continue to save up?

Last Modified on January 12, 2023

I don't want to wipe out my savings just to buy a home...
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Thomas Taveras

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Dear Tom,

As a 35-year-old single lady, I have been working hard for many years and have finally reached a comfortable point in my career where I am earning a salary of $100,000 per year. I have also been diligently saving my money and have managed to accumulate $20,000 in savings.

Owning a home has always been a dream of mine, but as a single person, the prospect of buying a house by myself seemed daunting. I have come to terms with the fact that marriage may not be in the cards for me, and I am ready to take the next step and buy a house on my own.

However, I don’t want to wipe out all of my savings in the process. I have seen friends and family members do that, and it leaves them in a precarious financial situation. At the same time, I don’t want to continue throwing money away on rent.

I have found a house that I love, but the down payment is $20,000 which will leave me with zero savings. I am now wondering if I should go ahead and buy the house or if it would be better to continue saving up my money.

On one hand, owning a home is a significant milestone and can be a great investment. It can also provide me with a sense of stability and security. But on the other hand, I don’t want to put all my eggs in one basket and risk ending up with no savings.

As I weigh my options, it’s important for me to consider my long-term financial goals and what is most important to me. I should take into account things like my job security, the current housing market, and my ability to save money in the future.

It may also be a good idea for me to consult with a financial advisor who can help me make an informed decision that is right for me. Ultimately, the decision is mine, but it’s essential for me to carefully consider all the factors before making a commitment.

Dear Single Future Homeowner,

Well, first off, congratulations on having $20,000 in savings! That’s a great start. Now, let’s talk about buying a home. In my opinion, it’s important to have a solid emergency fund in place before making a big purchase like a home. An emergency fund is typically 3-6 months worth of expenses, so in your case, it would be around $30,000 – $60,000. Once you build that up, pretend that’s at $0.

Now, I know you said you want to buy a home, and I totally understand that desire. But, using all of your savings for a down payment and having nothing left in savings is not a good idea. You need to have some money set aside for unexpected expenses, like car repairs, medical bills, or job loss.

So, my advice to you would be to keep saving for a few more months until you have at least 3-6 months worth of expenses saved up in your emergency fund. And then, once you have that, you’ll be in a much better position to buy a home and still have some savings left over for unexpected expenses. Pick a budget from one of these methods, and then, build up your down payment. By then, real estate prices may come down back into a buyer’s market.

Remember, it’s not about how much you make, it’s about how much you keep. And, the more you save, the more options you will have in the future.

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