Is anyone hoping to buy a home soon? If so, how much of your savings do you think you'll spend? Or if you're already a homeowner, how much of your savings would you suggest a new homebuyer put down?
I got a letter from a woman who wants to buy her dream home and rent out the one she and her boyfriend currently own. To make this happen, she's considering using 90% of her savings. https://www.thepennyhoarder.co...se-savings-for-home/
Honestly, I'm grappling with the same question. I'm hoping to buy a home at some point in the near future, but the idea of parting with a huge chunk of my savings sends me into a bit of a panic.
I think it's ultimately less about the percentage of savings you're using and more about whether you'd be dipping into your emergency fund. I'm keeping my six-month emergency fund, but realistically, all of my savings beyond that will probably go toward a down payment. I don't plan to use any money from my Roth IRA (even though I could use all my contributions plus $10K of the earnings since I'm a first-time homebuyer) or my 401(k).
In the letter writer's case, it sounds like 90% is a bit much — not only because she would probably dip into her emergency fund, but also because it sounds like spending so much of her money at once would cause her a lot of stress.
Unfortunately, with home prices so ridiculously high right now, many potential homebuyers will have to spend most of their savings if they don't want to rent forever. How do you know if you're spending too much on a down payment?