Comment by dsfyu404ed | Hacker News Reader

Comment by dsfyu404ed | Hacker News Reader

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Your comment it out of touch.

The overwhelming majority of first time home buyers do not have enough cash on hand for a down payment and a 6mo long emergency fund. It's just not possible for most first time home buyers to amass that kind of cash in any reasonable timeline while paying for the existing roof over their heads. You save for a down-payment, blow your savings on the down-payment and closing costs then rebuild your savings over the next year or two while putting up with the increased risk as a result of less savings during that time. People buying their 2nd through Nth home can generally roll the money made on the sale of their own home into the down payment and closing costs of the home they're buying without obliterating their savings. Sure, it would be nice if everyone were wealthy enough to have a down payment and emergency fund but so long as renting is the financial equivalent of lighting your money on fire people will stretch themselves as thin as they need to in order to buy.

If they're able to save up for a down payment they can wait a little longer and save up a six month reserve.

It takes most people a lot more than 6mo to save up a 6mo reserve. Delaying a house purchase by a year or two is not a practical option for most people. You have external things constraining your timeline to buy.

Sometimes people do get put into situations where buying earlier than optimal seems like the only option. However, people often use a variety of excuses to buy a house simply because they want to buy a house (even if they don't have the necessary funds for risk management).

-We are having a baby, so we need to move out of our 2 bedroom apartment and get a 3 bedroom house -Our rent is increasing so we need to buy a house (even though the mortgage is often more than rent) -We need a garage for our cars, so let's buy a house -We have money in our savings that isn't earning anything for us, so let's buy a house and put it to work. -We don't like sharing walls with neighbors, so we need a house. -Our parents say we are throwing money away at rent and should buy a house so we can build wealth.

Each excuse has some validity to it, but none of them really mean you need to buy a house RIGHT NOW.

6 month reserve is not 6 months of income. It's 6 months of making basic expenses; and is much easier than most people think.

- We (US) loose about 1/3rd of our income to taxes. These aren't paid when you have no income.* - A certain portion of income goes to retirement and saving for a rainy day... Well, you don't save for a rainy day when it's a rainy day. - Major purchases can be deferred - Major expenses, like vacations, can be skipped. - Some banks will let you switch to interest-only in hard times - ect

So, roughly speaking, 6 months of reserve is much less than 6 months of pre-tax income.

* If you have the misfortune of an extended unemployment, it will shift your tax bracket and you pay even lower taxes.

In an upmarket, In the meantime, the house goes up in price and you're even further away from owning the house and even more over-extended if you decide to bite-the-bullet and buy.

> The overwhelming majority of first time home buyers do not have enough cash on hand for a down payment and an emergency fund.

The point is, then these people are not first time home buyers.

> The point is, then these people are not first time home buyers.

They manifestly factually are, whether or not by the standards you would prefer to apply to the decision they should be.

Thanks for restating the point.

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