1x85zn wrote:to stop renting in the most expensive city in the us
This is the key statement. IF you are renting in the most expensive city in the US, then it might follow that home prices are the same? How much for the 'average' starter home? $600K?
If you're in a place that's expensive and average good home in a good neighborhood might cost that $600K, then 20% down would be $120K to avoid PMI or other issues. It's my opinion that your ROTH savings should stay in there for the future retirement and if you want to save for a house, then it really should be done elsewhere. The reason is you can only get $10,000 out of your ROTH For home purchase. But you'll need much more than that for a downpayment. If you keep that original $10,000 in the roth over the years, it should double almost every 10 years if the annualized yearly return is about 7%. That means in 30 years that $10,000 would grow from $10,000 to $20,000 to $40,000 to $80,000 for just sitting there. In my opinion, that's much better than using the $10,000 for a down on a house that requires an addiitional $110,000!. However, if you lived in an area whereas that $10,000 alone would eliminate PMI, then using the ROTH might get a thumbs up. But it's my impression that using the ROTH for a home downpayment is a marketing stunt by the Government to convince people that have never owned a house that the "American Dream" of home ownership is possible. The problem - the "American Dream" should NOT be about owning a depreciating asset like a house or a car - it should be about self-reliance, self-confidence and good health (oh and, practicing family traditions). Just my opinion.