New Castle News

All About You ...

August 2, 2013

Dave Ramsey: Make down payment; avoid PMI

NEW CASTLE — Dear Dave:  When is it OK to purchase a house without making a 20 percent down payment? — Hannah

Dear Hannah: When you’re willing to pay private mortgage insurance (PMI). And that’s not something you want to do.

PMI costs about $75 a month per $100,000 borrowed. So, if you borrow $200,000 on a home, and you don’t put down at least 20 percent on the transaction, you’ll have to pay out an extra $150 a month as part of your mortgage payment.

Private mortgage insurance does nothing for you except pay your mortgage company in the event they have to foreclose on you and they lose money. PMI is foreclosure insurance that protects the lender, and you get to pay for it if you don’t make a 20 percent down payment. In the scenario I mentioned before, that would be an additional $1,800 a year on a $200,000 loan. In a sense, that’s an extra 0.9 percent on your interest rate. That’s what it feels like.

So you can see that PMI is not a positive thing. Often, a first-time homebuyer will purchase a house with 10 percent down then pay the other 10 percent as quickly as possible in order to get rid of the PMI. Stay away from it, Hannah. It’s nasty stuff! — Dave

Dear Dave: I have a close friend whose 17-year-old daughter is going to college to become a high-school band director. Her daughter wants to take out student loans to attend an expensive private school, and tuition alone over four years will cost $100,000. I feel this is a really bad idea, but I don’t know how to talk to her about this. — Natalie

Dear Natalie: I’m sure your friend and her family are nice people. But what we’ve got here is a little teenage girl who has her heart set on something, and no one has told her no in a while. You’re getting ready to help introduce a new word into her vocabulary, because what you’ve described to me is stupid.

Text Only | Photo Reprints
All About You ...
  • peaches.tiff Your Summer Treats: Poor peach crop expected

    Local peaches may be scarce in Lawrence County this summer. County fruit farmers are watching their peach trees closely, not sure how badly they were damaged by the winter’s extreme cold.

    April 21, 2014 1 Photo

  • Hudson.jpg Culinary Conversation: Think globally, cook locally

    Another set of bookshelves might be necessary at my house very soon. It’s been a bountiful week. Edie Majesky of New Castle, who I have known most of my life, is aware of how much I love collecting old cookbooks.

    April 19, 2014 1 Photo

  • Ramsey.jpg Dave Says: Problems with no credit score?

    “Dave Says” is a weekly column featuring financial advice from nationally syndicated radio host Dave Ramsey. His column is filled with timely, relevant questions and answers taken from actual letters and calls on Ramsey’s radio progam, “The Dave Ramsey Show.”
     

    April 18, 2014 1 Photo

  • Brothers.jpg Lori Brothers: Play with names — not with your food

    Do you remember being told, “don’t play with your food” when you were a child?  Or maybe you’ve said this to your own children or grandchildren. I’ve heard stories about kids slipping food under the table to the dog or stuffing Brussels sprouts into their pockets to get out of the pain of eating them.

    April 17, 2014 1 Photo

  • stright.jpg Sarah Stright-Hartley: A T-shirt dress can be a three for all

    I love finding pieces that can be worn for just about every portion of my life.  From daytime, to work, and then on a date with my husband, I like pieces that can go the distance.

    April 16, 2014 2 Photos

  • ivy_bday.jpg Kali Davies-Anderson: Happy birthday, Miss Ivy!

    This week I would like to take time out of my usual ramblings to wish my second born daughter, Ivy, a very, very happy first birthday!

    April 15, 2014 2 Photos

  • Olszak.jpg Heartbleed raises the stakes on Internet security

    My column last week dealt with Internet and related scams, along with steps people can take to protect themselves. Today’s column could be termed Part 2 of that topic, albeit from a different angle.

    April 14, 2014 1 Photo

  • Hudson.jpg Lugene Hudson: Celebrate Easter like Helen Martin

    What’s cookin? That’s one of our favorite questions at Culinary Conversation. We love when readers share some of their favorites. This week, Helen Martin of New Castle stepped up to the plate to answer that question regarding Easter dinners.

    April 12, 2014 1 Photo

  • Ramsey.jpg Dave Ramsey: You can’t borrow way out of debt

    “Dave Says” is a weekly column featuring financial advice from nationally syndicated radio host Dave Ramsey. His column is filled with timely, relevant questions and answers taken from actual letters and calls on Ramsey’s radio progam, “The Dave Ramsey Show.”
     

    April 11, 2014 1 Photo

  • Brothers.jpg Lori Brothers: Wellness a growing trend among those over 50

    The power of choice that the explosion of Internet information has generated is moving us as a culture in a direction to examine who we are and what we really value.

    April 10, 2014 1 Photo

House Ads
Poll

When will you start mowing your grass?

Been there, done that
Probably this week
Not until May
You mean, when will I HIRE someone to mow my grass?
     View Results