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I've got a house/financial question.
All right gang, so here's my question.
Let's pretend you want to buy a house, and you've got great credit scores. Pretend that you want to put about 10% down, but you realize that you don't have enough to put 10% down AND pay for closing costs. Do you A.) Put down 10% and ask for closing costs from the seller, B.) Put down less than 10% and furnish your own closing costs, or C.) realize you're looking at houses that are too expensive?
ETA: Asked another way....do you save more money in the long run putting more down and asking for closing costs, or does the increase in PMI with a smaller down payment outweigh anything you would have gained by paying your own closing costs? If you can point me to any articles about this, too, I'll gladly read them. 
Re: I've got a house/financial question.
I'm no good with the math aspect of this.. I'm sure Puppy would be helpful to you there. But yes, I believe in general you would save more money in the long run by putting more down on the house.
With that said, I think it's pretty common these days to at least ask for assistance with closing costs. When we bought our house, we asked for $2,000 in closing costs from the builder. We considered asking for more, but we were trying to sneak in before another offer was made... and so we wanted to offer the best we could. Had there not been competition, we would have asked for a little bit more.
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Should you put down 20%? Probably. Generally, PMI is not tax deductible and depending on how much of a house you are buying, could run you close to $100 a month. Further, you automatically don't "get rid" of PMI until you are at 78% home to loan value, which completely sucks, unless (as we did) you make significant improvements, refinance, and appraisal well.
However, given the low interest rates, and the favorable tax deductions related to home ownership, I would put down 10% and ask your seller to pay for the closing costs. Now, if you are looking at $250k homes, you should probably pay for your own closing costs, lol.
All right, that's about what I was thinking, too. 250K is over our budget for sure, so no worries there. I keep vacillating between saying, "aw, screw it" and just waiting another 6 months to a year until we have 20%, and thinking that we could get in sooner and just start with aggressive mortgage payments to get to that 78%. It's a conundrum. I really, really do not want to do the former, and I'm kind of disappointed in myself about that, quite frankly.
Thanks for your help, gals!
I would agree that you could/should ask the seller to pay closing costs, but don't make your whole plan contingent on that since they might not agree.
Another option is to put down the 10% and pay your PMI (what you would pay until you got to 80%) upfront rather than adding it to your payment and having to wait until you get to that automatic drop threshold or refinance to get rid of PMI.
That's an option?! I didn't know that was allowed! What's this called? Tell me more!
That same amount of money may not be enough to put you at the >= 20% equity required to avoid PMI. If that's the case, then you're stuck paying PMI, which doesn't automatically quit at that same 20% threshold and you would have to pay more to re-finance to get rid of PMI or keep paying the PMI until you get to another higher threshold. In this case, your overall amount paid would be much larger than paying the PMI upfront.
I agree with Wendy's option. I have a loan officer that offers a program where you put down 5% or more plus pay the PMI upfront. Your upfront cost is recovered in 24 months in most cases. The guy I use is with Cornerstone.