Hey All! While saving for a house, would it be wise to halt contributions to your 457. At least until you reach a 20% down payment so I could avoid PMI tax? I really don’t want to do this but it would skyrocket my savings.
Well that’s an age-old question, let me give you an age-old answer… it depends.
If you’re a family of 6 living in a 2 bedroom apartment, then I would suggest saving for the down payment on the house.
If things aren’t quite that dire, then continue with your savings plan, but make as much progress on the down payment as possible and go from there.
BTW, that 457 plan you’ve got is gold, it’s like a super IRA because your contributions are pre tax and grow tax deferred, and here’s the biggie… you can withdraw your money with no penalty before 59.5 !!
Thank you for your response! I am 27, debt-free with a full emergency fund. I am contributing 15% to my 457 and building on my Roth IRA. I have a general savings of around 10k. I am planning on moving out with my girlfriend but having a hard time making a decision. I am stuck between renting and saving more for a downpayment while still contributing/ learning to budget. I feel a house is a great asset and builds equity also.
First of all, well done, you’re way ahead of most 27 year olds with your savings etc 
Two things about owning a home…
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Right now in this market, I seriously don’t think I’d be buying a house. Prices have been climbing steadily for several years and I personally believe they are near the peak. The last thing you would want to do is buy at the peak with 20% down, and three or four years later when prices have cooled off find yourself at breakeven, now you’re sitting with no equity because the house is worth exactly what your mortgage is, and your 20% down payment is gone, that’s a bad situation. The money blogs and papers have been talking about the Feds “tapering” very soon, which means the Feds gradual slowing of the pace of their large scale asset purchasing. The aim of course is to slowly remove the monetary stimulus from the economy.
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Most new home buyers underestimate the cost and the time it takes to maintain a house. Not only do you have the mortgage payment, but you’ve got annual taxes, maintenance costs, appliance repairs, yard maintenance, HOA fees, the list goes on. When I retired I sold my home and invested that money, and now I just rent. I love it when something goes wrong, I just call my landlady and it gets fixed.
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