vania-janet/multiturn-rag-retrieval-data huggingface dataset:
The point about insurance is solidarity. Think about this: In London a few hundred years ago people first started insuring their houses against fire. There were several insurance companies, and if you used one you got a marker on your house. So if your house caught fire they would come and check, and they would put the fire out only if it had their marker on it.  Now, in most places these days the fire brigade will always come and always put your fire out. We expect this, and we are happy to pay for this service by taxation, and we do not fret about wasted money if we pay it for decades without ever having a fire. We also do not complain if the neighbour's house burns, and they get the full fire service which we have been paying for.  Now all the fire brigade do is rescue you and put your fire out. Here in Germany every house owner is also obliged to have fire insurance, so if your house burns it can be repaired or rebuilt. Everyone pays insurance premiums, and I never heard anyone complain if they paid for 50 years and never claimed anything. If you need a new house the payout is huge. But the premiums are low. This only works if everyone is insured. This can only work if we all accept the concept of solidarity. It is easy to say, I don't smoke so I don't need to insure against fire, or, I live a healthy life so I don't need to insure against cancer. But lightning does not check your CV before it strikes. It hits you or your fellow man, and how can you justify not helping your neighbour? Insurance can only work if we all take part.
"As Yishani points out, you always have to do due diligence in buying a house. As I mentioned in this earlier post  I'd highly recommend reading this   book on buying a house associated   with the Wall Street Journal - it   clearly describes the benefits and   challenges of owning a house. One key   takeaway I had was - on average houses   have a ""rate of return"" on par with   treasury bills. Its best to buy a house if you want to live in a house, not as thinking about it as a ""great investment"". And its certainly worth the 4-6 hours it takes to read the book cover to cover."
"According to US News, renter's insurance does cover liability as well as your own belongings.  They list this as one of four ""myths"" often promulgated about renter's insurance.  This is backed up by esurance.com, which explicitly mentions ""Property damage to others"" as covered.  Nationwide Insurance says that renter's insurance covers ""Personal liability insurance for renters"" and ""Personal umbrella liability insurance"".  Those were the first three working links for ""what does renters insurance cover"" on Google.   In short, while it is possible that you currently have a different kind of coverage, this is not a limitation of renter's insurance per se.  It could be a limitation in your current coverage.  You may be able to simply change your coverage with your current provider.  Or switch providers.  Or you may already be covered.   Note that renter's insurance does not cover the building against general damage, e.g. tornado or a fire spreading from an adjacent building.  It is specific to covering things that you caused.  This may be the cause of the confusion, as some sources say that it doesn't cover anything in the building.  That's generally not true.  It usually covers all your liability except for specific exceptions (e.g. waterbed insurance is often extra)."
Even 10% of your net worth would be a substantial amount. As an example, would someone worth $1M have only a 100k home? Would someone worth $10M have only a $1M Home? Depends on where they live, and how extravagantly. Similarly, if you were worth $10M, you might not need extra insurance on your Toyota Camry, but you might want it if you drive a $1M Ferrari! Not to mention that things like auto insurance may cover you for liability, which could extend beyond the value of your car, into medical and disability costs for anyone in an accident. In fact, being high net-worth may make you more vulnerable to lawsuits, making this insurance even more important. In addition, high net-worth individuals have insurance that you or I have no need of. Things like kidnapping insurance; business operation insurance, life insurance used to secure bank loans. So yes, even high net-worth individuals may fear catastrophic events, and if they have so much money - why wouldn't they pay to reduce that risk? Insurance provides a service to them the same as to everyone else, it's just that the items they consider too 'cheap' too insure are more expensive than a toaster. Edit to counter concerns in some other answers, which say that insurance is ""always a bad idea"": Imagine you are in a kafka-esque episode of ""Let's Make a Deal"". Monty Hall shows you two parallel universes, each with 100 doors. You must choose your universe, then choose a door. The first universe is where you bought insurance, and behind every door is a penalty of $200. The second universe is where you didn't buy insurance, and behind 99 doors is nothing, with one random door containing a penalty of $10,000. On average, playing the game 99,999 times, you will come out ahead 2:1 by not buying insurance. But you play the game only maybe 3 times in your life. So which universe do you choose? Now, you might say ""pfft - I can cover the cost of a 10k penalty if it happens"".
FHA doesn't have PMI which stands for Private Mortgage Insurance. MI for Mortgage Insurance is the generic name. FHA has MMI or Mutual Mortgage Insurance. With PMI you can apply to have it removed if the value of your home increases in value. With MMI (from FHA) that is not possible.  The current FHA rules are here 1.  For your case, 85% LTV: the rule is no longer, PMI ends when you hit the 78% mark. It is you must pay 11 years PMI for a 30 mortgage with a 78% to 90% LTV. The current rules took effect June 3rd, 2013.  1. Note that many websites, including Wikipedia, have not been updated to reflect the current rules.
"John's answer is similar to what I was thinking. You should invest in insurance ""because there's an insurance salesman who needs to pay to send his kid to college."" I will never be a fan of any type of permanent insurance, and I think it wrong to sell a single person with no dependents such a policy. I've used the expression ""Variable Annuities are sold, not bought."" I feel the same about these insurance policies.  The best advice I can offer in a short reply is this: If you need life insurance, buy term. Save as much as you can, 10% minimum, more if you are able. A young person should be saving for retirement and to position them self to buy their first house, if that's what they wish. What good is a full up Whole Life policy when you need to raise $40K to put down on a house? Sorry to sound like I'm lecturing, this is one of my hot points."
&gt; Am I over simplifying things?  Yes.  Insurance, property taxes, water/sewer taxes, legal fees, upkeep/maintenance, and mortgage insurance premiums should be included in your expense model.  This is in addition to principal repayment at your loan's interest rate.    &gt; or could somebody with more experience clue me in to why this is a bad investment?  The answer depends on your financial ability to pay and the area in which you are seeking to buy.  A lot of factors, actually.
Property prices collapse, and my parents aren't able to make their repayments, bank forecloses on the place and sells it, but not even enough to cover the outstanding loan, meaning my parents no longer have our money. (I could of course double down and pay their monthly repayments for them in this case). First, property prices collapsing have no impact on whether your parents can pay the loan. If they can it doesn't matter what the property is worth. If they can't then it will be sold as quickly as possible for an amount that covers (as far as possible) the first mortgagee's indebtedness. It is only in reading this far that I realise that there will still be a bank as first mortgagee. This massively increases the risk profile. Any other risks I have missed? Yes, among others: Any mitigations for any identified risks? Talk to a lawyer. Talk to an accountant. Talk to an insurance professional. Anything I flagged as a risk that is not actually an issue? No Assuming you would advise doing this, what fraction of savings would you recommend keeping as a rainy day fund that can be accessed immediately? I wouldn't, 100%.
I can answer Scenario #3. If you are purchasing a property with buy-to-let intentions […] can you use the   rental income exclusively to fund the mortgage repayments? Yes – this is exactly how buy-to-let mortgage applications are evaluated. Lenders generally expect you to fund the mortgage payments with rent. They look for the anticipated monthly rent income to cover a minimum of 125% of the monthly mortgage payment. This is to make sure you can allow for vacant periods, maintenance, compliance with rules and regulations, and still be in profit (i.e. generate a positive yield on your investment). However, buy-to-let (BTL) mortgage lenders also generally expect you to own your own home to begin with. It's up to them, but rare is the lender who will provide a buy-to-let mortgage to a non-owner-occupier. This is because of point 2 above. The lender doesn't want you to end up living in the property because then you'll need to repay the loan capital, since you'll always need somewhere to live. This makes the economics of BTL unfavourable. They look at your application as a business proposal: quite different to a residential mortgage application, which is what your question seems to be addressing. Bottom line: You're right about scenario #3 but it sounds like you're trying to afford a home first, whereas BTL is best viewed as an investment for someone who already has their main residence under ownership (mortgaged or otherwise). As for Scenarios #1 and #2 I can't offer first hand answers but I think Aakash M. and Steve Melnikoff have covered it.
"There's an old saying:  ""Never invest in anything that eats or needs maintenance."" This doesn't mean that a house or a racehorse or private ownership of your own company is not an investment.  It just points out that constant effort is needed on your part, or on the part of somebody you pay, just to keep it from losing value.  Common stock, gold, and money in the bank are three things you can buy and leave alone.  They may gain or lose market value, but not because of neglect on your part. Buying a house is a complex decision.  There are many benefits and many risks. Other investments have benefits and risks too."
That way if the worst happens and a tenant breaks their hip in the shower and sues you for ONE MILLION DOLLARS and wins, the company folds and you walk away. You might even consider two companies. One to own the property and lease it to a property management company. The property management company can then go bankrupt in case of some sort of liability issue, in which case you still keep the property, form a new management company, repaint and rename the property and move on. TL;DR: Get insurance advice from insurance agent before you buy. Same for taxes from an accountant. Get trained as a property manager if your local codes require it (might be a good idea anyway). Incorporate and have the company take all the risks.
"One additional penalty is you will be put on the CAIVRS (""cavers"") for your default on the FHA mortgage which will preclude you from FHA financing in the future. When purchasing the multifamily unit it is an FHA requirement that you occupy one of the units.   Lastly, I would advise against FHA due to elevated costs.  Conventional options have 95% financing options, and don't have mortgage insurance that lasts forever, like FHA does."
This is something you should decide as part of entering a partnership with someone. Ideally before you make the initial purchase you have a detailed contract written up.  If you have already bought the house and someone is now ready to move out the easiest thing to do is sell the house. If that is not an option, you'll have to decide on a plan together and then get it in writing.
Don't be afraid to shop around. Every couple of years when it's time to renew my auto insurance I call a couple of places to see if I can get a better deal. It's especially important to do this as you get older (because your rates go down assuming you keep a clean driving record). Also as your life changes, e.g. if you get married, move, buy a home, get a new car, etc. At 30 my rates dropped a lot. When I bought a home, I qualified for a discount by combining my home and auto insurance through the same carrier. My suggestion would be to call 3 insurance companies for quotes, all on the same day. You'll need to be able to identify the car you'll be insuring for the most accurate quote. Do you belong to any organizations that offer insurance discounts? (E.g. my college alumni association had a program with one of the larger carriers that had the best rates on auto+home that I could find.)
"Neither you nor others have mentioned the costs of being a homeowner. First, there are monetary costs. If you own a house, you have to pay taxes. They will vary by jurisdiction, but are usually not zero. You also need insurance, which again comes with monthly rates. Then, once in a while, you'll be hit with unpleasant lump sum payments. In 30 years, the mortgage is over and you own the house - but by that time, it will probably need a new roof. That's in the price range of a new car. And over that time, you'll rack up several other repairs which your landlord covers when you rent. Another thing which feels less like an expense emotionally but ends up thinning your wallet is the cosmetic changes you make just because it's your own home. You wouldn't put marble floors in the bathroom if you rent, but you might be tempted to if you live in the house. It might be even worth it from a life satisfaction point of view, but we are talking finance right now, and that's a minus. And then there are the opportunity costs. A house binds you geographically. You may pass up on a nice job offer because your house is too far away, for example. Or you might experience liquidity problems, because a house is difficult to turn into money in a hurry. If you are able to do so, it is usually a much larger sum than you need, and you are paying the costs inherent in that large transaction. These are just examples, you can probably come up with more costs. Then, it is not sure how much money you can get of the house if you change your mind. Say you take this job at the other end of the country, or you become a parent of four and need more space. At the time you decide to sell, the market may have gone down due to the overall state of the economy, or to the house location's popularity, or your own house may have turned undesirable (what if you get a mold infestation which would only go away if you strip it to the concrete and rebuild?) You could let it to renters, but that's a hassle of its own.
Some people are risk averse, some are risk lovers in certain situations. That's the reason why given the same options we make different choices. You may say that you don't value certainty enough to buy this insurance. The bottom line is that nobody can tell you that you're wrong to not buy an insurance. If your risk tolerance is high it may not make a sense for you. Having said this all, I must note that sometimes the society doesn't accept your preferences and utility function. Yes, you tell me today that you accept the risk, but tomorrow when the boat sinks you may come to me and say that you can't pay the student loan because of the hardship. That's the reason why it's mandatory to get liability insurance on cars, for instance."
Before doing anything else: you want a lawyer involved right from the beginning, to make sure that something reasonable happens with the house if one of you dies or leaves. Seriously, you'll both be safer and happier if it's all explicit. How much you should put on the house is not the right question. Houses don't sell instantly, and while you can access some of their stored value by borrowing against them that too can take some time to arrange. You need to have enough operating capital for normal finances, plus an emergency reserve to cover unexpectedly being out of work or sudden medical expenses. There are suggestions for how much that should be in answers to other questions. After that, the question is whether you should really be buying a house at all. It isn't always a better option than renting and (again as discussed in answers to other questions) there are ongoing costs in time and upkeep and taxes and insurance. If you're just thinking about the financials, it may be better to continue to rent and to invest the savings in the market. The time to buy a house is when you have the money and a reliable income, plan not to move for at least five years, really want the advantages of more elbow room and the freedom to alter the place to suit your needs (which will absorb more money)... As far as how much to put down vs. finance: you really want a down payment of at least 20%. Anything less than that, and the bank will insist you pay for mortgage insurance, which is a significant expense. Whether you want to pay more than that out of your savings depends on how low an interest rate you can get (this is a good time in that regard) versus how much return you are getting on your investments, combined with how long you want the mortgage to run and how large a mortgage payment you're comfortable committing to. If you've got a good investment plan in progress and can get a mortgage which charges a lower interest rate than your investments can reasonably be expected to pay you, putting less down and taking a larger mortgage is one of the safer forms of leveraged investing... IF you're comfortable with that. If the larger mortgage hanging over you is going to make you uncomfortable, this might not be a good answer for you.
"When I first purchased my home six years ago, I was able to get into a Bank of America First Time Homebuyer program that required no down payment and no PMI. While I hope you find a lower initial payment, the banks have tightened their requirements so that buyers have ""more skin in the game"" so to speak. Exotic loan options coupled with the subprime mortgage crisis caused the housing bubble to burst. Now banks are being very selective about who they provide a mortgage. The other things you need to look at are interest rate and terms. Do you feel you will be in the home for the next 30 years? Have you considered a 15 year mortgage? Shop around. PMI used to have a bad connotation (at least it did when I bought my home six years ago), but I feel now that it would have been worthwhile for the banks and the economy in the long run had banks required buyers to utilize PMI."
If you don't think you're necessarily going to stay in this area for five years, consider another option: renting. Five years is often quoted as the minimum length of time for buying (over renting), as the costs of the house purchase and the mortgage are significant - and if you're buying a new house every 5 years you're putting several thousand dollars of fees up front each time.  If you don't assume that house prices will increase (as they won't necessarily), then you can consider these costs - say, $5000-$6000 for a $500k house - an extra 1% or so of interest that first year.  If you are there 5 years, then you're paying 0.2% extra (more or less); that's reasonable, but if you're there only 2 years, you're adding 0.5% to your rate, which is pretty significant. You won't necessarily come out ahead here (versus renting). Renting for a year or two gives you enough time to find out if you do like the area, and if you do, you buy then - with more knowledge of the area and a chance to make a purchase at the right time for you. You pay off your loans, or at least a chunk of them, now, save some of the rest, and then rethink in a couple of years.  If you then don't qualify for a doctor's mortgage anymore, you just save up the rest of the 20% before making the purchase.
In general, you can only be charged for services if there is some kind of contract. The contract doesn't have to be written, but you have to have agreed to it somehow. However, it is possible that you entered into a contract due to some clause in the home purchase contract or the contract with the home owners' association. There are also sometimes services you are legally required to get, such as regular inspection of heating furnaces (though I don't think this translates to automatic contracts). But in any case you would not be liable for services rendered before you entered into the contract, which sounds like it's the case here.
I personally would not buy a townhouse. with the HOA / Association fees plus the taxes its almost more than usual house.  Buy a home with average taxes (8,500-10,500) depending on your budget -> good schools (kids) --> No flood zone.  depends what area exactly in northeast you are.
In my experience buy-to-let mortgages charge a higher rate of interest than an personal residential mortgage.  They are regarded as a business enterprise and presumably the banks calculate that they carry a higher risk.  A bank would probably take action if the property on an ordinary mortgage was rented out, as you would be breaking their terms.  Policies could be rendered void.  The terms on an ordinary mortgage disallow renting out the property.
edit: A bit of support data for those that somehow think buying a home on a mortgage is somehow a good investment: Robert Shiller, who won a Nobel prize in economics and who predicted the bursting of the housing bubble, has shown that a house is not a good investment. Why? First, home prices (adjusted for inflation) have been virtually unchanged for the past 100 years. (link 1, link 2) Second, after you add in the costs of maintenance alone then those costs plus what you've paid for the home will exceed what you get out of it. Adding in the cost of a mortgage could easily double or even triple the price you paid which makes things even worse. Maintenance costs include things like a new roof, carpet/flooring, water heater, appliances, etc. Yes, a home might cost you $100k and you might sell it for $200k after 15 years. However during that time you'll likely replace the roof ($10k to $20k), replace appliances ($2k to $5k), water heater ($1k), carpet/flooring ($5k to $20k), paint ($3k to $6k), and mortgage related costs (~$60k - assuming 30 yr fixed @4%). So your ""costs"" are between $180k and $200k just on those items. There are many more that could easily escalate the costs further. Like a fence ($5k+), air conditioner ($5k+), windows, etc. The above is assuming the home actually appreciates in value faster than inflation: which they historically haven't over the long term. So you have to consider all of the costs ultimately paid to purchase and maintain the home vs the costs of renting during the same time period. Point is: do your research and be realistic about it. Buying a home is a huge financial risk."