skipdogg posted:Like Flowers said, HUGE difference. Who are you getting your mortgage through? If your credit is good, find a broker that friends or family have recommended. 5 1/4 right now is paying 2 points on the back end, plus whatever you're paying up front. You decide if 4K is too much money for them to make on this deal. We're going to have it paid off in 4-5 years, we're really only taking 30-year fixed in case something goes wrong and we lose our jobs. Right now I'm less interested in rate and more interested in how timely\dependable the lender is.
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Dec 15, 2009 21:01
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Niklas Kronwall 2.0 posted:We're going to have it paid off in 4-5 years, we're really only taking 30-year fixed in case something goes wrong and we lose our jobs. Right now I'm less interested in rate and more interested in how timely\dependable the lender is. What's your credit like? Are you 760+? Stable job history? Good DTI numbers? If so I would find a broker that can put a file through provident. They'll close a file in 12 days if it's clean.
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Dec 15, 2009 21:09
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skipdogg posted:What's your credit like? Are you 760+? Stable job history? Good DTI numbers? My average credit score is 760+, as is my wife's, but I just graduated with my master's and, although I have a job, I have no proof of that yet. My wife has been working for ~4 years. We have 0 debt aside from student loans.
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Dec 15, 2009 21:14
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Niklas Kronwall 2.0 posted:My average credit score is 760+, as is my wife's, but I just graduated with my master's and, although I have a job, I have no proof of that yet. My wife has been working for ~4 years. We have 0 debt aside from student loans. I would find a good broker, as opposed to going retail through a bank. Retail tends to take longer because the people in it aren't on a pure commission basis. A mortgage broker though will push your file through fast, because the faster you close, the faster they get paid. Find someone motivated to get a deal done. If you want this done fast though, be prepared and have everything they're going to want up front. Last 2 years taxes, last 3 to 6 months bank statements, etc. People can really slow things down when they take forever to get documents needed.
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Dec 15, 2009 21:19
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I have a totally different view on Lenders: I use a small boutique bank, and I have a personal relationship with my banker and to a lesser extent her assistant and others on her team. I value my relationship with them and the entire package of services available to me, and the personal service I get with them. When I need something, I don't call an 800 number (though I can if I wish), I call Mary. When a question came up over the weekend about my upcoming home purchase, I called her on her cell phone, and she spent 20 minutes on the phone with me to help me out. When someone tried to make my life difficult for me by putting my personal bank account information in the public record (long story), I had new accounts and passwords immediately. When I go out of the country, I send a simply fax to Mary's assistant, and a courier shows up to my house with the currency I need (for which I pay a good exchange rate, and no extra fees). Sure, depending on the product of loan, I may be able to save 0.02%-0.05% on the rate by going elsewhere, but this bank goes the extra mile for me in so many other ways, its worth it to me to pay for the service. If course, they have bank only products (loans) which give me more options than just the Frannie/Freddie options. So, Mary isn't happy that I signed a 30 day escrow, but her team will do what it takes to get me the best loan product for my situation closed on time. If anyone is interested, I am happy to refer people to my bank, they are great! Just PM me...
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Dec 15, 2009 23:56
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gently caress this poo poo. I waited 16 weeks for my tax credit. Called tonight, I'm getting audited. I've got nothing to hide, but now they're going to take their sweet rear end time getting paperwork to me and yada yada. gently caress. You. IRS.
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Dec 18, 2009 01:55
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Have Some Flowers! posted:I guess my next request (if you're up for it!) is letting us know if they come at you with any repair requests. Repair request came in, no surprises. Two minor fixes and a section 2 termite repair that is inexpensive (<$100) so we'll do it. I expect section 1 termite stuff plus the repair request items will be less than $1,000 total. I expect that they will accept our willingness to do the repairs and remove all but loan/appraisal contingency, which should come back this week. The repair list for the house we are buying is much more extensive (plumbing stuff, HVAC leaks in the attic, broken window, busted roof tiles, etc) so we'll see how they respond. Good news is the appraisal for that house came back at purchase price. Its a scramble trying to beat the holidays for stuff, but so far we look to be on target. The only thing that I am really worried about is the appraisal on the sale of this house, but they haven't requested a credit, so maybe its not an issue...
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Dec 22, 2009 03:04
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Update: Appraisal for the sale of our current house came in at 10% below the agreed sale price. Our agent (who has a background in valuation) will try to discredit the appraisal, but the whole deal (and purchase on the net house) may be sunk.  
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Dec 22, 2009 20:44
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Oh man, that really sucks. I'm sorry Mango. That's exactly the danger in trying to sell & buy at the same time, of course. My realtor told us about a colleague who had a house appraise way less than his client (the buyer) had offered. They had been working on the issue for 6+ months and it hadn't been resolved yet. Given how reluctant and conservative the lender banks are right now, they are not very amenable to funding a loan on a questionably-valued house. Even if you can get a competing appraisal that matches the bid, that might not satisfy the bidder's lender. How bad would it be if you had to lower the sale price by 10% to match appraisal?
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Dec 22, 2009 22:16
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Ultimate Mango posted:Update: That really sucks. If the buyers were using any kind of FHA/Gov't financing, the deal is probably dead. They're really cracking down on appraisals these days.
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Dec 22, 2009 23:22
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Leperflesh posted:Oh man, that really sucks. I'm sorry Mango. That's exactly the danger in trying to sell & buy at the same time, of course. If we had to lower the sale price 10% we would not be able to buy the next house, so we would probably just pull out of both sides and take our house off the market. The buyer isn't FHA or anything (normal 20% down), but probably doesn't have the cash or the desire to come up with the extra 10% to make up for the appraisal shortfall. Its pretty telling that the first comp the appraiser used is a short sale down the street that was on the market for 10 months and finally sold in October for a full $100k less than our house. Meanwhile he totally ignored a house one street over that just closed, and for only $10k shy of our sales price. I guess there is other questionable stuff in the report that we can dispute. The report apparently states that it is a declining market with 6 months inventory, and when we listed there was only 1.5 months inventory and everything similar all sold in 10 days or less. I get the impression that the appraiser didn't bother running current research, drove by four short sales all listed $100k or more below our sales price and called it a day. gently caress
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Dec 22, 2009 23:42
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It certainly sounds like you have grounds for dispute. I'm not sure that short sales should never be used as part of the comps, but certainly they shouldn't be used as the only comparable sales, unless a majority of the sales in your area are short sales. The market info is certainly wrong and I'm surprised, because I thought they had to pull recent info as a matter of course. My own appraisal had columns for market conditions a year ago, 6 months ago, and currently, to show trends. I guess the real issue is that this is going to take time. You might have to get multiple additional appraisals from different sources, to show that there is broad agreement that the bad appraisal really is bad. Then again, maybe not; everything depends on the buyer's bank. They have pretty much total freedom to decide what to do at this point.
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Dec 22, 2009 23:49
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The appraisal on the house I just bought came in 5% below the offer at first, and no one could understand why. Turned out there was a typo on the form. Good comps, good calculations, appraiser just pulled the wrong number out of his rear end somewhere when he was filling out the final box. Good luck dealing with yours - does sound like your appraiser had his head up his rear end so maybe it will work out.
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Dec 23, 2009 00:58
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slap me silly posted:The appraisal on the house I just bought came in 5% below the offer at first, and no one could understand why. Turned out there was a typo on the form. Good comps, good calculations, appraiser just pulled the wrong number out of his rear end somewhere when he was filling out the final box. Good luck dealing with yours - does sound like your appraiser had his head up his rear end so maybe it will work out. Our agent was here for the appraisal, and he had a gut feeling that it was going to come in below. He commented about the attitude of the appraiser and the amount of time he spent looking around, measuring, and generally poking around the property. The appraiser even made an offhand comment about the low price on the comps he pulled, and was unwilling to listen to anything our agent had to say. As it is, our agent is putting together a different set of comps for the buyer's lender and we'll have to see how they respond. There's no way we can soak up a 10% delta and have both deals work.
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Dec 23, 2009 02:02
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What are the differences in interest rate between putting down 5% vs 10% vs 20%? I was always aiming to put 20% down and could do so if I waited a year. However there are some properties on the market that are really grabbing my eye right now but I could only put down 10%. Was wondering if there was a significant difference in what I'd pay to carry this property above and beyond just paying for a larger mortgage. Happydayz fucked around with this message at 09:31 on Dec 26, 2009 |
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Dec 26, 2009 09:20
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I would probably jump, especially if you could get to 80% LTV and dispense with PMI after a year. Example from amerisave.com today: the difference between an 80% loan and 90% loan was 0.3 points at a 5% rate - you couldn't even get a full 1/8th less on the rate with the higher downpayment.
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Dec 26, 2009 15:30
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This question might be the case of me overthinking things - but I'm wondering how to act in light of expected increases to the interest rate. Basically I can buy either in the spring of 2010 or 2011. Assume higher interest rates in Spring 2011. Generally increases in interest rates pushes down home values as it reduces the amount of home that people can purchase for a setmonthly payment. So I could buy in 2010; capturing a low interest rate with slightly higher house price. Or I could buy in 2011; paying a slightly higher interest rate but for a potentially lower mortgage amount. There is some optimum mix here of interest rate and house cost, but I can't figure it out. My suspicion is that this is small potatoes overall and not worth really agonizing over. But it is another data point that I'd like to add to my calculations.
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Dec 28, 2009 03:29
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Ultimate Mango posted:The appraiser even made an offhand comment about the low price on the comps he pulled, and was unwilling to listen to anything our agent had to say. Ultimate Mango posted:As it is, our agent is putting together a different set of comps for the buyer's lender and we'll have to see how they respond. There's no way we can soak up a 10% delta and have both deals work. Leperflesh posted:I'm not sure that short sales should never be used as part of the comps, but certainly they shouldn't be used as the only comparable sales, unless a majority of the sales in your area are short sales. Leperflesh posted:Given how reluctant and conservative the lender banks are right now Happydayz posted:Assume higher interest rates in Spring 2011. You can work out the details with any online mortgage calc, but as a sweeping generalization a high(er) interest rate on a cheap(er) home is better than an more expensive home with a low interest rate. So if you believe that home prices will tank further in your area over the next few years then wait, if you think we've hit bottom then buy. Personally I'd wait.
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Dec 28, 2009 06:11
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PC LOAD LETTER posted:You ever try to get a home loan in the 70's or 80's, or heck even during the 90's bust? The stuff that people are seeing as excessive today was normal back then, people are just still used to low/no doc loans with 0 down and such. Having to do real work to qualify for a loan is alien to them but will soon become the new norm. I wasn't speaking only about qualification. The banks, as a whole, are actively restricting how much money they're willing to loan, period. Nevermind qualified buyers, they're strictly limiting their exposure to a real estate market that they still see as falling; no matter how well-qualified the buyers are, if the houses across the board are still losing value, then they will wind up with another portfolio of under-the-water loans and buyers who are facing a strong economic incentive to walk away from those loans. They're seeing the same reports we are. This is why the Executive branch is pushing the banks so hard; they're trying to convince them to open up and lend more. Not just real estate loans, but (especially) small business loans too. I agree that the tightening of lending qualifications is just a return to previous practice, and also that it's a good thing (generally). But it's not the whole picture by a long shot.
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Dec 28, 2009 19:15
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Leperflesh posted:The banks, as a whole, are actively restricting how much money they're willing to loan, period. Leperflesh posted:This is why the Executive branch is pushing the banks so hard; they're trying to convince them to open up and lend more. Not just real estate loans, but (especially) small business loans too. Leperflesh posted:I agree that the tightening of lending qualifications is just a return to previous practice, and also that it's a good thing (generally). But it's not the whole picture by a long shot.
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Dec 28, 2009 20:28
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PC LOAD LETTER posted:At best he is foolish and doesn't understand that the banks can't do that and lend prudently (and if they don't lend prudently they go bankrupt or get bailed out...), at worst he is being cynical and knows the banks can't provide more easy credit but will publicly demand for them to do so to look good for the voters. What is the purpose of a bank? It is to invest the money of its depositors, thereby earning interest for them, and scraping some of that off the top to profit. That's what a bank is. The bank has a fiscal responsibility to balance risk vs. potential earnings, to insure it doesn't lose money. However, it also has a fiscal responsibility to invest that money. The banks are sitting on billions of dollars. Trillions, put together. They've got to invest it somewhere. It doesn't all have to be real estate or small business loans, but it's got to go somewhere. All the Executive is doing is trying to ensure the pendulum doesn't swing too far in the opposite direction (from foolish, easy credit to unreasonably strict, difficult credit) because that hurts the economy a lot. To bring it back to the actual point of the discussion, though: the banks are gunshy and I suspect unwilling to put any effort into rescuing a loan if there's a red flag... such as the property appraising 10% less than the loan amount. In the past (even in like the 70s and 80s) I think there was, normally, more willingness to work with the situation and discover if the appraisal was reasonable or not. Maybe I'm wrong, I didn't buy a house in 1985. It's just an observation.
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Dec 28, 2009 21:08
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Leperflesh posted:What is the purpose of a bank? It is to invest the money of its depositors, thereby earning interest for them, and scraping some of that off the top to profit. That's what a bank is. Leperflesh posted:The bank has a fiscal responsibility to balance risk vs. potential earnings, to insure it doesn't lose money. Leperflesh posted:However, it also has a fiscal responsibility to invest that money. Leperflesh posted:The banks are sitting on billions of dollars. Trillions, put together. They've got to invest it somewhere. Leperflesh posted:It doesn't all have to be real estate or small business loans, but it's got to go somewhere. Leperflesh posted:All the Executive is doing is trying to ensure the pendulum doesn't swing too far in the opposite direction (from foolish, easy credit to unreasonably strict, difficult credit) because that hurts the economy a lot. Leperflesh posted:In the past (even in like the 70s and 80s) I think there was, normally, more willingness to work with the situation and discover if the appraisal was reasonable or not. PC LOAD LETTER fucked around with this message at 22:00 on Dec 28, 2009 |
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Dec 28, 2009 21:55
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PC LOAD LETTER posted:Dude the appraiser isn't supposed to listen to word one the agent has to say on the subject of appraising. During the boom things got pretty loose and agents would talk to appraisers all the time so they could "hit their numbers", but that poo poo does not fly anymore. Not even close. Now maybe he hosed up, but maybe he didn't, either which way I'd talk to another agent in your area just in case for CYA purposes. Isn't the appraisal supposed to support the value the bank should be able to get if for some reason they ended up owning the house, and had to sell it? In that case, why wouldn't an appraiser consider short time on market and multiple offers at or above listing price? General feedback on our sale was that it was priced appropriately, and the amount of interest and offers suggest that we hit it right on the money. If this sale falls through, we have several others still wanting to buy the house at or above the sale price. It seems like that is the price the market will bear. The appraiser was blatantly incorrect in some of the facts in his report, which suggest that he either didn't doesn't know this area or didn't do his job properly. Regardless, the buyer is appealing it, and a second appraisal has been order just in case it is needed. All parties involved except the appraiser all want to work together to get this done, so there is hope that we'll get through this.
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Dec 28, 2009 22:21
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PC LOAD LETTER posted:Too much credit helped cause all this mess so more credit is the answer? That is a blatantly twisted innacurate way to present what I (and the Exec) is saying. Too much foolish credit caused all this mess, so some "amount" (actually, quality) of credit less than that, but more than what we are seeing today, is the answer. The dial was at 11, now it's at 3, and we want it to be at a nice moderate 5. quote:Its an issue of insolvency not liquidity, even the gov. admits they can't fix insolvency with more liquidity, they just refuse to admit that the banks are insolvent. Which is why they keep playing extend and pretend games. Several hundred small banks have gone under and been scooped up by the FDIC, yes. However, all of the major banks have or are about to pay back their TARP money, and several have reported substantial profits this quarter. It is not accurate to say that "the banks are insolvent". They are solvent largely because the government has helped them to unload their toxic assets. They do not want to accumulate new toxic assets and as a result they are being overly cautious, but all of the very large banks - with Chase being the straggler - are now in a financially stable and solvent position. quote:It doesn't matter what time you point to, if you're underwater on your loan and/or trying to sell in a declining market then you're pretty much screwed. We are discussing a bank's reaction to evidence that a house might be worth less than is apparent. We are not discussing someone who is "underwater on their loan". And as for selling in a declining market... as long as there are buyers, it is possible to sell, and "pretty much screwed" depends on several factors (what you originally paid, which market you're in, how much you still owe, what your house can sell for, how much inventory in your area at your price point, condition, advertising, etc. etc. I don't think I'm actually disagreeing with you, PC... just disagreeing with the absolutism and sky-falling tone to your posts. Let's try to avoid hyperbole in a thread about advice. This isn't LF.
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Dec 28, 2009 22:32
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Ultimate Mango posted:Isn't the appraisal supposed to support the value the bank should be able to get if for some reason they ended up owning the house, and had to sell it? Ultimate Mango posted:In that case, why wouldn't an appraiser consider short time on market and multiple offers at or above listing price? Ultimate Mango posted:It seems like that is the price the market will bear. Ultimate Mango posted:The appraiser was blatantly incorrect in some of the facts in his report, which suggest that he either didn't doesn't know this area or didn't do his job properly. Ultimate Mango posted:All parties involved except the appraiser all want to work together to get this done, so there is hope that we'll get through this. Leperflesh posted:That is a blatantly twisted innacurate way to present what I (and the Exec) is saying. Leperflesh posted:Too much foolish credit caused all this mess, so some "amount" (actually, quality) of credit less than that, but more than what we are seeing today, is the answer. The dial was at 11, now it's at 3, and we want it to be at a nice moderate 5. Leperflesh posted:However, all of the major banks have or are about to pay back their TARP money, and several have reported substantial profits this quarter. Leperflesh posted:It is not accurate to say that "the banks are insolvent". They are solvent largely because the government has helped them to unload their toxic assets. They do not want to accumulate new toxic assets and as a result they are being overly cautious, but all of the very large banks - with Chase being the straggler - are now in a financially stable and solvent position. Leperflesh posted:We are discussing a bank's reaction to evidence that a house might be worth less than is apparent. We are not discussing someone who is "underwater on their loan". Leperflesh posted:And as for selling in a declining market... as long as there are buyers, it is possible to sell, Leperflesh posted:and "pretty much screwed" depends on several factors (what you originally paid, which market you're in, how much you still owe, what your house can sell for, how much inventory in your area at your price point, condition, advertising, etc. etc. Leperflesh posted:I don't think I'm actually disagreeing with you, PC... just disagreeing with the absolutism and sky-falling tone to your posts. Let's try to avoid hyperbole in a thread about advice. This isn't LF.
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Dec 29, 2009 00:22
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Happydayz posted:Basically I can buy either in the spring of 2010 or 2011. Assume higher interest rates in Spring 2011. Generally increases in interest rates pushes down home values as it reduces the amount of home that people can purchase for a setmonthly payment. I would say that generally you are better off buying when rates are slightly higher because then there is the possibility that they could go down and you could then refinance at the lower rate. The problem with rates right now is that they only have one direction to go - up. That being said I don't think anyone expects rates to hit 7% or higher anytime soon so the price differences caused by rising rates may not be significant. The issue (if there even is one) is when you go to sell the home...if rates are 5% now, but 7% when you sell...well you likely won't get as much. PC LOAD LETTER posted:QUOTES Is a line by line retort really necessary? If you're responding to someone, how about responding to their post as a whole or at least in bigger chunks? You've got like 15 single line quotes in there which makes it impossible to read :\
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Dec 29, 2009 06:23
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QUOTES QUOTES
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I think housing prices are responsive to interest rates, but they are more responsive to demand, and demand is more responsive to (un)employment and consumer confidence. I think if you buy in a market full of fear and uncertainty (low prices) and sell in a market full of optimism and confidence (2005), you'll be in great shape pretty much regardless of the interest rates. I also think that houses are, in general, terrible investments. If you are looking for a way to invest $500,000 over a 30-year period to earn ~3%/year on a $250,000 house, maybe you should consider bonds or mutual funds or perhaps comic books and baseball cards. Buy a house because you want to own your own home, make sure you can make the payments even if you experience a period of hardship, get a fixed-rate loan with as much down as you can afford, and don't worry too much about how your "investment" is working out. Don't be stupid, mind you; suburban Phoenix, AZ real estate was a crazy dumb place to buy 2 years ago and it still is. But if you buy a sensible house in an area with reasonable infrastructure and a solid employment foundation that is sure to recover as the rest of the economy does, then in the longer-run (8+ years) I think your odds are pretty drat good.
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Dec 29, 2009 07:51
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Leperflesh posted:Buy a house because you want to own your own home, make sure you can make the payments even if you experience a period of hardship, get a fixed-rate loan with as much down as you can afford, and don't worry too much about how your "investment" is working out. Don't be stupid, mind you; suburban Phoenix, AZ real estate was a crazy dumb place to buy 2 years ago and it still is. But if you buy a sensible house in an area with reasonable infrastructure and a solid employment foundation that is sure to recover as the rest of the economy does, then in the longer-run (8+ years) I think your odds are pretty drat good. This is exactly why I am trying to buy my new house now. We can get in with a super low rate, 30% down, and with the baby coming soon we'll be all settled in and be ready to start our family. As for demand, I guess we just got lucky trying to sell our current house (appraisal aside). Even when the market is poo poo, there will still be reasonable people who want or need to move for some reason, and will find a way to make it happen.
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Dec 29, 2009 18:07
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http://business.theatlantic.com/2009/12/treasuries_to_contribute_to_the_surge_in_mortgage_rates.phpquote:Yields on benchmark 10-year notes will climb about 40 percent to 5.5 percent, the biggest annual increase since 1999, according to David Greenlaw, chief fixed-income economist at Morgan Stanley in New York. The surge will push interest rates on 30-year fixed mortgages to 7.5 percent to 8 percent, almost the highest in a decade, Greenlaw said. Just throwing this out there. Leperflesh had a great point about home value being more responsive to demand then the interest rate. I'm leaning toward agreement. I'm not looking at buying a condo to make OMGHUGE profit off appreciation. But I do want it to be a financially prudent move. Hence me asking a bunch of questions and trying to game it out via multiple scenarios. My timeframe for using a condo as my primary home would be about 5-7 years. Afterward I plan on renting it out My carrying costs for the place would amount to around $2300 a month not including the mortgage interest deduction. Factoring in losing the standard deduction, the mortgage interest deduction should overall save me roughly $300 a month. So my actual carrying costs would be closer to $2000/mo while keeping the condo as my primary residence. Right now a comparable 1-bedroom in the area will rent for anywhere between $2000-2300 (assume $2100). At the 5 year mark assuming I move out I could land around $2450/mo in rent assuming 3% rental inflation. I'd pay my marginal tax rate on that rental income giving me around $1600/mo. So my difference at 5 years if I chose to rent the place would be a rather painful $700/mo. Likely more as the condo fee would also be appreciating, but hopefully not as much since the buildings I'm interested in are all new construction from the 2004-2006 timeframe Ouch. It is not necessarily that bad. Of the $700/mo difference around $300 would be going toward principal plus I would have 5 years of mortgage payments going into it, giving me around $15k in additional equity. Around the 10-12 year mark of ownership is where my carrying costs would roughly approximate what I could recoup in rental income. So if my plan was to buy as as primary residence, move out in 5 years, then rent thereafter, I would have about 5-7 years of eating carrying costs before the place could sustain itself on its own. As for the opportunity cost of my capital - a concern, but not significant enough to be a major issue. And if I do this, I would be able to set aside enough savings to smooth over tenant turnover and other landlord type issues. This look about right to people? There might be small stuff wrong here and there, but I am more interested in the big picture. Mainly that it will take to around the 10 year mark for rental income to offset carrying costs, with the remaining 20 years on the mortgage being increasingly profitable. Happydayz fucked around with this message at 18:47 on Dec 29, 2009 |
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Dec 29, 2009 18:43
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Don't forget that: -your deduction on the interest rate isn't a credit, it's a deduction, so it's only reducing your taxable income by that amount; e.g., you recoup your tax rate X your interest paid each year -As you pay principle and your loan amortizes, the amount of each monthly payment gradually shifts from mostly-interest to mostly-principle, so the tax deduction will decline every year. This might be offset somewhat if your income increases and you climb into a higher tax bracket. -You can't deduct your interest when you switch to renting the place out, so on that day, you have to stop factoring in the interest deduction at all. More factors: -Rents in your area could climb, or drop, in 7 years -Condo fees always go up, no matter how new or old the building is, because the cost of labor (maintenance guys) and material (swimming pool lube, roof wax, whatever) go up over time, while the building simultaneously depreciates -Insurance costs tend to rise over time -It costs cash to buy a home that doesn't go towards the principle (loan costs, escrow, etc.) and it costs again (usually more) when you sell it. It looks to me like you live in a very expensive place (New York? San Francisco?) where rents are sky-high. That's a difficult market to get your feet wet in. Buying a condo is different from buying a house on land; you're much more at the mercy of other people's decisions, good or poor. Unlike a house, you often don't have the option of doing upgrades to increase the value, doing your own work on the house to save money, etc. If the property management/condo assoc. whatever, makes bad decisions (managing money, the property, advertising, who is allowed to rent, etc.) that will affect your property value. One more thing to remember: if you move out (to convert the condo to rental property), you have to move in somewhere else. If rents are rising, you'll have to pay the higher rent: or, if house costs are up, you'll have to buy a more expensive house (or move to a cheaper area). And, don't forget "life changes". Are you married? Perhaps you will be, or be planning to be, in 5 or 10 years. Kids? Career change? Home ownership can really lock you down and constrain your options in these regards, more than almost any other kind of purchasing decision in your lifetime. All that said... I'll leave it to someone else to say "that's a good idea" or "that's a bad idea", because I have no experience in income property and I don't want to steer you wrong.
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Dec 29, 2009 19:02
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quote:Around the 10-12 year mark of ownership is where my carrying costs would roughly approximate what I could recoup in rental income. So if my plan was to buy as as primary residence, move out in 5 years, then rent thereafter, I would have about 5-7 years of eating carrying costs before the place could sustain itself on its own. I'll say "that's a bad idea." The best case scenario has him leaking money for at least five years after he moves out before he starts turning a profit on it. What happens if you can't find a long term tenant? Each month without a tenant is going to cost you what, like $1600? Can you afford to be paying rent for two places at once? If your condo appreciates, you'll come out alright. But if that condo drops 10% (a very real possibility), you are going to take a huge bath. Why not just rent a condo from someone else? The U.S. is full of people who own condos they wish they never bought.
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Dec 30, 2009 01:00
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Can I get a should I / shouldn't I analysis? My wife and I are tired of our apartment, and not terribly thrilled with apartment life. We'd like to own a home. Our combined income is approx. $48,000 combined. We have zero credit card debt. I have a student loan of approx. $1500, monthly payment is $54. My wife just graduated from college, so we will have another student loan payment in 6 months. Not 100% sure on the amount of the monthly payment. We have 2 car payments totalling $560 per month. Our rent is currently $575/mo. We have $10,000 in savings. I just recently switched jobs, did not take a pay cut, in fact I will have right around $100 more per month due to getting free tv/internet. My company was bought out, and I made the transition to the new company. My wifes employment is secure, although she is currently shopping around for a new job post-graduation. Housing prices in our area can range from $75,000 to $150,000 plus. I found this stat, to give an idea of the price of housing in this area. quote:There seems to be a large amount affordable residential real estate in Blair County, Pennsylvania. In 2005, 71.7 percent of owner-occupied dwellings were valued under $125k. Are we in a position to buy?
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Dec 31, 2009 15:21
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Budget wise you typically can afford a house from 3-3.5 times your gross income so you should be able to buy a house in your area. However you should have more cash on hand before doing so. You'll want a 20% down payment so 15,000-30,000 and you'll need extra cash on hand for closing costs and new purchases that will go along with a new home. Short answer: Assuming you are living frugally you should be able to after you've saved a bit more.
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Dec 31, 2009 16:05
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jassi007 posted:Are we in a position to buy? A little more information is needed: A) Amount, Interest Rate, and Payment on upcoming wife student loan. B) Amount and Number of Payments remaining on your cars C) Property Taxes in your area. My parents live in PA (Mt. Joy) and they are paying taxes in the 3-4% range compared to my 1-1.25% in GA. It makes it fairly prohibitive to purchase if they are too high. Find a few houses in your area and look up your county tax commissioners office website and you should be able to pull tax bills and get an idea. D) Will your new company count your old company as time worked with them for your employment history check? If you are trying to get this loan and are shown as being at your current job for only the past few months, there is no way you are getting approved. Assuming a best case scenario of your wife's student loans being small, being able to get at least one of your cars paid off, and property taxes being low in your county I would say you still need to build a larger cash reserve. Filling escrows, closing costs, fees, inspections, etc. will eat up the majority of that $10K very quickly possibly leaving you with less than 3.5% minimum down. Then you end up paying PMI on top of that. What do you get for $575/mo renting? Why not look at trying at trying to rent a house for the time being until you can build up $20-30K and get the cars paid off?
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Dec 31, 2009 17:29
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In addition to all the great questions Arzakon asked, is that 48K before or after taxes? I'm assuming before taxes. Right now customary FHA DTI limits are about 31/43. That means no more than 31% of your gross income can go to your mortgage, and your total debt payments (car loans, mortgage, credit cards, student loans) cannot be more than 43% of your total gross income. There are cases where you can get approved for higher rates, but you usually need compensating factors to do so (large reserves, excellent credit, etc.) So going off your income, the absolute largest mortgage you should get would be is about 1240 a month. That's Principal, Interest, Mortgage Insurance (PIMI), Taxes, insurance, the whole shebang. Great right! You should be able to afford a house easy right? Not so fast. Remember your total debt is limited to 43% of gross income, so you only have 1720 a month for total debt repayment 1720 - 560 cars - 54 SL1 - 75 SL2 (estimated) --------- 1031 left for housing. Those cars put a big dent in your ratios. This guy has a pretty good website with lots of calculators. He's a little nutty, but the info is sound. http://michaelbluejay.com/house/index.html As for the actual purchasing process, say you and the wife find a 100K house you like. An FHA loan is your best bet in this market with a low down payment, unless you can get USDA Rural Development 100% financing. Let's assume you go FHA. On the 100K house, you'll need 3500 down. That's the easy part. Now comes closing costs. Closing costs can run 3 to 5% of the amount of the house. My house it's running about 4% so I'll use that. You can get the seller to pay closing costs if you negotiate, or you can pay them out of pocket. If you go the out of pocket route, that's another 4K. Your 10K is now down to 2500. You still need to move, buy a refrigerator, and pay for all those other moving related expenses. Those can add up quick. In summary, it's doable, you could buy right now, but it might not be the best idea for you in your situation.
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Dec 31, 2009 18:40
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Welp, looks like I get to eat ~5% of the sale on my house to get the deal done. We should be locked in by the end of the day. Appraisal review was (shocker) a total failure, and because the buyer asked for a 30 day escrow they don't have enough time to switch lenders. At least by using a well qualified buyer they were able to split the difference by bringing more cash to the table. So it hurts, but I guess that's the price of doing business these days.
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Dec 31, 2009 21:44
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Finally signed off on the refinance last night after much back and forth with BoA. 4.75% on a 15 year note. We are thanking the cosmos that it's finally over. We came from a 7.375% 30 year fixed so my wife and I are feeling pretty good about that end of the personal finance piece now.
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Dec 31, 2009 21:46
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Ultimate Mango posted:Welp, looks like I get to eat ~5% of the sale on my house to get the deal done. We should be locked in by the end of the day.
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Dec 31, 2009 22:13
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Interesting factoid that I can't explain. Basically single men account for 10% of all home buyers, yet for whatever reason single women account for 21% Why such a huge disparity? http://money.cnn.com/2009/12/30/real_estate/prices_dropped_over_decade/index.htm?cnn=yes quote:There has also been an increase in the number of single folks buying homes on their own. Back in 1999, single men accounted for 9% of all home sales and single women 18%. It was families who formed the big majority of buyers, 66%, with unmarried couple at 6%.
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Dec 31, 2009 22:45
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Can you correlate it with the number of single moms versus single dads? That might go a long way towards explaining it. There might just be more single women with a family to keep in a house than single men.
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Dec 31, 2009 23:40
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