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dalstrs posted:I have a question about buying, hopefully someone here can help me out. A friend of a friend is going into foreclosure on their house (being auctioned next month). They have told us they will sell me the house for what is left on the mortgage. She says that they owe $100k on the loan, but the bank has added $12k because they didn't complete the Obama mortgage assist program, and lawyers for the bank are saying there is another $13k that I am not sure what it is for. I have seen that you can negotiate with the banks to get a lower price when buying a house like this and wanted to see if anyone had advise on the best way to approach the lawyers to get the lowest price out of them. Also any other information on how sales like this work would be appreciated. Why in any universe would the bank sell you the house for $100k when it's worth $165k on the open market? Why aren't your friends selling it and pocketing $40k-$60k, depending on whatever these fees are? Something about your story doesn't make sense. LloydDobler fucked around with this message at 06:49 on May 9, 2011 |
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May 9, 2011 06:46
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DJCobol posted:Question about mortgage terms: my original numbers are based on a 30 year fixed mortgage. I ran the numbers for a 15 year mortgage, and could probably swing it, but its a little tighter than I want. However, if I do go with the 30, I would like to be able to throw extra money at the principal whenever I can (tax refund, extra income, bonuses, etc). Do most mortgages allow that, or is that something you have to request or make sure is included? Your student loans aren't going to make a giant difference, assuming you've been regularly paying them, but they may make a small difference. Paying them off and having no debt won't increase your debt to credit ratio, but it will improve your debt to income ratio, which may mean a few extra points of credit rating. If your student loans are at a higher interest rate than your mortgage will be, though, then I think it makes financial sense to pay them off anyway. While they're unsecured and you generally don't exchange unsecured debt for secured debt (like a mortgage), they're also special in that you cannot discharge student loan debt in a bankruptcy. And going into your house with no other debt at all will give you better cash flow on a month to month basis, a good thing for dealing with any unexpected expenses. There are mortgages out there that don't allow prepayment, but they're crap and it's always something everyone should avoid. Making extra payments on your mortgage is often advised as a great thing to do because 100% of that extra payment goes to principal. A reputable bank or lender should absolutely offer terms that allow unlimited amounts of prepayment/extra payments.
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May 9, 2011 07:57
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LloydDobler posted:Why in any universe would the bank sell you the house for $100k when it's worth $165k on the open market? Why aren't your friends selling it and pocketing $40k-$60k, depending on whatever these fees are? The bank won't have a choice if they choose to sell before the auction. The reason the friends are willing to sell to us is because they don't have time to traditionally list and sell the place and I will be paying above what she owes so there is some profit for her. The bank will take it over in a little less than a month. Plus her husband recently died and she wants the house to go to a family and someone that will appreciate the house. My hope is there is someone that has dealt with these foreclosure lawyers before and knows the best way to get the best price from them.
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May 9, 2011 13:41
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Leperflesh posted:As a lot of the people in the thread have actually bought a house - and I daresay most of us are reasonably happy having done so
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May 9, 2011 15:36
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dalstrs posted:The bank won't have a choice if they choose to sell before the auction. The reason the friends are willing to sell to us is because they don't have time to traditionally list and sell the place and I will be paying above what she owes so there is some profit for her. The bank will take it over in a little less than a month. Plus her husband recently died and she wants the house to go to a family and someone that will appreciate the house.
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May 9, 2011 15:39
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I think we're confused why they're going into foreclosure if the house is worth more than they owe. Foreclosures are slow, so they should have had plenty of time to do a conventional sale.
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May 9, 2011 15:55
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FISHMANPET posted:I think we're confused why they're going into foreclosure if the house is worth more than they owe. Foreclosures are slow, so they should have had plenty of time to do a conventional sale.
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May 9, 2011 16:05
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gvibes posted:Worst mistake of my life.
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May 9, 2011 17:44
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Jorath posted:Worst financial decision of my life- lost %100 of our downpayment. Crawling out now, will probably rent for the same as the total we paying, and save up until we can just buy with more than %50 down for what's hopefully our last house ever.
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May 9, 2011 17:53
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Jorath posted:Worst financial decision of my life- lost %100 of our downpayment. Crawling out now, will probably rent for the same as the total we paying, and save up until we can just buy with more than %50 down for what's hopefully our last house ever. Also out a ton on my current home, but receiving what I feel great value out of our new one. I'm basing value on what I am willing to pay for a certain product, not what the market was X years ago. I can live comfortably in a beautiful and nicely sized home in an amazing location that is up-to-date and needs no renovations and is very close to my new work. If I look at the package, my losses on the first house (yet to be incurred, but will be shortly) will be more than offset by the opportunity and ability to get into the new one. Oh well, not a perfect financial situation, but my crystal ball was broken when I bought the first one. =/
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May 9, 2011 18:00
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gvibes posted:Well, I didn't make a downpayment (I'm dumb), but I have probably lost about $60-70k. If you didn't make a downpayment hasn't the bank lost 60-70k? Which is preferable I think.
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May 9, 2011 18:05
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sanchez posted:If you didn't make a downpayment hasn't the bank lost 60-70k? Which is preferable I think. 2) I have paid down more than 60-70k, so I'm not underwater.
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May 9, 2011 18:06
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Jorath posted:Worst financial decision of my life- lost %100 of our downpayment. Crawling out now, will probably rent for the same as the total we paying, and save up until we can just buy with more than %50 down for what's hopefully our last house ever. Now I'm saving back up again for another down payment, and now because I'm married and my wife makes less than 20% of what I do, it's basically even harder to save up now. The worst part is that my local housing market is the only one in the nation still going up (DC metro area) which is probably a moderate bubble, saved only by the fact that federal government jobs are so stable.
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May 9, 2011 18:29
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To add to the DO NEVER BUY discussion. I think it was Leperfish that summed up the sentiment well. It's not that nobody should buy houses, it's just you should really think a lot longer and harder about the decision if you are a first time buyer like many of us here. I was 23 and bought an apartment for more than it was worth because I didn't think to get a realtor or really study the market and the area before making an offer. I know I could have done worse, but I could have definitely done better. The situation was very doable at first, but has gotten harder since I started contributing to retirement savings at work (14.25% pretax to a pension and 457k). I had a refinance request shot down because their appraiser pegged my apartment at being worth less than I owe the bank. What was truly amazing was that it was the local credit union that shot me down, and while I don't begrudge them doing so, their customer service was atrocious and they never returned calls or emails to try and get a copy of the appraisal that sank my application. Assuming that really is the case then I've essentially lost $60k+ in equity, of which $56k was the down payment. I have a feeling I will have to be here a while to break even on the place. DO [almost] NEVER BUY
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May 9, 2011 18:57
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gvibes posted:I think you are talking about a short sale, and that does have to be approved by the bank. The original thought was that we would pay off the full remaining balance, until I heard of all the other fees. FISHMANPET posted:I think we're confused why they're going into foreclosure if the house is worth more than they owe. Foreclosures are slow, so they should have had plenty of time to do a conventional sale. The story that I heard was the woman and her husband were together and he had lost his job, then they tried to get help but in order to qualify for the Obama mortgage assist they had to be behind on the mortgage. So they fell behind to get the help, but then her husband died and she has been a mess since that happened. I guess she left things to the last minute and it is too late now to start making payments. The bank said the only option she has it to sell the house. Our plan is we will pay the mortgage off and then give her some money separate from the bank so she doesn't get nothing out of it. My question is what is the best way to negotiate with the bank to get them to accept the lowest price possible to pay off the house that way I pay less and am able to give her more money. So I guess it could be considered a short sell if we can get the bank to take less than what is currently on the mortgage.
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May 9, 2011 19:04
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dalstrs posted:So I guess it could be considered a short sell if we can get the bank to take less than what is currently on the mortgage. This was mentioned in another thread as an answer to one of my questions, but short sales are not allowed to friends or family members. The bank will not approve a short sale from her to you. They will be happy to accept full payment though. Also, there is no reason to "give her some money on the side" instead of being on the up and up and actually paying full price if you aren't using agents, which you shouldn't. The bank will take what she owes, and at closing she will get a check for whatever is over that amount.
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May 9, 2011 19:27
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senor punk posted:To add to the DO NEVER BUY discussion. I think it was Leperfish that summed up the sentiment well. It's not that nobody should buy houses, it's just you should really think a lot longer and harder about the decision if you are a first time buyer like many of us here. Exactly. It's not that nobody should ever buy, it's that the SA demographic should never buy until they get out of college and get their poo poo together. This thread is a counterpoint to the misinformation out there that says owning is always better than renting, houses always increase in value, and that there is a "housing ladder" that is imperative to start climbing.
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May 9, 2011 19:55
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Arzakon posted:This was mentioned in another thread as an answer to one of my questions, but short sales are not allowed to friends or family members. The bank will not approve a short sale from her to you. They will be happy to accept full payment though. Thanks for that information, if all the bank asks for is the $100k she owes on it then that is what I will do the problem comes that they are saying she owes $25k in other fees or something. We are trying to get a hold of the lawyers handling the foreclosure to see what they say the bottom line price is, but I am trying to learn about it while I wait, and there just hasn't seemed to be much I could find about a situation like this. What kind of fees can they add to the principle to make it cost that much more to buy the house? For the money on the side, I figured if the bank saw there was more money up for grabs they would try to take it rather than it going to her who really needs it.
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May 9, 2011 21:01
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Ah I forgot about the extra fees part. For that amount I have to assume part of it is back taxes and accrued interest. Maybe an unpaid home equity loan or HOA fees that there is a lien on the house for?
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May 9, 2011 21:06
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Arzakon posted:Ah I forgot about the extra fees part. For that amount I have to assume part of it is back taxes and accrued interest. Maybe an unpaid home equity loan or HOA fees that there is a lien on the house for? Looking at the county tax assessment site it doesn't show any leans, and there isn't a HOA. Is there some kind of penalty if you didn't complete the Obama mortgage help plan?
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May 9, 2011 22:59
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LloydDobler posted:Exactly. It's not that nobody should ever buy, it's that the SA demographic should never buy until they get out of college and get their poo poo together. I hope I have all my poo poo together. In other news I got notification of my pre-approval from bank of America today, so time to get serious about looking for a garage with an attached house.
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May 9, 2011 23:25
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Hey homebuying goons, I've been renting this neat lil house in Phoenix for the past 3 1/2 years and the owners need to sell in a hurry so they've given me first shot at it. Great neighborhood. As-is. New roof, new plumbing, new air conditioner. FHA loan. Mortgage+PMI+taxes+insurance would = about what we're paying in rent on it now. I'll be living here at least ten years, and probably longer, knock on wood. The sellers (my landlords) have an agent they're paying a flat $2k to be their realtor on the transaction (they're going through a short sale on another home and she's handling both). We got a look at a draft purchase contract--the price matches neighborhood comps (sold) and other than that I really don't know what the major issues are to look out for in the letter of the contract. We don't have a realtor representing us on the buy-side, so I don't want to get screwed by misunderstanding details in the contract. Anything in particular to look out for? Common ways the seller's agent can mess with unrepresented buyers?
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May 9, 2011 23:38
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Hire a lawyer.
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May 9, 2011 23:40
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gvibes posted:Hire a lawyer.
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May 9, 2011 23:44
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Get a buyers agent, it's on their dime. Oh, and no one is your friend in a real estate transaction, trust no one.
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May 9, 2011 23:48
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Buyer's agent may be a deal breaker for them, as that means they are losing 3% when they weren't planning on it when selling to you. Hire a lawyer to represent you for a flat fee.
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May 10, 2011 00:05
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gvibes posted:Worst mistake of my life.
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May 10, 2011 00:23
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Soothing Vapors posted:And this dude went to law school, he knows from horrible mistakes. But still, don't go, no jobs, die alone.
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May 10, 2011 17:51
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gvibes posted:Worst mistake of my life. Jorath posted:Worst financial decision of my life- lost %100 of our downpayment. Crawling out now, will probably rent for the same as the total we paying, and save up until we can just buy with more than %50 down for what's hopefully our last house ever. Did you guys buy in 2006/2007? Pretty much everyone who bought their first home in 2006/2007 got hosed. A lot of the "do never buy" sentiment seems to be "wish I hadn't bought a house right before the market crashed." I'm not saying you are dumb for buying...it is good for people to see that housing doesn't always go up and it is a risk that needs to be factored into a purchase decision. If you look at the NYT calculator, home appreciation is the biggest factor in buying beating renting. If the home isn't appreciating, it is never better to buy.
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May 11, 2011 03:18
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Bought in 2007 myself as well, but I bought a condo that had HOA costs about doubling (last I heard it was just under $400 / mo - I started at $201) within merely 2 years or so, which aren't tax deductible unlike mortgage interest in the US. I also got screwed in quality of life wasn't any better than some random apartment in the area. In fact, the upstairs neighbor is probably the trashiest (literally - he left his trash outside his door leading to ant infestations) neighbor I've had and I've been renting for like... 7 years now all across the country. I could also easily hear his footsteps above me, not to mention I could hear him snore. I had spent hours and hours in the place at various times to figure out if there was some good soundproofing between the units and thought it was sufficient when it wasn't. Even if there was no market crash, I'd likely have been screwed over anyway. I was unable to sell my place unless the buyer wasn't going to use a lender due to a lawsuit going on with the HOA. The lender I had used ignored it unlike most even during the boom (I spoke with a few independent appraisers for banks that said even during the boom none of their clients would finance condos with major HOA lawsuits going on). In the end, home prices in the Seattle-Bellevue area dropped about 30% or so from peak while mine dropped about 50%. That means even in a "normal" housing market where prices were within affordability I'd have lost my down payment within 3 years of ownership. I don't think they can afford new roofs now and so there's probably going to be a big fat assessment sometime to the tune of $2000 per resident. If there's any place that's a money pit, it's that entire community - even the original buyers of the condo conversion got raw deals at 2004 prices in the Seattle area (the area lagged the nation by about 10 months pricewise).
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May 11, 2011 04:16
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Realjones posted:Did you guys buy in 2006/2007? Pretty much everyone who bought their first home in 2006/2007 got hosed. A lot of the "do never buy" sentiment seems to be "wish I hadn't bought a house right before the market crashed." We bought our first house in 2007. Buying the house wasn't the mistake, though; the mistake was starting renovations with both of us in school full-time and only one of us earning income. Our agent was kind of pissed that we only used 73% of what we were approved for by the bank, too. But we're making up the difference in blood, sweat, and tears. We didn't even buy a project house. We just made a fairly normal house into a project. Because I'm dumb.  If anyone ever considers buying a house that "could just use a little work," please be honest with yourself about whether you actually have the time to do it.
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May 11, 2011 04:47
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Realjones posted:Did you guys buy in 2006/2007?
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May 11, 2011 06:01
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LoreOfSerpents posted:We bought our first house in 2007. Buying the house wasn't the mistake, though; the mistake was starting renovations with both of us in school full-time and only one of us earning income. One income, two full time student tuitions AND some DIY? How did your relationship survive?
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May 11, 2011 06:50
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Bovine Delight posted:One income, two full time student tuitions AND some DIY? How did your relationship survive? If this picture makes you squeamish, DO NEVER BUY. 
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May 11, 2011 13:31
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So I've been comparing rent on some places where I live, and double wide trailers with 2bd/2ba are going for around 600 a month. An apartment wouldn't do as we have ATV's and I play the drums. So we pulled the trigger and bought a house. 3bd/2 ba around 1300 sq. ft with a 2 car attached garage. The house was built is 2005 and is move in ready, complete with great Frigidaire Professional series stainless appliances. HOA's are $52 a quarter. We got the stick built house for $89,900 and our monthly payment with 3.5% down at 4.75% interest and PMI is $682.82 per month, and that includes taxes and insurance. We feel like we got a great deal, and the inspectors and appraisers are saying the same thing. It seemed like a much better option than renting, the house sold the first time for $160,000 in 2005, so I doubt it can take much a hit. Our combined pre-tax monthly income is about $4000 and we have very stable jobs. We are only 20/21 years old and plan on living here for 5 or so years, or until the market recovers and then we will list is as for sale by owner and just see what happens, but we are in no hurry to sell. We haven't owned for long, but the way its going, I'm saying DO BUY.
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May 11, 2011 18:39
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LoreOfSerpents posted:There was an unspoken agreement not to freak out about some parts of the house being covered up with plywood, cardboard, and duct tape (to keep pets in the "safe" part). We couldn't handle everything all at once, so we both agreed that house repairs were the lowest priority. I would probably most likely hate you as a neighbour.
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May 11, 2011 18:45
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Rabid Anti-Dentite! posted:It seemed like a much better option than renting, the house sold the first time for $160,000 in 2005, so I doubt it can take much a hit. Our combined pre-tax monthly income is about $4000 and we have very stable jobs. And yes, we bought in 2006. The next time will be considered much more carefully.
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May 11, 2011 19:17
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Rabid Anti-Dentite! posted:So I've been comparing rent on some places where I live, and double wide trailers with 2bd/2ba are going for around 600 a month. An apartment wouldn't do as we have ATV's and I play the drums. So we pulled the trigger and bought a house. 3bd/2 ba around 1300 sq. ft with a 2 car attached garage. The house was built is 2005 and is move in ready, complete with great Frigidaire Professional series stainless appliances. HOA's are $52 a quarter. We got the stick built house for $89,900 and our monthly payment with 3.5% down at 4.75% interest and PMI is $682.82 per month, and that includes taxes and insurance. We feel like we got a great deal, and the inspectors and appraisers are saying the same thing. It seemed like a much better option than renting, the house sold the first time for $160,000 in 2005, so I doubt it can take much a hit. Our combined pre-tax monthly income is about $4000 and we have very stable jobs. We are only 20/21 years old and plan on living here for 5 or so years, or until the market recovers and then we will list is as for sale by owner and just see what happens, but we are in no hurry to sell. We haven't owned for long, but the way its going, I'm saying DO BUY. Come back and give us an update in 2 years. 21 is way way too young to get chained down to a mortgage payment.
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May 11, 2011 20:04
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skipdogg posted:Come back and give us an update in 2 years. 21 is way way too young to get chained down to a mortgage payment. People are different. Tons of people settle in at 21-22 and do just fine for themselves.
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May 11, 2011 21:15
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greasyhands posted:People are different. Tons of people settle in at 21-22 and do just fine for themselves. And 3-5 years is not an adequate planned holding period for a home, IMO. Also, at less than 50% off of the 2005 new construction price, I would expect to see some further price falls.
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May 11, 2011 21:18
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