|
PC LOAD LETTER posted:Most of the bidding wars going on right now are manufactured by the realtor FYI guys. This is highly, highly dependent on market. Some markets are totally dead and some (a few) are actually up. I feel it's wrong to give a "rule" about where bidding wars are coming from without clearly qualifying it by mentioning which market you're familiar with.
|
#
?
Oct 11, 2011 01:29
|
|
|
|
| # ? May 15, 2024 10:35 |
|
|
plester1 posted:I think the suggestion is to get a licensed home inspector that is ALSO a PE. A Professional Engineer's license is a completely separate thing. People who build bridges and skyscrapers have PE licenses, but they may not be able to do a home inspection. That, exactly. This may matter less on new construction, or somewhere not prone to structural issues, but I was buying in Texas (where everything has foundation settling and issues from that), and buying 40 years old. A couple extra hundred bucks to get your standard inspection AND someone that's a PE to tell me anything I'd possibly want to know about the condition of the structure (and there was a pretty hefty list of things on that report.) It's a matter where knowing TOO much is never a problem, and not knowing enough could cost you an absolute fortune.
|
|
#
?
Oct 11, 2011 01:50
|
|
|
Leperflesh posted:I feel it's wrong to give a "rule" about where bidding wars are coming from without clearly qualifying it by mentioning which market you're familiar with.  There are some real bidding wars out there but few and far between. If you do get engaged with a real one I'd back off because the supply out there is still insane right now, plenty of "~dream homes~" to go around for less than what you'll likely end up paying after a bidding war.
|
|
#
?
Oct 11, 2011 02:07
|
|
|
Jorath posted:We have been offered a windfall gift to help pay for a downpayment from my in-laws. Is there anything that we should be aware of when recieveing such a gift? I'm assuming that the lender will want the money to be in our account for a while? Assuming conventional 20% down, your in-laws will need to sign a letter basically stating that they are giving the funds as a gift and no repayment is expected or implied. You'll also need to show the transfer of funds from your in-laws into your own checking/savings account or that the funds were sent to escrow directly. You should check with your broker/loan officer/processor what your exact documentation requirements will be prior to transferring the funds, every lender is a bit different about what is/isn't OK or acceptable (we don't like gift funds sent directly to escrow, for example). Gift funds are extremely common in purchases so not usually problematic unless your in-laws are unwilling to provide statements for their accounts. PoliSciGirl posted:One more question about mortgages- I have a few paid off collection accounts (4). Three out of 4 of them are to be taken off in the next year, but one was paid in 2009. I have a 730 credit score and my husband has almost a perfect credit score. We don't have any debt. We are putting 20% down. Will we have a problem getting financing? We are already pre-approved, but I've heard that means nothing.
|
|
#
?
Oct 11, 2011 02:42
|
|
|
I'm in luck. I found out my home inspector is one semester away from getting is MS in structural engineering. Thanks guys for the tip!
|
|
#
?
Oct 11, 2011 15:53
|
|
|
PoliSciGirl posted:Can a PE perform ALL of the duties of a home inspector? Such as termite, mold, electrical? Not necessarily. Like the guy earlier said, you should get a home inspector who is also a PE, not just a PE. PE certification is for more than just civil / architectural roles, so you want to still be looking for a PE in the relevant fields. (Technically, next year I'll be eligible to take my PE exam, and even if I pass it, I guarantee you I am not qualified to inspect your house, unless your house is a cell culture, in which case you have bigger issues...) In short, look for a home inspector, and treat the additional P.E certification as proof that he's at least educated and has had to demonstrate that to an accreditation board.
|
|
#
?
Oct 11, 2011 17:48
|
|
|
Holy poo poo. I just went to my mortgage officer's office after work today. I expected ten minutes of formalizing paperwork and got two hours of explanations and numbers. On the plus side, the AUS had no issues with me and the GFEs put me at a $515 monthly payment. 
|
|
#
?
Oct 12, 2011 03:44
|
|
|
looked at a house on Sunday, scheduled another visit for next weekend and heard that they received 3 offers. the price did drop about 25k that week, and crossed the 100k threshold, but 3 that quickly? edit: it is a fixer upper in a nice part of town with bad schools. Molybdenum fucked around with this message at 15:17 on Oct 12, 2011 |
|
#
?
Oct 12, 2011 15:15
|
|
|
I know this varies pretty wildly from market to market, but adding an attached double garage with a finished upstairs to an existing house in a rural area of the north-east, are we talking ballpark of $50000 or $80000?
|
|
#
?
Oct 12, 2011 18:32
|
|
|
Talked the mortgage broker and he told me because my credit score is 711 and my husband's is in the high 700's, we should just have him on the mortgage, but I'm still on the title? Is this a good thing? He said it would save us .25%
|
|
#
?
Oct 12, 2011 19:26
|
|
|
PoliSciGirl posted:Talked the mortgage broker and he told me because my credit score is 711 and my husband's is in the high 700's, we should just have him on the mortgage, but I'm still on the title? Is this a good thing? He said it would save us .25% If he can qualify on his income alone it could save you a bit in interest. Most couples need both parties income to qualify for the mortgage.
|
|
#
?
Oct 12, 2011 19:39
|
|
|
skipdogg posted:If he can qualify on his income alone it could save you a bit in interest. Most couples need both parties income to qualify for the mortgage. I only make about $10k/year because Im a graduate student. We are trying to afford this mortgage on one income and then when I finally find full time employment we can put my whole salary on the mortgage.
|
|
#
?
Oct 12, 2011 19:53
|
|
|
whaam posted:I know this varies pretty wildly from market to market, but adding an attached double garage with a finished upstairs to an existing house in a rural area of the north-east, are we talking ballpark of $50000 or $80000? You gotta find a construction/contractor guy in your area and ask him. Get at least 3 quotes, price will vary quite a bit from person to person.
|
|
#
?
Oct 12, 2011 21:12
|
|
|
PoliSciGirl posted:I only make about $10k/year because Im a graduate student. We are trying to afford this mortgage on one income and then when I finally find full time employment we can put my whole salary on the mortgage. Just out of curiosity, real interest rates are not that far from 0% (factor in inflation plus your tax write-off), why would you feel the need to throw a ton of extra at the mortgage?
|
|
#
?
Oct 12, 2011 22:16
|
|
|
greasyhands posted:Just out of curiosity, real interest rates are not that far from 0% (factor in inflation plus your tax write-off), why would you feel the need to throw a ton of extra at the mortgage? To not have thousands upon thousands of dollars hanging over your head? I mean, yeah interest rates are low, but returns in anything else are pretty freakin' low right now too.
|
|
#
?
Oct 12, 2011 22:42
|
|
|
sheri posted:To not have thousands upon thousands of dollars hanging over your head? When we first bought I was big into paying more than the monthly amount as I knew that making the equivalent of 1 extra payment a year can reduce your total amount of debt and thus, time you are in debt, considerably. But as the value plummeted I realized that all it did was kept us from being underwater (which is a nice feeling), but it didn't offset the fact that our down-payment + extra payments were now money that we donated to the bank, as opposed to money that we could/would get back when we sold. Of course, if the house had appreciated, that wouldn't matter, but if we had saved that money, in either case (Appreciation or depreciation) we would have the money to do with as we pleased/needed, including paying a lump towards the principal if that became a good idea.
|
|
#
?
Oct 12, 2011 23:43
|
|
|
greasyhands posted:Just out of curiosity, real interest rates are not that far from 0% (factor in inflation plus your tax write-off), why would you feel the need to throw a ton of extra at the mortgage? We want to pay the house off as soon as possible so we can move out and rent it out. EDIT: Sorry I thought this was for me, but I am putting 20% down. PoliSciGirl fucked around with this message at 23:56 on Oct 12, 2011 |
|
#
?
Oct 12, 2011 23:49
|
|
|
PoliSciGirl posted:We want to pay the house off as soon as possible so we can move out and rent it out. Wait, what? Why are you buying a house so you can move out and rent it? That seems....really dumb.
|
|
#
?
Oct 13, 2011 00:03
|
|
|
sheri posted:Wait, what? Why are you buying a house so you can move out and rent it? That seems....really dumb. It's really small. It's only my husband and I right now and maybe in a few years we will want to have kids and we will want a bigger place and if it's paid off, we can rent it out.
|
|
#
?
Oct 13, 2011 01:00
|
|
|
PoliSciGirl posted:It's really small. It's only my husband and I right now and maybe in a few years we will want to have kids and we will want a bigger place and if it's paid off, we can rent it out. Wait what, since when does a mortgage have to be paid off in order to rent out a property? I know in NJ that's not the case, neither is it in ME. Where are you located?
|
|
#
?
Oct 13, 2011 01:13
|
|
|
hey santa baby posted:Wait what, since when does a mortgage have to be paid off in order to rent out a property? I know in NJ that's not the case, neither is it in ME. Where are you located? We live in PA (Philadelphia).
|
|
#
?
Oct 13, 2011 01:21
|
|
|
Why would you prefer to rent the house out rather than sell it? Have you crunched any numbers to figure out which option is more financially sound? Owning a house still costs you plenty of time and money, even if it you aren't living in it.
|
|
#
?
Oct 13, 2011 01:55
|
|
|
PoliSciGirl posted:We don't like debt. That is a completely different thing than "so we can move out". Being physically in the house has no relationship with owing or not owing money on that house. If you don't like debt, then sure, pay off the house as fast as you like. But owner-occupancy is only an issue if you are getting an FHA or other government-style loan where that's a requirement.
|
|
#
?
Oct 13, 2011 02:21
|
|
|
Jorath posted:But as the value plummeted I realized that all it did was kept us from being underwater (which is a nice feeling), but it didn't offset the fact that our down-payment + extra payments were now money that we donated to the bank, as opposed to money that we could/would get back when we sold. No. You 'donated' that money to the people you bought the house from, not the bank.
|
|
#
?
Oct 13, 2011 03:52
|
|
|
sheri posted:Wait, what? Why are you buying a house so you can move out and rent it? That seems....really dumb. What? Lots of people do this... It's not dumb at all. Live in a house until you outgrow it, then rather than sell it you rent it out to have an income stream over time. But, she seems really confused about a lot of things. sheri posted:To not have thousands upon thousands of dollars hanging over your head? It's not "hanging over your head" if the money goes into some other kind of investment vehicle while your mortgage accumulates interest at very close to 0%. greasyhands fucked around with this message at 04:04 on Oct 13, 2011 |
|
#
?
Oct 13, 2011 03:59
|
|
|
greasyhands posted:What? Lots of people do this... It's not dumb at all. Live in a house until you outgrow it, then rather than sell it you rent it out to have an income stream over time. But, she seems really confused about a lot of things. Even though a lot of people do it doesn't mean it is a good choice. Buying a house you are only planning on living in for a few years is generally a bad financial decision.
|
|
#
?
Oct 13, 2011 04:14
|
|
|
I've said this over and over again, being a small scale landlord is one of the absolute worst financial decisions you can make. You won't get a "steady income stream over time". You may make enough to break even if you are lucky, but one bad tenant can cost you tens of thousands of dollars in damages and lost rent. It is insanely risky and you won't get much return for it even if everything goes right.
|
|
#
?
Oct 13, 2011 04:56
|
|
|
Jorath posted:When we first bought I was big into paying more than the monthly amount as I knew that making the equivalent of 1 extra payment a year can reduce your total amount of debt and thus, time you are in debt, considerably. But as the value plummeted I realized that all it did was kept us from being underwater (which is a nice feeling), but it didn't offset the fact that our down-payment + extra payments were now money that we donated to the bank, as opposed to money that we could/would get back when we sold. Of course, if the house had appreciated, that wouldn't matter, but if we had saved that money, in either case (Appreciation or depreciation) we would have the money to do with as we pleased/needed, including paying a lump towards the principal if that became a good idea. I don't understand this argument. Assume your house looses value in both cases: Case 1, you've been overpaying the mortgage, so you aren't underwater but will basically clear the loan amount when you decide to sell and that's it. Case 2, you've been min paying the mortgage and you're underwater, so when you sell the house you'll need to throw a lot of money at it to close the loan out. If you're going to move and sell the house, then I'd argue that the 2nd situation is a lot harder because odds are good that you weren't saving 100% of the money that otherwise would have gone to overpayment of the house. Even if you were investing it in a vehicle that would allow you to access the money on the back end (and beat the 4% interest the debt was costing you vs. just throwing it in a bank), the markets haven't exactly been stellar so there's no guarantee you wouldn't have lost money there, either. Since you would owe the full loan amount either way, overpaying to ensure the flexibility to move whenever you wish vs. needing to balloon pay the rest of the loan when you sell is worth something beyond the saved interest by paying the loan early. If you're staying in your house, who cares what the market value is? You only need to worry about that when you're selling it. Strategic defaults would effectively work the same as the above paragraph, too, so I'd argue my point stands in either case. Property that you live in is not an investment vehicle: it's a home. If you're buying a condo building and renting it out for income, fine, THAT's an investment, but your home is a roof over your head. You should care about it's value and upkeep, but if you're going into home ownership counting on making any kind of appreciable return, you're doing it wrong. Disclaimer: I'm not against emergency funds in any way, but strictly speaking I wouldn't buy a house without having that money established and locked away in the first place to begin with. The money I'm talking about here is funds beyond this already accumulated savings.
|
|
#
?
Oct 13, 2011 11:52
|
|
|
Stuck on the fence between buying vs renting. I'm certain that I will stay in the same place for 3-5 years. Only big possible change is of getting married within that time period, so I'm looking for someplace that can comfortably fit two (800 sq ft +). Right now I can purchase a place, and after all expenses (principal, interest, condo fees, tax) have it come out to $1950/mo to carry, maybe $1700 after I take a deduction. With renting, it will come out to $1850-1900/mo. Rents tend to go up 4-6% in this area, so that's about $100/mo rental increase every year. Doing the math I can put away around $5,000/yr in equity while buying, plus another $2-3k in rental savings. This means that after 3 years I should break even between buying vs renting, as in I could sell my place after 3 years and break even after realtor fees assuming I get the same as what I paid for. In the out years, years 4, 5, 6, etc, I'll be putting away an extra $7-8k a year by owning vs renting. I understand the basic arguments about renting is often way better than owning. But gently caress, this particular situation looks pretty drat sweet. The condo is relatively old, built 1985, but is 1 block away from a metro station, close to a major interstate for easy commuting, and putting down 20% is not going to a huge deal for me. Thoughts?
|
|
#
?
Oct 13, 2011 16:08
|
|
|
Happydayz posted:Stuck on the fence between buying vs renting. Don't. I'm possibly in the position of having to sell, and 3-5 years isn't nearly enough time to build enough equity that you're not totally wiped out when you sell, if you can sell. Buy with the assumption you're going to be stuck with whatever you buy long-term, or end up taking a loss to get rid of. Edit: Don't forget closing fees, and if you sell again, realtor fees: they're easily 3-5% of the loan value, and in some cases, more.
|
|
#
?
Oct 13, 2011 16:30
|
|
|
Happydayz posted:Stuck on the fence between buying vs renting. Depending on your market, condos may take a while to sell. If it sits on the market for an extended period of time, you may feel pressured to drop the price and lose on your investment. You should look into how long it has been listed for, because if it has sat on the market and hasn't sold, you may incur the same difficulties when you go to sell. If you're inclined, go check out the county & tax information at your local assessors office. You can see how much it transferred for and the years the title changed hands.
|
|
#
?
Oct 13, 2011 16:37
|
|
|
Yeah, I have those fees already priced in. Between building $5-6k/yr in equity and saving $2-3k/yr in rent, I can cover the costs of moving in and moving out within 3 years. The only risk after that would be what I can sell the place for. But I suspect that we are reaching a floor on prices, as there is almost a 10% premium to rent a place compared to owning. Right now owning will cost $1950/mo gross, around $1700/mo after deductions. Renting a comparable place will cost $1850-1900/mo, with expected annual rent increases of $100/mo.
|
|
#
?
Oct 13, 2011 16:38
|
|
|
For the small amounts you would save in that time frame versus the large exposure that you take by doing it, I wouldn't feel comfortable. How exactly do you know we are at a floor on housing prices? There is no law that says that at x% renting vs. buying housing prices go up. It is just really scary for that short of a time span. Just rent and enjoy the peace of mind of not having to be beholden to a mortgage.
|
|
#
?
Oct 13, 2011 17:06
|
|
|
Happydayz posted:Yeah, I have those fees already priced in. Between building $5-6k/yr in equity and saving $2-3k/yr in rent, I can cover the costs of moving in and moving out within 3 years. Can you post some real numbers (price, rate, etc.) rather than these per month/per year amounts, your math seems a little fishy... How are you building 5-6k a year in equity right off the bat? Approximately you only pay down 1/4 of the loan balance in the first 15 years of a 30 year mortgage. Are you figuring in maintenance both planned and unplanned? If the windows or roof start to leak, washer or dryer breaks, pipe starts to leak in an apartment you just call the landlord. In a place you own, you are on the hook for those. Not to mention with the state of the economy, the slow continued slide of home prices is possible and almost likely. Also not to mention you go and tie a massive amount of wealth to a single asset class in a single location and having an undiverseified portfolio isn't a good thing. Looking at your numbers most of the savings from buying is just based off the home interest mortgage deduction. Do you actually itemize your taxes? If you are going to switch to itemizing is your deduction going to be much larger than the standard to begin with? Daeus fucked around with this message at 18:12 on Oct 13, 2011 |
|
#
?
Oct 13, 2011 17:26
|
|
|
Daeus posted:Looking at your numbers most of the savings from buying is just based off the home interest mortgage deduction. Do you actually itemize your taxes? If you are going to switch to itemizing is your deduction going to be much larger than the standard to begin with? Actually, I'm not sure how i missed his math: you can't pay less in rent AND build $5000-6000 in equity. Even on a 15 year note, you'd have to pay several hundred a month OVER your mortgage to manage that, and well, that's not exactly "savings", is it? From my own loan: I'm paying $968 a month on it. Of that, $454 is P&I, and of THAT, something like 10% is actually principle. All the rest is taxes and insurance. There's no way you can 'build' equity in that amount without paying in a huge pile of money. cstine fucked around with this message at 17:37 on Oct 13, 2011 |
|
#
?
Oct 13, 2011 17:34
|
|
|
Sure. Condo sells for around $320,000. Condo fees of $450 a month. Taxes about $2800/yr. Location is in the Washington DC metro - 1.5 block from a metro station and a 5-10 minute drive into downtown Washington. Rent for a comparable unit is $1870. Assume 4% interest and 20% down. $1220 principal + interest, + $450 condo fee + $230 tax = $1900/mo. Amortization table puts about $850 toward interest, and $370 toward principal per month. Figure deduction (interest + property tax) will shave $200/mo off that from my marginal rate of 25% (actually closer to $270, but I had factored in loss of standardized deduction). So actually carrying costs: Condo = ~$1700 month, Rental = ~1870/mo. Confident that rents will increase at least $100/mo every year. With condo I'll gain $520/mo on top of renting in the first year, plus an extra ~$100 during each following year. Yeah, I know there are maintenance costs etc. But the appliances are new, ditto HVAC, and the condo association has a healthy reserve fund. So that's why I'm generally confident I can break even with the transaction costs associated with buying/selling within 3 years, and pocket an extra $7-8k/yr in gravy for years 4, 5, 6, etc. It's also why I'm not worried about the price dropping too much. The price/earning ratio is already in my favor. I'm not super confident about being able to rent it out in the future for a high price. I mean I'm sure I'll be able to. But within the immediate area (walking distance to metro), there are only 3x condos and a maybe a dozen apartments. So might be rough trying to rent a place out when someone could just walk down the street and rent from a professionally managed company. That said in 3x years I'm confident that prevailing rents will be in the $2000-2200/mo area, while my costs will still be fixed at around $1900-2000/mo. Happydayz fucked around with this message at 18:31 on Oct 13, 2011 |
|
#
?
Oct 13, 2011 18:28
|
|
|
NY Times has a hugely detailed calculator designed to compare buy vs rent. http://www.nytimes.com/interactive/business/buy-rent-calculator.html My inputs based on your numbers: Rent: 1870 Home Price: 320000 Down Payment: 20% Mortgage Rate: 4% (I'm being generous here, assuming you have top tier credit) Annual property taxes: .9% (this matches the $2800/yr figure) Annual home price change: 0% (don't think you can really assume this will be going up) Annual rent increase: 5% Advance Inputs: HOA dues: $450 Additional Utilities: $0 (you seem to be looking for same size place so I assumed no increase when buying) All others left default. Using these assumptions buying doesn't become advantageous until after 8 years. You can look at the detailed breakdown on that page for why. Even after tweaking assumptions way in favor of buying so that your home appreciates 2% year and rents go up by 6% per year you still don't reach break even until after four years. Also this doesn't even being to address the flexibility you have with renting. Want a new job in another city? Need a bigger space? Decide to have a kid? Five years is a long time. Five years ago I hadn't even met my wife yet and I was living 3,000 miles away from where I am now. Plans can change fast. Why take such a huge risk and tie yourself to a location to maybe save a few thousand bucks? Edit: Consider worst case in each scenario. Renting you move in rent goes up a lot each year and the housing market appreciates. Maybe you miss out on $30,000 had you purchased shucks, you missed out on some money you could have made. Buying you move in, unemployment continues, market tumbles more losing maybe 15-20% (maybe more in certain local markets) you lose your job and cannot find one in the same city. You literally cannot move until you sell, with the soft market people are low balling your asking price and you might have to bring cash to a closing even as the seller. Daeus fucked around with this message at 19:24 on Oct 13, 2011 |
|
#
?
Oct 13, 2011 19:20
|
|
|
Your math does work, and essentially boils down to you making ~$21K over 6 years if everything happens perfectly. But if the price of the condo decreases, your HOA needs to raise fees, you can't sell it when you need to, buyers ask for 3% concessions for closing costs, you have to move early, the unit needs a new roof, taxes go up, or anything else happens comes directly out of that profit. Or you could just invest that $64K and if you average 5% over 6 years you make $21K. Do never buy your apartment.
|
|
#
?
Oct 13, 2011 19:25
|
|
|
Daeus posted:My inputs based on your numbers: What about homeowner's insurance? Is that not applicable to condos in DC? I realize that with 20% down there's no mortgage insurance, but I thought pretty much everyone with a mortgage had to have hazard insurance. Also not included in these calculations: the risk that prices (especially condo prices) continue to fall. In 5 years there's a real risk of losing, say, 10% of value. Or even 20%.
|
|
#
?
Oct 13, 2011 19:47
|
|
|
|
| # ? May 15, 2024 10:35 |
|
|
Leperflesh posted:What about homeowner's insurance? Is that not applicable to condos in DC? I realize that with 20% down there's no mortgage insurance, but I thought pretty much everyone with a mortgage had to have hazard insurance. That is included in the advanced options. I left it at default (.5% of home value). Totally agree, there is a real possibility prices continue to slide and even if they don't, they market isn't going to turn around and shoot up anytime soon.
|
|
#
?
Oct 13, 2011 20:31
|
|