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Leperflesh posted:I believe that this is incorrect. There's no impediment to any two (or more) people buying a house together. You can be married, you can be siblings, you can be buddies, you can be total strangers. If you're both putting your names on the loan, you're jointly responsible and your incomes can both be considered. Legally I am incorrect. There is not supposed to be discrimination based on marital status. There have been a few lawsuits that people have won over this. I can't prove it, but my gut and a few personal examples tell me that nonetheless non-married people are less likely to get approved. Again, just my opinion...
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Jan 18, 2013 19:51
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Not really a home buying question, more of a home refinancing/rental question. If this should go elsewhere, my humble apologies, direct me please. Any advice is welcome on my sitcheyation. 3.5% ARM, resets in September 2015. House worth 220k, I owe 171.5. Principal + interest = 808 a month (320 of which is going to principal, yeahhhhh boy). Called for refinance and got quoted (sans credit check, but my credit/debt to equity is darn good) a 3.63% 30 year fixed with $3k in fees by USAA, principal + interest = 835 a month. Versus the 4.2 30/year I think I was quoted back when I bought it, I'm ~$4000 ahead with the ARM as of today taking into account interest (3k) and principal (1k). I think there is a 50% chance I will own the home in September 2015. So, would you refinance now while rates are still low and eat the $3k or continue rolling along with the ARM given the 50/50 shot that I'll sell it? I would need to decide in the next few months because I may start renting it out this summer (put it up around April/May), which would no longer make it my "primary residence." ---- I plan on renting out the house starting this summer, and buying another house elsewhere. My rental comps are at $1595 (literally my exact floor plan), and I live in a high demand family neighborhood. Assuming I rent it for $1550, assuming $2500 in maintenance costs per year, with 9% taken out by the management company (probably ReMax) and other assorted costs, I am looking at netting $170 a year (lol) but around $3800 when factoring in recouped equity via principal payments. Worth it to keep the house and rent it just for paying down the principal? To me, that is, but if renting out a house is a super huge headache, then maybe not. $2500 seems a safe high number to me for maintenance per year, doesn't it? That's assuming something big goes amiss every year (i.e. air conditioning unit).
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Jan 18, 2013 21:08
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Orange_Lazarus posted:Yeah I remembered after posting that with refinancing they usually want you to make a bit of a down-payment; I'm just not sure how much. You've still not got this right. A refinance costs money. Like, you pay cash for various expenses, and then they take the value of your current loan and put it into a new loan with new terms. If rates have gone down since you got your original loan, then it can make sense to refinance. But because there are up-front costs, the per-month savings you are realizing have to happen for long enough to recoup the up-front expense, or it's not worth it. For example, say your refi costs you $4k. Say as a result of your refinance, your monthly mortgage payment goes down by $200. You will recoup the cost in 20 months, after which you'll be in the black (compared to your original loan), so it only makes sense to refi if you're pretty sure you'll still own the house 20 months later. These are random example dollar amounts and should not be taken as being representative. It's possible to refinance a standard loan only if you're right-side-up on the loan (or have cash to pay the difference). IF you have an FHA mortgage, you may qualify for an FHA fast track refi; in this case, you don't have to get an appraisal and can therefore refi even while being underwater. The actual costs of a refinance can vary by a lot. When I refinanced in November 2011, I got such an amazing deal that it effectively cost me nothing at all - the cost was low, and I got a rebate from my broker that covered it. On the other hand, it's possible for a refi to cost many thousands of dollars. So you need to do some investigating (consider a broker!) before you'll know how much your refi is likely to cost. There's not necessarily a "down payment" on a refinanced loan (although you can pay for points like on an original mortgage, and you can also pay down some of the debt at that point if you feel like doing so.)
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Jan 18, 2013 22:44
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Arkane: You have to factor in vacancy of the house. I think if you were willing to self manage it might work.
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Jan 18, 2013 22:48
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Editing out my mistake. Don't buy points to try and reduce your tax base: http://www.ehow.com/how_2243719_deduct-points-mortgage-taxes.html Slappy Pappy fucked around with this message at 01:48 on Jan 19, 2013 |
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Jan 18, 2013 22:51
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Spamtron7000 posted:One other thing you can do with refinancing is to use it as a kind of tax shelter. Let's say you're trying to lower your income tax base by a few thousand bucks to get into a lower income tax bracket and doing so will put your itemized deductions above the standard deduction. You can refinance and buy points to do that - "points" is pre-paid interest and you get to deduct it along with the rest of your mortgage interest from your annual income. This is a great way to lower your tax base IF the rates are good and it makes sense long-term. If you're considering something like this, be sure to include the tax savings into your break-even calculations. You must amortize points over the life of the loan. Buying points isn't going to change your taxable income much at all in any give year.
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Jan 19, 2013 01:39
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SlapActionJackson posted:You must amortize points over the life of the loan. Buying points isn't going to change your taxable income much at all in any give year. D'oh you're right. I didn't realize that. Looks like only the points you pay when you buy are fully deductible the same year. Well, snot. Thanks for pointing it out - I probably would have figured that out when I got my tax docs.
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Jan 19, 2013 01:47
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It's been mentioned a few times already in this thread but I have a question about underground heating oil tanks. I just got the disclosure statement for a house I'm in the process of buying. They have an underground tank listed (I assume it's an oil tank, the house was built in the 30's) and note that it was DEQ certified decommissioned in 2001 (cleaned, filled, and soil tests). Someone earlier in the thread mentioned they had trouble finding home insurance with a tank underground, though they didn't specify if it was decommissioned or not. Will be a challenge to obtain a policy with the tank still in the ground? As a tangential question, should I be concerned keeping it in the ground? Besides the fact that it would obviously be better if it wasn't there at all. I've seen horror stories of people paying thousands and thousands of dollars for removal/remediation.
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Jan 19, 2013 09:34
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Arkane posted:
I wouldn't. I've had renters before. Totally not worth the headache and potential risk for such a small amount of $.
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Jan 19, 2013 17:51
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I'm interested in buying a house in the Austin, TX market in the next 1.5 to 2 years. It seems like most of houses in the areas that I am looking (within 3 miles of downtown) are between 250,000 and 400,000 for a 2-3 bedroom house with 1-2 bathrooms. That seems like a ton of money for these tiny little houses, but I absolutely refuse to live in the burbs. I make a little over 100k a year in the tech industry, and my partner makes around 40k. This is assuming, of course, that we are married by that time (we have been dating 4 years, and living together for 3). Our rent is currently $1400 a month for a 3 bedroom 1 bath, about 6 miles from downtown. Does a 280k-320k house seem reasonable for us? in 2 years I would estimate that I would have 0 student loans, 0 car payment, 0 credit card, and about 60k in the housefund a downpayment. I anticipate that she should have around 10k. Does buying a house in the price range make sense for us? Here's a rough example of the type of house we would be looking at for that price: http://www.trulia.com/property/3106476265-3403-Hollywood-Ave-Austin-TX-78722 arbybaconator fucked around with this message at 21:49 on Jan 19, 2013 |
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Jan 19, 2013 21:47
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That seems reasonable; how much are you currently paying per month on debt? You'll just want to make sure that you keep a big buffer of savings for repairs in the first year. If you are done paying down the debt, all that money can be rerouted into a "house repair" savings account.
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Jan 19, 2013 22:07
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I agree. I bought for $240k with less income and more debt and a smaller down payment. Did FHA, though. My payments, including taxes, insurance, and PMI, are under $1600. With 20% down, you should be able to buy at $280k and pay around the same.
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Jan 19, 2013 22:34
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moana posted:That seems reasonable; how much are you currently paying per month on debt? You'll just want to make sure that you keep a big buffer of savings for repairs in the first year. If you are done paying down the debt, all that money can be rerouted into a "house repair" savings account. I'm snowballing a credit card, student loans, and my car right now, so about $3k a month. Those should all be paid off this August. How much do you think needs to exist in a house repair savings account? For the longest time I was against home buying, but rental prices here are starting to skyrocket. My landlord tried to raise my rent $300 a month last year. I talked him down to $200 and signed a 2 year lease. I expect he'll try to do it again in 2014. I just heard on the radio that rental prices go about between 8-15% a year here. Homes for sale go up between 10-15% a year. Crazy.
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Jan 19, 2013 22:37
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Oh, another question. Who do you guys talk to when you need advice about this stuff? Should I go to my bank (Chase) to discuss possible options that far down the road? I know there are things like First Home Buyer Credits here in Texas. I also have a credit union that I could talk to, but they are not located here in Texas (Pentagon Federal). An Accountant maybe?
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Jan 19, 2013 22:41
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House savings account: the answer depends, I think, on the general condition and age of your home, as well as your local climate. A brand new house won't (shouldn't) need a new roof for a couple of decades (depending on the local weather, the roof material, etc) whereas an older house might need one in the next five. Do you have lead pipes, or iron, or copper, or plastic? Do you have an AC unit, and if so, how old is it? And so forth. As a rule I try to keep $8k in savings, and that's keeping in mind that A)I'm very handy and do almost all work myself, and B)In an emergency I could draw on my 401(k), not to mention family support. My roof should be good for another 8-10 years, my pipes are good (and I can fix them myself), I'll need to do some exterior paint in the next year but my house is one-story and we have warm dry months most of the summer so it won't be hard to do that by hand. My backyard fences are in good shape now I've replaced the section that was falling down. If I was going to sell this house I'd need to put at least $15k into it first: fix the cracked driveway, paint, fix the chimney (we're not using it but the flue and ironwork needs to be completely replaced), replace the patio roof, some landscaping, and some light remodeling in the kitchen and bathrooms. And that's $15k assuming I do a lot of work myself. So yeah, it really varies a lot. I'd say $5k is the bare minimum, though. Advice about "this stuff": well, this thread, for starters. For financial stuff if you have an accountant that's good, but a real estate specialist is better. If you have someone that prepares your taxes you can ask them about home buyer credits and such. I had a mortgage broker who was a good resource for a lot of this stuff. You can definitely ask questions of your bank. But bear in mind that the person you talk to has a job, and that job is to sell you Chase financial services. Everything they say to you will be towards that end, so do not expect to get any kind of unbiased advice about what's best for your own financial security, getting the best deal on a mortgage, what you can actually afford, etc. e. I should add that the $8k house fund is separate from my emergency savings account, which is for if I lose my job and am unemployed for six months.
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Jan 20, 2013 04:12
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Is it smart to take a loan from my TSP to pay for down payment? The interest on the TSP loan (1.5%) is paid back to myself, so the only cost is the opportunity cost as that money could be earning X% in my TSP.
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Jan 20, 2013 18:12
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spaceship posted:I'm interested in buying a house in the Austin, TX market in the next 1.5 to 2 years. It seems like most of houses in the areas that I am looking (within 3 miles of downtown) are between 250,000 and 400,000 for a 2-3 bedroom house with 1-2 bathrooms. That seems like a ton of money for these tiny little houses, but I absolutely refuse to live in the burbs. I make a little over 100k a year in the tech industry, and my partner makes around 40k. This is assuming, of course, that we are married by that time (we have been dating 4 years, and living together for 3). Our rent is currently $1400 a month for a 3 bedroom 1 bath, about 6 miles from downtown. Why exactly do you refuse to live in the burbs? Did they hurt your feelings once? Do you just refuse to be like your parents? I believed that within three miles of downtown is going to be a specialty market for college kids and hipsters. Do you require to be within walking distance of 6th street or something? I wouldn't rule out the burbs and make a huge life altering decision based on an irrational idea. If you would look at Hutto, which is right off the totally awesome new bypass, you can get a house for literally half of that cost. You can spend all the money you save on investing. I was in your position once. I lived in Pflugerville, worked for Broadwing and Dell. I was laid off in 2001 and then I could not find a tech job to save my butt. There are ALOT of people that can work your job in that town. There are also ALOT of people selling houses at any given time, and if the market picks up again the developers will come back and start flooding the market as well. I ended up with a $1400 mortgage that I absolutely could not pay and buyers were few and far between. We short sold the house after moving out of state. In Austin I would take some time to research the area. There is alot of area and a ton of inventory. If you are patient there are still people loosing their rear end and they absolutely must take whatever they can get. You can also pick up a foreclosure.
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Jan 20, 2013 18:45
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Just repaired the washing machine timer knob with hot glue and scotch tape to avoid buying new parts and hiring someone to install them. Homeownership: do never buy
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Jan 20, 2013 20:54
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Arkane posted:Not really a home buying question, more of a home refinancing/rental question. If this should go elsewhere, my humble apologies, direct me please. Any advice is welcome on my sitcheyation. Your ARM most likely has a 2.75% margin over the index its tied to. For example, if the index is LIBOR and the LIBOR rate is .5, your ARM rate would be 3.25%. It will never go lower than 2.75% so you know your floor. The 30 year fixed rates right now are near that level and 15 year rates are lower than that. If you can move into the security of a fixed rate, do so. In the next 33 months, interest rates will rise. The Fed will stop its buying of treasury notes and mortgage backed securities causing rates to increase. Investors will wake up to the ongoing bond bubble and move money out pushing rates up further. Both of these forces will push up mortgage rates as well as the LIBOR index. Fixed rates will increase and so will your ARM. If you're planning to turn that home into an investment property in the future, refinancing today will allow to take advantage of the primary residence rates which are lower than what you get on rental homes. So if your 50/50 on selling it in 33 months, I'd refinance it for sure. If you refinance, your down side is a maximum loss of 3000 dollars of cost plus 27 dollars a month in higher interest payments (until your index increases another .375% which is most likely the next time it adjusts). The upside is security plus savings when rates climb up again, most likely late this year according to my companies econ team (I work for a very large bank). If you're still torn, just do a no cost mortgage. That would lower your investment and just cost you about 54-70 dollars a month until you sell.
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Jan 21, 2013 04:45
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I’ve read a few recommendations lately for people to get pre-approved instead of pre-qualified at the beginning of their search with one bank, and then to shop around once they have found a house. I’ve also read that you should do all of your pre-approvals in a short (2 week?) period to avoid having multiple dings on your credit report. We want to start looking at houses soon, which requires an agent, which it seems requires a pre-approval rather than pre-qualification these days. What if we get pre-approved now to get an agent and then spend 3-4 months looking at houses before we get serious and go back to shopping for the most competitive mortgage rate? How will that first pre-approval affect the second round of approvals in terms of having a second round of hard-pulls? Edit: cleared up pre-approval vs pre-qual confusion JKicker fucked around with this message at 14:57 on Jan 21, 2013 |
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Jan 21, 2013 06:27
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JKicker posted:I’ve read a few recommendations lately for people to get pre-approved instead of pre-qualified at the beginning of their search with one bank, and then to shop around once they have found a house. I’ve also read that you should do all of your pre-approvals in a short (2 week?) period to avoid having multiple dings on your credit report. Pre-Approval letters > Pre-Qual letters. PreApprovals means that a banker or broker has pulled your credit, looked at your debt, your income, your savings and ran it through decisioning software and gotten you approved pending an underwrite. Pre-Qualification letters means that a banker or broker was unable or unwilling to get you an approval. Instead, he wrote a letter and said he thinks you have a good shot. If you think about it, you can understand why a real estate agent and a seller only want to deal with people with PreApprovals. A pre-approval letter is typically good for 90 days since thats when credit reports and documentation starts to expire. At that point, another set of hard pulls will be required. Hopefully, you've found a lender and banker you trust and can return to them. Usually, another credit pull is no problem but can be an issue if you were borderline which a good banker would tell you upfront. What counts as borderline depends on the program, the lender, and the state. For example, a minimum middle credit score of 640 is required in Alabama for FHA loans. In Georgia, its 620 for FHA. If your scores are 20 or more points higher than that and you've made no recent mistakes, your credit should be fine even after a new pull.
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Jan 21, 2013 07:12
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Randomly posted:Pre-Approval letters > Pre-Qual letters. Thanks for the reply. Basically it just seems like two of the new best practices kind of conflict: 1. Don't rush into buying the first house that you view. Look at a lot of houses and take your time. 2. Get pre-approved by a lender before you can get an agent. Once you've found a house that you like, get a bunch of quotes from different lenders and go with the most competitive one. This new trend of agents only wanting to work with someone who has been pre-approved seems like it is kind of detrimental to the buyer since they have to get a hard credit pull early, and then, perhaps months later when they have found the house they want, they will go around to all of the banks looking for the best rate. However, the earlier pre-approval they got to get in with a lender could potentially negatively impact their later, most important round of pre-approvals. My concern has been somewhat assuaged by the information you provided on borderlines. Assuming that all banks decide what rate you get based on a more general, borderline system, I guess it would be less likely that the early pre-approval credit pull would hurt them. Still, this new practice of having to pull early and then potentially do a second round of pulls later seems like it could hurt a lot of people who are near any of those credit score borderlines. Am I over-thinking how much a single credit pull from a bank could impact the rates offered later?
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Jan 21, 2013 15:06
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ButWhatIf posted:Just repaired the washing machine timer knob with hot glue and scotch tape to avoid buying new parts and hiring someone to install them. This is how you always repair them
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Jan 21, 2013 16:06
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JKicker posted:Thanks for the reply. Basically it just seems like two of the new best practices kind of conflict: Pretty much. A pull will drop you 10 points or so. I'd suggest that you shop around for a lender at the same time you get your pre-approval letter. You'll call a big bank, a small credit union and maybe a broker like Quicken or something local. You'll notice something quick. They are all really close to each other at first glance. The small credit unions are great with customer service and speed so if you absolutely need someone to kiss your rear end and close your purchase in a week, they are the best place. The big banks have a million programs and slightly better rates because they have the staff to handle it all so if you have a desire to get the lowest rate or every single special program, they are the best place. Brokers are for the lazy. Seriously. They used to be a great thing 5 years ago when there were 900 banks lending money but only to a segmented group of people and you needed the help to cut threw it all to find the best deal. Thats not the way it is anymore. Only 5-6 big banks really lend and everyone else funnels loans to them but charges you a middleman mark up for it. In todays world, brokers charge higher costs, rates, etc and have less control then they used to. The bigger boys have so much federal oversight and public pressure on them that they've cut fees and focus on honest dealings because the alternative isnt worth it. So yeah, shop around to get a Pre-Approval. Have everyone send you a GFE and look at the origination fee. Since you're doing a purchase, almost all the other 3rd party costs are going to be out of their control. Decide then who you will use and then go find a home. You'll want your realtor and your mortgage person to be on the same page. Switching things up after you find a house is only going to create headaches for you.
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Jan 21, 2013 17:30
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JKicker posted:Am I over-thinking how much a single credit pull from a bank could impact the rates offered later? Probably, though it depends on how good your credit is. In terms of pricing/eligibility it's pretty much all the same if your score is 740+ so if you've got an 800 or whatever you've got some room. Don't go too crazy though, high numbers of recent pulls can be a big red flag to your underwriter and may result in a decline. I've only had to deny for it a couple times and there were a lot of other weak factors, but something to consider.
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Jan 21, 2013 19:27
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I've spent the last several days reading through the thread and many of the linked articles and actually still want to buy a house! I've been thinking about buying a place for several years but the huge price of real estate in my area has scared me away thus far. I would really like to live in a house with a lawn so I can have barbecues. That said, I have a couple of options in front of me and could use some advice. Some background: I currently live in a one-bedroom apartment, rent is $1600/month. My earnings depend in my bonus, but it's between $90K-$110K (Usually closer to $110). I currently have a monthly automatic deduction of $1K setup to go into a brokerage account, and I also add extra money as I have it, which works out to about another $1K a month on average. I have about $200K saved up for a down payment. I began contributing to my 401K two years ago and have a little over $30K in that in case I need it. The owner of my apartment has offered to sell it to me; we haven't discussed price but he bought it for $350K a decade ago, and Zillow currently values it at $280K, so it would probably be somewhere in that range. Despite the drop in value over the past 10 years, my area is a suburb of a major city and is one of the fastest growing neighborhoods in the region - home values have increased over the past year as we have come out of the recession. With that as background, I see two options: 1. Although I really want to live in a proper house, I buy my current apartment for much less than a house would cost and get a low mortgage, which would allow me to continue to save for a house. If the market continues to improve in this area, I could live here for a few more years then sell the apartment, hopefully for a profit, and put that towards a house. This is risky because it's possible that the market could drop again and I would lose money. However, my mortgage would only be a few hundred a month, and even with taxes and upkeep fees, I'd be saving more than I am now for a long-term purchase. 2. I get a huge loan (on the order of $400K) and buy a house, which cost between $500-$600K in this area. That is a scary huge number and I really don't want to do it, but according to myfico.com, with my credit score and a $200K down payment I should be able to get a $400K loan at 3.3% over 30 years, which works out to about $2200/mo - this is $400 less than I'm currently paying in rent + automatic savings deduction. This $400/mo would mostly cover taxes and insurance, and I would be able to continue maxing out my 401K deposits annually. Any advice on which option I should take? I really want to do the second, but $400K is a big number and it's scaring me away.
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Jan 21, 2013 21:44
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First off, where did you get the $2200 dollar payment? $400,000 at 3.375% for 30 years is $1768.39 a month. You'd have to include property taxes, homeowner's insurance and HOA dues into that if you're trying to budget. Not sure if that number helps make you feel better or not. With 200k and the amount you're saving per month, you have more than enough to gain the interest of a Certified Financial Planner. I'd strongly suggest you stop getting general advice off the internet and call one. Talk to someone you know and trust and get personal recommendations for a few. They'll be able to help walk you through the tax implications, retirement options, and life planning that should help make this easier on you.
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Jan 21, 2013 22:52
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The $2200 came from myfico.com, If they're off and the payment will actually be lower then I do feel better, but not much. The issue is not whether I can afford the mortgage but if it's a good idea to take that large a loan on my salary. Thanks for the suggestion about a financial planner, I'll ask around my family.
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Jan 22, 2013 02:56
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The Pirate Captain posted:I would really like to live in a house with a lawn so I can have barbecues. You can actually rent these, too. I'm only mentioning this because previous posters seem to have been bizarrely unaware that houses are for rent. With yards and stuff. quote:The owner of my apartment has offered to sell it to me; we haven't discussed price but he bought it for $350K a decade ago, and Zillow currently values it at $280K, so it would probably be somewhere in that range. I feel it's quite risky to purchase a property that never goes on the market. Zillow is a useful tool for getting a vague idea of what properties are going for in a given area, but it's not an appraisal. I strongly suggest shopping around for similar properties, and of course, getting an appraisal, before discussing prices with your current landlord. quote:Despite the drop in value over the past 10 years, my area is a suburb of a major city and is one of the fastest growing neighborhoods in the region - home values have increased over the past year as we have come out of the recession. Beware of thinking you can predict the future. Prices can suddenly drop even if they previous period has been one of increasing prices. Actually, especially in that case. I'm not saying one must totally ignore "trends", but beware that lots of people - maybe the majority - put too much weight in past performance when evaluating all types of investments. quote:If the market continues to improve in this area, I could live here for a few more years then sell the apartment, hopefully for a profit, and put that towards a house. The market doesn't have to drop for you to lose money. All it has to do is fail to appreciate enough for you to cover the very large costs of buying and selling. Moreover, if the alternative is keeping your large savings in safe investments that earn you a little, then merely failing to outperform whatever those investments would have earned, means you lost money. quote:2. I get a huge loan (on the order of $400K) and buy a house, which cost between $500-$600K in this area. That is a scary huge number and I really don't want to do it, but according to myfico.com, with my credit score and a $200K down payment I should be able to get a $400K loan at 3.3% over 30 years, which works out to about $2200/mo - this is $400 less than I'm currently paying in rent + automatic savings deduction. This $400/mo would mostly cover taxes and insurance, and I would be able to continue maxing out my 401K deposits annually. Frankly I think the second is the better option, just because I am of the opinion that the prices of real estate (that is, actual land) are less volatile than those of apartments, condos, townhomes, etc. which are just a (piece of) a building. I also prefer living in a house rather than shared-walled, shared-facility, shared-overhead/expense living arrangements, but that's a personal choice. I also think given your savings and income that you can afford a $400k loan. But, go back to my first comment: if all you want is to live in a house, you could just rent one. You also haven't said anything about your lifestyle, but I'm concerned with your buying something now if you may experience major life changes in the next decade. Consider things like marriage, children, and career; any of these things can change where/how you want to live. If you buy, your time horizon for not losing a bunch of money in a sale is something like 5 to 10+ years. (Not that any length of time guarantees you to not lose a bunch of money: but the large transaction costs get amortized out over time, and a longer horizon gives you more opportunity to wait out a temporary downturn in the market before selling.) So, think carefully about what you want to be doing with your life in the next ten years. Changing jobs? Having kids? Maybe getting married? Leave of absence to backpack across europe for two months? How do you feel about home maintenance and repairs? How do you feel about HOA dues? There's a lot of factors here. But if you decide in the end that you want to own a house, I think, based on what you've told us, you can afford it.
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Jan 22, 2013 08:12
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Heh, my wife's aunts came over last night and told us she is planning on stopping her mortgage payments and squatting for as long as possible in the home until she's kicked out, this way she can save money for her planned move in a couple years. She was under the impression that in many cases the banks want people to remain in the home so they can maintain the property. Honestly, this doesn't bother me but she seems to have the idea that she can stay there for up to two years before the banks finally kick her to the curb. Now, I've heard about people doing this before, like in Florida they were so backed up after the housing collapse that it took the banks a couple years before they finally got to the home and they would even offer money ($5000) to get people to leave the home peacefully if they found squatters. What I told her was that while she probably could get away with squatting there for a little bit but there was no guarantee that she would be able to get away with it for over a year, or even a few months. I also told her that if she really was considering walking away then she should seek the advice of an expert and to have a plan B if it doesn't work out. Anything I left out? She's not concerned about her credit for some reason. Sephiroth_IRA fucked around with this message at 17:26 on Jan 22, 2013 |
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Jan 22, 2013 15:12
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Orange_Lazarus posted:Heh, my wife's aunts came over last night and told us she is planning on stopping her mortgage payments and squatting for as long as possible in the home until she's kicked out, this way she can save money for her planned move in a couple years. She was under the impression that in many cases the banks want people to remain in the home so they can maintain the property. No advice, other than this is a terrible idea. Why would she think she could save money? Wouldn't the lender be able to come after her for it? In any case, you should definitely make a thread detailing her adventures in misanthropy.
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Jan 22, 2013 16:38
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That seems highly unethical. 
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Jan 22, 2013 16:46
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It's called a strategic default and some people can get away with a year or two with nonpayment before being evicted but its entirely up to how quickly the bank feels like moving on this. Basically she knows she's going to be foreclosed on because she can't make the payments so why bother making them anymore? It's not that crazy when you think about it even if it is kinda lovely. Either way her credit is destroyed so its not like she can just jump to another house anytime soon. Pfhreak posted:No advice, other than this is a terrible idea. Why would she think she could save money? Wouldn't the lender be able to come after her for it? If she's in a non recourse state then no, the lender can't come after her for the difference. At the end of all this she would walk away from the mortgage and have a bunch of money to start over. Moral issues aside, It's the best option for some people. FCKGW fucked around with this message at 16:57 on Jan 22, 2013 |
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Jan 22, 2013 16:48
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Defaulting on a mortgage isn't really unethical - the bank takes a calculated risk on lending you money, that risk may or may not pan out, and if it doesn't they basically mark you down as a bad risk by murdering your credit for several years. Sometimes you were that bad risk for them. However, if your master plan involves banking on living in a "rent-free place" for two years by hoping they don't notice, that's not a great plan. I'd say the odds are much more likely they'll evict her long before that and she'll end up paying money to live somewhere else. That might still be a savings for her but it's not exactly the scenario she's envisioning.
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Jan 22, 2013 17:05
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Leperflesh posted:I feel it's quite risky to purchase a property that never goes on the market. Zillow is a useful tool for getting a vague idea of what properties are going for in a given area, but it's not an appraisal. I strongly suggest shopping around for similar properties, and of course, getting an appraisal, before discussing prices with your current landlord. Orange_Lazarus posted:Heh, my wife's aunts came over last night and told us she is planning on stopping her mortgage payments and squatting for as long as possible in the home until she's kicked out, this way she can save money for her planned move in a couple years. She was under the impression that in many cases the banks want people to remain in the home so they can maintain the property. There is a ton of bank to bank and locality to locality variation on time to foreclosure, but she may be able to live there a couple years. Her credit is going to get hammered, so I hope her planned move does not involve getting a mortgage. I don't think it's unethical either, but that's a personal judgment call.
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Jan 22, 2013 17:09
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Leperflesh posted:You can actually rent these, too. I'm only mentioning this because previous posters seem to have been bizarrely unaware that houses are for rent. With yards and stuff. That is always so funny to me, that people don't know you can rent houses. I've been renting for like 7 years and I've lived in an apartment for a grand total of about 6 months. I always rent houses. I have a fire pit in my back yard, and a storage shed, and a private parking area, and the back yard is fenced and it's really nice. Also the landlord does lawn care. It's cheaper to rent a house than an apartment in a lot of cases because apartments like to jack up the rent for amenities you'll never use, like a fitness center and a pool or whatever. I pay less in rent for my house than any of my friends who rent an apartment. But I am aware that this is probably not the case in a lot of areas, especially urban areas. I live in a fairly small (55K people) college town.
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Jan 22, 2013 17:13
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Yeah, we're in a non-recourse state and Sophia pretty much nailed the ethics part of it. She actually can afford to make her payments but she isn't able to save very much afterwards. I know to some people she might sound like a lovely person for wanting to squat and bail on her debt but she's actually a really great lady who's just going through a rough patch at the moment. Personally I have no qualms with people flipping off the banks, especially when she bought the home back when every "expert" was screaming "the value of your home can only go up up up!!!!" to the uneducated masses. Although I'm considering another option. I've been thinking of proposing to her that we take over her mortgage payments and move into her house which will save the wife and I $300 a month (probably more as utilities would be cheaper) after we get out of our house. She can stay there for as long as she wants until she's ready to move and I would only ask that she pay half the utilities and pay for her food. After she moves my wife and I would be allowed to continue to stay there and pay just the price of the mortgage for a set amount of time and then after that she can choose to rent to someone else at a higher price or sell the home. I haven't talked about this to the wife and I just now thought of it but this seems like a pretty good idea to me, especially since my wife and I really hate our house and even though her aunt's is smaller it's much nicer. edit: Wife thinks it's a great idea and she's usually very skeptical/conservative about my Sephiroth_IRA fucked around with this message at 17:43 on Jan 22, 2013 |
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Jan 22, 2013 17:14
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Well...we made an offer last night! 3 beds, 2 bath condex (no fees, separated by garage with no shared walls) on the market for 240. House next door sold for 195 in November, so we offered a little bit more than that. We love the place but its not worth more than 220 to us. I'm so excited/nervous.
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Jan 22, 2013 18:56
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Orange_Lazarus posted:Yeah, we're in a non-recourse state and Sophia pretty much nailed the ethics part of it. She actually can afford to make her payments but she isn't able to save very much afterwards. I know to some people she might sound like a lovely person for wanting to squat and bail on her debt but she's actually a really great lady who's just going through a rough patch at the moment. Personally I have no qualms with people flipping off the banks, especially when she bought the home back when every "expert" was screaming "the value of your home can only go up up up!!!!" to the uneducated masses. You can do what you want, but if it’s me there is no way I am intertwining my life with your wife’s aunt’s life. If you like the house that much then go to your bank and get your own loan and buy it from her. Otherwise you are in this open ended deal with no clear cut end where there is one way everything works out fine and multitudes of ways it ends in disaster with family taking sides about who screwed over who. Just as you can do what you want, your aunt can too with this strategic default. I don’t love banks, but if you can afford to pay the debt I believe you have an obligation to do so. If you can’t afford to pay the debt, then you can’t and the bank took a bad risk. I don’t know what it means that she can make the payment but she can’t save much money. If that means she is struggling, she has cut everything out and there is zero margin in her life, then she probably needs to get out of the house. But if she is going on vacations, leasing cars, going to starbucks every morning, and that’s part of the reason she can’t save money, then it’s a different issue.
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Jan 22, 2013 20:05
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Orange_Lazarus posted:Although I'm considering another option. I've been thinking of proposing to her that we take over her mortgage payments and move into her house which will save the wife and I $300 a month (probably more as utilities would be cheaper) after we get out of our house. She can stay there for as long as she wants until she's ready to move and I would only ask that she pay half the utilities and pay for her food. After she moves my wife and I would be allowed to continue to stay there and pay just the price of the mortgage for a set amount of time and then after that she can choose to rent to someone else at a higher price or sell the home. So basically you're suggesting becoming her tenants? If so, well, you should only be paying her mortgage payments if that's the going rate for renting (and co-habiting!) that size house in that neighborhood. And of course she should cover her own portion of the rent if she's living there too. Unless she is in the sort of financial emergency where you'd let a family member move into your own house for just the cost of utilities and food. I think your wife's aunt should just sell the house. If she's underwater, she should try for a short sale.
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Jan 22, 2013 20:20
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