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Everything is going very well in the Purchase of our townhouse. The payment will only be about $25 more than my budgeted monthly payment, but my car insurance is going to go down 20% for leaving the ghetto and it's going to cost half of what it did in my apartment for electric/gas/heating oil. The appraiser went out Friday, and I'm not worried about that because the townhouse two down sold for a similar price last year and it had one less bedroom. Now, I have a question. When is an appropriate time to buy furniture? Do I wait until after we close? If I pull $4,000 out of savings now will that cause a problem (I still have enough for the DP and then some). If anyone's concern here is that the house could fall through, the furniture we are going to buy would have been bought anyways. I just don't want to screw anything up.
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Apr 7, 2013 00:42
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Yes. After closing. Mortgage underwriters hate to see large purchases between approval and closing, it'll delay things and is the worst idea.
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Apr 7, 2013 01:22
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silvergoose posted:Yes. After closing. I've actually seen people denied day before closing because someone racked up a ton of debt buying furniture. Wait.
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Apr 7, 2013 03:04
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Wait.
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Apr 7, 2013 14:20
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I am a Realtor don't do this. Spending all your money on furniture for a house that has not yet changed hands is a disastrously bad idea. Houses fail to close all the time for a million stupid reasons at an extremely high percentage. Some are reasons that don't even make sense and you can't avoid. Others are reasons just like this. Either way buying all the furniture drastically increases your odds of being super hosed
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Apr 7, 2013 16:43
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Pillowpants posted:Everything is going very well in the Purchase of our townhouse. The payment will only be about $25 more than my budgeted monthly payment, but my car insurance is going to go down 20% for leaving the ghetto and it's going to cost half of what it did in my apartment for electric/gas/heating oil. First of all, wait until after closing for sure, because if your credit is pulled before closing again and there is a huge purchase, you are going to possibly get denied the loan. Second, you might want to wait until big sales come up to buy furniture. Ask the sales reps at the store when their big sales are and how much they usually are. We were told that the biggest discounts are 20% at the most and to come back 4th of July weekend, and wouldn't you know it, we got the same furniture but saved an additional 10% off the current sales price at the time we first started browsing. We also bought $4,000 worth of furniture, so 20% off was kind of big to us.
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Apr 7, 2013 22:11
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Our 5.9k below listing on a gorgeous starter home in a great neighbourhood was accepted! I don't think it's hit me yet...I feel stunned. Yay!
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Apr 8, 2013 01:57
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So right now we are currently in attorney review and the seller wanted to move the closing date a month earlier to May 15th, so 37 days away instead of 67 like I anticipated. Doable, so that's fine... But at what point do I start looking into home insurance, and how the hell do I shop around for it? Any tips?
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Apr 8, 2013 07:33
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The earlier the better. Look for insurance brokers. Be prepared to answer a lot of funny questions like how far is your house from a fire hydrant. If you're a member of any professional or alumni organization they often have very good deals for members. Also if you have a car insurance, check if they do house insurance as well, you get a discount for multiple policies.
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Apr 8, 2013 13:17
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Astro7x posted:So right now we are currently in attorney review and the seller wanted to move the closing date a month earlier to May 15th, so 37 days away instead of 67 like I anticipated. Doable, so that's fine...
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Apr 8, 2013 14:53
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10-8 posted:Check with your lender to make sure it's doable for them, too. If you are not already clear to close with funding just waiting for a date 37 days is a miracle short time to get a loan funded. These underwriters are backlogged to the moon. Something always comes up.
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Apr 8, 2013 15:37
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Funny, my lender just claimed he could get my loan done by closing (Apr. 29) and we just started.
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Apr 8, 2013 15:42
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10-8 posted:Check with your lender to make sure it's doable for them, too. My loan had actually already been approved through underwriting, took about 2 weeks.
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Apr 8, 2013 17:02
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I imagine it depends a lot on the person and their credit history, loan amount, etc.
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Apr 8, 2013 17:06
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Alright, my turn in the barrel. Newbie homebuyer here with some questions... Income: wife and I combined make around 98k salary (so around 8k gross monthly). We also each have a bonus structure written into our contracts which historically amounts to a 3-5% bump year to year. Debt: 6.5k left on my car, that's it. Her car is paid off, both our student loans are paid off. We have cards for emergencies and each month I'll put about 1200 of everyday expenses through one of them (MC) and pay it off at the end of the month (not sure if this is a good practice or not, the card does give a small % kickback) Savings: Ignoring retirement savings we have a nest egg of around 30k. A good chunk of that was a gift from our parents. However, for legal purposes we got married early and are having a wedding ceremony planned late this year which might eat into that fund, and we've yet to honeymoon so we are a little gunshy about blowing the whole fund on a down payment (definitely a tough one to decide on how to spend it). We have one pre-qual letter from the credit union we use (and love). Now that i've been digging into researching all of this I mean to get more pre-quals, but was an idiot newbie at the start and sort of focused in with our CU once that process got started. Now that we have all our legal & financial paperwork scanned, organized and so on, I see now how easy it would be to reach out to other lenders and be able to get them everything they need in a fraction of the time. I'm more than happy to work with my CU but am having trouble navigating their terms. So, step one was their GFE. At the time we decided to go for a 240k with down payment of (I thought) 15k. I don't think those numbers translated or perhaps there was a miscommunication as we bandied about several options just over the phone. Here's some screencaps of the meat of the GFE:  And the summary section:  After handing over all the paperwork they requested and so on, we received a pre qualification letter with the following snippet:  So what we end up with is a line of up to 230k for 3.375% as a 30 year FHA. The biggest thing that hit me was that PMI rate. $260/month?! Not what I was anticipating after my highly scientific google researching! I've got several questions from this so here we go: 1) How is PMI calculated and how can I as a borrower influence it? 1a) Is it influenced by credit? Now, a little backstory, my credit history is not ideal. I'm in the 650s (and climbing steadily) but had some incredibly damaging poo poo I had to sort out last year, I believe I posted about it in here. That halted our homebuying plans back then but after working with Direct Loans and letting some time go by we are out of those woods, at least enough to qualify for an FHA. My wife's credit is in the 700s and basically has nothing wrong with it, but our loan officer wasn't confident about getting a conventional loan with my credit rating. My question is does that affect the PMI because at 260/month it seems insane. Is that insane, or am I just getting sticker shock? Is it influenced by credit, eg. if wife & I had a 780 rating each with all the other loan #s being the same would the PMI be reduced? 1b) Is it influenced by downpayment? I know 20% down is the magical threshold. But I don't think we can reach 20%, maybe for a 150k house but we'd be close to tapping out to reach that and even then closing costs might kill it. So if we accept that we can't reach that mark is there any point (from the perspective of PMI costs) to not just do a minimum amount down, keep a bundle for closing & moving expenses, and once the dust settles we can just throw whatever remains towards the principle before the end of the year. That would feel like a safe way of going about this but if we put more into the down payment (say, from 5% up to 10%) and that will reduce the PMI then perhaps that would be the smarter move. Also, is PMI brought in when you're < 20% down on the price of the home, or when you're > 80% LTV? They can both be the same numbers but right now we're getting serious about making an offer on a home (more on that later) where we think we can negotiate around 5k off the price which is probably close to the value. In the former case it won't matter because the reduced price still doesn't get our funds within 20%, but that plus the deflated price to appraisal value ratio might get the LTV within striking distance of 80%. I hope that question made sense. 2) How does one get a clear cut picture of the PMI terms? I cannot for for the life of me figure out how long I'll be paying PMI. If it's 260/mo for the full 30 years I've got half a mind to call this off for half a year or however long it needs while we do what we can to get a downpayment big enough to eliminate it. Our officer said april 1st was an important deadline which we were unfortunately too late for. My understanding is previously your PMI could be removed after 5 years AND getting above 20% equity (or is it below 80% LTV?). He said post april 1 it will stay on for the life of the loan. However on hud.gov it says 11 years (which sucks but is at least better than 30). My real estate agent said the 5 year thing still applied or could if you go with a lender who will do that. I get that there are probably several options but cannot find anything in writing between all the paperwork between me and the credit union. I will write the loan officer an email asking but am trying to rely on my own due diligence on this but feel like I've failed on this one. 2a) Does the PMI amount change over time (yearly)? If it's 260 for the first year and then drops and drops successively each year that may be one thing, but I've got no indication of that. 3) Is the answer to PMI to just refinance once I'm over 20% equity? My realtor suggested to just refi into better terms, which effectively closes the PMI early on. The only downside I can see is facing a higher rate when the time comes that will negate any gains from losing PMI. No idea if there's more intricacies or tradeoffs to this to consider. So, all that being said, in the mean time we've found a house early on in our search that we are feeling really good about. Its size, layout, location, condition, and so on are perfect. Definitely the only home we walked through and still went away with that "I love it, it's perfect" feeling. Condition wise it's got nothing obvious, so barring an inspector finding rot or something like that I imagine there will be little in terms of repairs, really well-kept carpet too. Its price is listed at 175k so that will certainly help with the larger numbers facing us in the GFE. Still too rich to get 20% down right now but my realtor looked into comps, the history of the listing, and decided that this would be a good one to negotiate on and that an offer at 170k would stand a good chance at getting accepted or a minor counter. It's been listed for over a month which is out of character for our market (phoenix), and nobody lives there so the owner is paying for an empty home and is probably itching to get rid of it. It's tough to decide what to do because I feel like I'd want more clarity and possibly better options for the financing side of all this, but I imagine this one might disappear if we try to get all that sorted out before making an offer. Tough decisions, and maybe my mortgage conditions are in line with what's available and i just need to be reassured of that and go ahead with a good offer before it's too late. This poo poo is stressful. Bhaal fucked around with this message at 21:20 on Apr 8, 2013 |
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Apr 8, 2013 21:15
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It looks like they assumed your $15,000 downpayment was all the money you have, in which case the vast majority is going towards closing costs and a minimal downpayment. For FHA PMI the calculation is (original loan amount * 1.25%)/12 for a downpayment < 5% so yeah, $260 sounds about right given the numbers they gave you there. It does decrease with a higher down payment, but it's still pretty high. Your mortgage lender might be able to give you a non-FHA loan if your credit is good enough and your down payment is high enough (mine had to be 10%), in which case the PMI will probably be a lot lower. There may be options for paying a single upfront MI premium as well which gets rid of the monthly payment, but that's generally for people with excellent credit I believe.
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Apr 8, 2013 21:41
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That particular loan appears to have an up front insurance cost of $4k in addition to the $260/mo. That is indeed quite expensive relative to the purchase price and I suggest you take a deep breath and get yourself in a better position even if it means waiting a year. Anyway, I don't think you can buy a $240k house, have a wedding, and go on a honeymoon with only $30000 cash. Don't forget you will need to budget for house-related expenses and keep an emergency fund as well. How much are you saving every month? To answer one of your other questions, the lender will take the lower of the appraisal or the purchase price as the value of the house when calculating LTV.
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Apr 8, 2013 22:26
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So I've used a few of those rent/vs buy calculators but they always seem to overwhelmingly tell me buying is the best option. Am I doing something wrong? I'm not always 100% sure the answers to all the fields so I estimate, but I think I'm pretty close.
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Apr 8, 2013 22:39
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What other people have said pretty much, but especially keep in mind what your goals are. You seem focused on keeping your PMI down, but it's important to also consider the long-term effects of having a very small down payment and long-term debt in addition to that PMI eating into what you can contribute monthly. 30k is a pretty solid nest egg, but you really NEED to decide where it's going to go - how much will the wedding cost? The honeymoon? Are you willing to take a hit on those two things to get the house you want? And is getting the house you want practical considering your upcoming expenses, or should you wait first? While your credit union is a great place to start, your breadth of questions concerning payments and options really speak of needing to sit down with a lender who really specializes in first-time homebuyers so they can go through absolutely everything step-by-step, not just the PMI, because it seems like you need to be a bit more aware of the actual monthly costs of homeownership and how your downpayment/monthly contribution can drastically impact the overall price of the home. I mention this pretty often, but do you have a Realtor who does a good amount of work with first-time buyers? Because if so, I would highly recommend you ask them if they have a lender with good first-time buyer programs/options available, since that really helps arm you with a lot more information for each subsequent lender meeting. Baronjutter posted:So I've used a few of those rent/vs buy calculators but they always seem to overwhelmingly tell me buying is the best option. Am I doing something wrong? I'm not always 100% sure the answers to all the fields so I estimate, but I think I'm pretty close. that super-duper depends on the current housing market where you live, where it will go in a few years, how much of a downpayment you can make, HOA/PMI/Insurance/Upkeep fees, if your house needs any repairs, if you're going to be renting out part of the house, etc. etc. etc. Can you give a bit more information on your situation? Because those calculators alone aren't going to see the whole story. Can at least give you an idea of what to watch out for. I Love You! fucked around with this message at 22:50 on Apr 8, 2013 |
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Apr 8, 2013 22:47
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Do Never Buy! (Another tale of caution from a home owner) We bought our house last year as a foreclosure, so we knew there would be problems. It had already been broken into while under the bank's control and a whole heap of stuff was stolen (Light fixtures, faucets, A/C condensers, garage doors, door hardware. Oddly enough they left all the copper.) The house is 3200 sq. ft. and we bought it for $110,000 and paid $35,000 for renovations. After all the work was done, we were really happy with the place, but we always knew something could pop up and bite us. Three months ago we noticed a gurgling coming from the kitchen sink. I knew that wasn't a good sign. I planned on calling a plumber to come check it out, but got distracted and never made the call. We only heard the gurgling once anyway, so we weren't too concerned. A month later we opened up our master bath and were hit with a horrendous stench. The sewer had backed up into our tub and shower. I called a plumber and they showed up within the hour to check it out. Now all throughout the process of buying the house I had information that said the house was connected to city sewer. When the plumber arrived he asked if we had a septic tank. I of course said we did not, and he went to work. A few hours later he came to the door and said we DID have a septic tank, and it was filled to the brim and probably hadn't been pumped out in quite some time. I was floored, since I had been told we were connected to city sewer. I was upset, but at least now I knew I had a septic tank. We had it pumped out and inspected and everything looked good. The whole thing set us back $600, but hopefully our sewer problems were behind us. We weren't so lucky. Yesterday the septic system backed up into the tub again. Another call to the plumber, the septic tank was full again. Ordinarily you should only have to pump out a septic tank every 3-5 years. Obviously the waste water from the septic tank wasn't draining into the soil properly. While the plumber was there, my neighbor came over to ask about it. Turns out his son built the house and had installed the septic tank. From what he told me, the system originally had a pump that pumped from the tank down the street into the city sewer system (This is probably where the information came from that the property was connected to the sewer). The home owner after our neighbor's son took out the pump and put in a traditional leeching field. Unfortunately for us, the soil in our area isn't great for leeching, so the leeching field isn't working properly. Thus, we have poo poo in our bathtub. I've been discussing our options with the plumber and it looks like we'll be spending $6,000 - $10,000+ for a proper septic system. gently caress home ownership.
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Apr 8, 2013 22:56
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Baronjutter posted:So I've used a few of those rent/vs buy calculators but they always seem to overwhelmingly tell me buying is the best option. Am I doing something wrong? I'm not always 100% sure the answers to all the fields so I estimate, but I think I'm pretty close. Assuming you are financially able to do it - none of the calculators capture the intangibles: how do you feel about owning a house? Being responsible for the maintenance and repairs? Being able to modify the furnishings and choose the paint color? Being far more tied to the specific location? Deal with the HOA and such? Actually I bet most of the calculators gloss over some of the costs, too. Which ones are you using?
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Apr 8, 2013 23:00
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Baronjutter posted:So I've used a few of those rent/vs buy calculators but they always seem to overwhelmingly tell me buying is the best option. Am I doing something wrong? I'm not always 100% sure the answers to all the fields so I estimate, but I think I'm pretty close. Lot of those are ran by people who are selling homes. But what I've found is that yes, I *could* save money monthly by buying a house, I'd still be out thousands upon thousands of dollars getting into the house, nevermind the extras. Also, at least where I live, what I can afford doesn't really line up with desirable homes in the area.
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Apr 8, 2013 23:01
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Okay, have a few questions since I'm nearing the point where I want to get pre-approved and make an offer. - Sitting on 30K saved and should have another 15K by July 1, which is when I want to make an offer. - Grand total of 45K for a downpayment, which should be around 10%. (As well as all of my savings, although I can build that back up quickly at a rate of ~5K a month). - Credit score is around 760 according to Transunion. - 17K in a new 401K which I won't be touching. - Zero debt. Would be looking for a home in the 350-450 range, which is quite a huge range admittedly, but Chicago's market is really weird right now. DO NEVER BUY now considering my downpayment will be small relative to the size of the place, or am I in okay shape to buy?
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Apr 8, 2013 23:25
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slap me silly posted:Assuming you are financially able to do it - none of the calculators capture the intangibles: how do you feel about owning a house? Being responsible for the maintenance and repairs? Being able to modify the furnishings and choose the paint color? Being far more tied to the specific location? Deal with the HOA and such? I can't remember which ones. I think my credit union had one, and just a few others that showed up on google when I searched for them. I thought I'd try a few suspecting some of them being shills for home-buying and mortgage industry. We don't have HOA's where I live and the ability to repair and modify things my self and putting down roots in my city is one of the biggest selling points for me to get a condo. A house is right out of the question though, we'd both need to be making 3-4x as much as we do now to even THINK about affording one. Where I live houses are only for the rich. Our absolute "oh god what are you doing this is a bad idea" mortgage we could get is about 310k but our credit union mortgage guy told us not to go over 250k, and then said their rates are the best in the region but feel free to get a broker if we want. It's a good credit union! We both have no debt, both make about 28-34k a year. We've got 60k saved up so far from being little squirrels for the last 3 years for a downpayment so far but I keep feeling like we need MORE for incidentals. I'd like to have 10k cash for after we buy just to deal with what ever and fix the place up a bit. Baronjutter fucked around with this message at 23:42 on Apr 8, 2013 |
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Apr 8, 2013 23:36
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What is your income? If you're able to save $5k a month, that means you've only been at this income level for 6 months? How long have you had your job? It seems like you have a high income to savings, so unless there's a burning need to buy now (there really isn't), you should sit tight for another half year until you have 20% and don't have to pay PMI.
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Apr 8, 2013 23:36
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Baronjutter posted:We don't have HOA's where I live and the ability to repair and modify things my self and putting down roots in my city is one of the biggest selling points for me to get a condo. Are you sure? I've never heard of a condo without an HOA. You need one in a condo for the common areas.
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Apr 9, 2013 00:28
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Oh condo's absolutely have strata councils, which I guess are like vertical HOA's. Most of them are fine and the bad ones are easy to spot and are almost entirely in 55+ buildings. I mean we don't have the classic American style HOME owners associations that enforce rules on houses/neighbourhoods. There's just city bylaws and that's that. A lot of newer condos have much stricter rules regarding what rules can be implemented without a building-wide vote. So there's not so much that risk that you buy into a building with low fees and a good contingency fund and a couple years later suddenly a clique has taken over the building and the contingency fund has been spent on a native plant garden and the dues are up 200% to buy old-lady style furniture for the lobby. Most of them have a very basic standard set of bylaws and big changes have to be owner-wide rather than just strata council votes. I'm not really looking forward to that. I wish we would just go back to building row-houses. All the density of multi-family but without a strata or common property. Cities are idiots.
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Apr 9, 2013 00:33
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I Love You! posted:What other people have said pretty much, but especially keep in mind what your goals are. You seem focused on keeping your PMI down, but it's important to also consider the long-term effects of having a very small down payment and long-term debt in addition to that PMI eating into what you can contribute monthly. I Love You! posted:how much will the wedding cost? The honeymoon? Are you willing to take a hit on those two things to get the house you want? And is getting the house you want practical considering your upcoming expenses, or should you wait first? I Love You! posted:While your credit union is a great place to start, your breadth of questions concerning payments and options really speak of needing to sit down with a lender who really specializes in first-time homebuyers so they can go through absolutely everything step-by-step, not just the PMI, because it seems like you need to be a bit more aware of the actual monthly costs of homeownership and how your downpayment/monthly contribution can drastically impact the overall price of the home. In terms of finances we have 1500-2k left over each month that sometimes goes to savings, sometimes goes to paying down debt, sometimes we splurge at least until recently once we started to get serious about home buying. As it is we are renting a house at 1300 / month which is higher than normal due to the area it's in but not by a lot. On top of that it's clear across town from where my office is and due to that I consume about 13 gallons of gas every week with works out to 200/month roughly. My wife's commute is about a quarter of that and using the house we're considering as an example, will keep her at roughly the same distance from work but will take my commute from 25 miles each way down to 6. Adding that up we'd need a place whose monthly cost (PITI, HOA, everything regular) adds up to around 1300-1400 / mo to be around the break even point (depending on what you attribute to savings in gas) with sudden repairs and so on being covered by the regular 1500-2k we're able to tuck away each month. It's not at all uncommon in my area right now for someone to go from renting to buying and wind up spending less overall for as good or better a place than they were in, and that's completely disregarding equity/resell considerations, just cost of living goes down. We could find a place to rent that's closer to work but the options aren't as attractive and we really wouldn't be saving a whole lot more compared to where we are. The rent is too drat high. The lender's GFE puts us at 1533/month, but that's assumed for an amount that is 20%+ more that I think we're realistically looking at--35% more than the one at 170k in particular. That home also has an HOA of 37/mo and tax history shows it to stay around 100/mo. Given the 60k drop in price from what's quoted on the GFE, and using more than the tiny down payment he used in the estimate, I can't see how it would ever add up to be near that 1533/month estimate. I Love You! posted:I mention this pretty often, but do you have a Realtor who does a good amount of work with first-time buyers? Because if so, I would highly recommend you ask them if they have a lender with good first-time buyer programs/options available, since that really helps arm you with a lot more information for each subsequent lender meeting. Thank you all for the info. I think I see how PMI is calculated quite a bit better and didn't realize that the banks use the lesser of purchase price or assessment value. I'll be having a conversation with my credit union, possibly to see if I can get a GFE that's closer to reality of a purchase/downpayment I'm going to make. And I'll be seeing how quickly I can a few more pre-quals sorted out. Bhaal fucked around with this message at 02:19 on Apr 9, 2013 |
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Apr 9, 2013 02:11
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Feeling good right now... Just locked in a rate of 3.375% on a 30 year fixed with no costs. Especially considering that people have been telling us to lock in a rate since last week when rates were at 3.75, then 3.625 on Friday, 3.5 yesterday, and finally today down to 3.375.
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Apr 9, 2013 22:00
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Bhaal posted:Thank you all for the info. I think I see how PMI is calculated quite a bit better and didn't realize that the banks use the lesser of purchase price or assessment value. I'll be having a conversation with my credit union, possibly to see if I can get a GFE that's closer to reality of a purchase/downpayment I'm going to make. And I'll be seeing how quickly I can a few more pre-quals sorted out. Here's a little more information. An FHA loan is a special kind of loan, backed by a government program offered by the Federal Housing Authority. It is special in that it allows very low down payments - as low as 3.5% of the purchase price. FHA loans come with a calculated insurance cost, which they call MIP (Mortgage Insurance Premium) but which is functionally the same as PMI. Under FHA rules, you must pay the MIP for the lesser of: 5 years, or until your LTV (Loan-to-Value) reaches 22%. In addition to the monthly MIP, there is an up-front premium. You have the option of paying for the up-front in cash, or rolling it into the mortgage. PMI is insurance charged by regular lenders for non-FHA mortgages. These mortgages typically require higher down payments. There is a crossover point where PMI becomes cheaper than MIP, and given MIP calculations have changed at least twice since I bought a little over three years ago, I don't know exactly where it is. But you can definitely lower your insurance cost by going with a higher down payment. If you can make a 20% down payment, you can avoid PMI/MIP entirely. You can also cancel PMI payments typically when you hit 20% LTV, and I don't know if there is an up-front premium or not. So basically, it is a good idea to minimize this cost (since the insurance is for the lender's risk, not yours, so it does not directly benefit you) but at the same time, it can make sense to buy with less than 20% down if saving up 20% pushes out your ability to buy indefinitely. One such circumstance would be if your total monthly housing cost, after purchasing a house, would be lower than your current/future rental costs, for example. There might also be personal reasons to go ahead with a purchase now rather than later. As an anecdote: my wife an I bought a $240k house in December '09. We put down 3.5%, paid for the up-front premium in cash, and got a decent rate for the time. We re-financed using a special FHA Streamline refi program in November '11, and because this type of refi does not require a re-appraisal, we didn't have to worry about the fact that our house would likely have appraised for less than our outstanding loan amount on that date. The re-fi was so cheap that, after cash incentives, it cost us essentially nothing... but, while we got a much lower interest rate, FHA MIP calculations had changed (lower up-front premium, but higher monthly MIP). And of course the re-fi reset the clock, so we'll be paying that MIP until at least November 2016. Our numbers match up pretty well to yours. We pay about $1500 a month, inclusive of principal, interest, MIP, and escrow (which we use to pay hazard insurance and property tax). As for advice: I suggest you pay more down. I disagree with an earlier poster that $30k isn't enough for both a wedding and a down payment... my wife and I had our wedding for less than $2k (the catering was by far the largest cost), and for our honeymoon we took a drive up to Mendocino for a nice 4-day weekend and spent maybe $1500 on that. If you are frugal with your wedding plans you can do it for hardly any money at all. Of course some people spend tens of thousands of dollars on weddings, but those people are not being frugal, and frankly I find blowing that kind of cash on a single party (an important one, sure, but basically just a party) to be mind-boggling. On the other hand: weddings can be really stressful, man! It's a good idea to not be house-hunting, negotiating, inspecting, etc. at the same time you're trying to plan and hold a wedding ceremony. Because house-buying is also super-mega-stressful! So on that basis I encourage you to try to do these two things one at a time. I also encourage you to get quotes from additional lenders. And of course, get a quote with a much higher down payment... a conventional loan with PMI may work out cheaper, and if you decide to, you can accelerate your payments (make additional or larger house payments for the first few years) so you can get past that 20% hump faster and then stop paying PMI. You can do this with an FHA loan, too, but you still have to pay the MIP for 5 years regardless. Also, make sure you keep a good chunk of cash as an emergency house fund. Especially for just after you buy. There are often major unforeseen expenses... and many of them just aren't likely to be detected by your pre-purchase inspections. It's best to reserve at least $5k or $10k in cash for furniture, immediate repairs, moving costs, etc., on top of your down payment and estimated closing costs.
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Apr 9, 2013 22:38
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I think my buyer is going to back out because of foundation questions raised during inspection. They brought out a repair company to make an estimate so I offered that (+ $500 for various other repairs) to their closing costs, but they declined. They want me to hire a structural engineer myself, repair the foundation myself, repair some drainage issues myself, and do plumbing tests or something, and then provide them with all those reports and warranties. Throwing money at them in the form of closing costs and price cuts doesn't appear to matter to them. Do never sell  Good thing we had multiple offers, hopefully this won't be too painful of a process.
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Apr 9, 2013 23:35
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This is aimed at Bhaal and his FHA/PMI questions and concerns: Bad news. You need to suck it up because thats the best you are going to get unless you stop and regroup. You are stuck going FHA because of your credit score and your inability to put down 20% today. Why? Unless you can put down a full 20% of either your money or gifted money from a family member, you will need mortgage insurance. With a credit score less than 680, no mortgage insurance company will sign off on you. That leaves FHA as the only option... unless you are a military vet. You aren't though. FHA mortgage insurance is the same no matter where you go. Its set by the government and every lender has to operate by the same rules. It's so expensive too. It requires an upfront amount and a monthly amount so it adds up quickly, as you have noticed. Now the really bad news! If you didn't get your FHA case number pulled by April 1st of this year, that monthly mortgage insurance is for the life of the loan and the only way out is to refi. It gets worse. Your rate is likely the best rate you will ever have so if you plan on refinancing your loan in 10 years, it will be into a higher rate. Sucks, right? You have options though! If you can stomach it, you can yank your deal and not buy a home today. You can spend a few weeks getting your credit score up to 680 and look at a home that you can afford to put 5% down on. If you do that, you'll avoid that FHA upfront mortgage insurance and tens of thousands of dollars in monthly mortgage insurance. If it was me, I'd do that.
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Apr 10, 2013 04:38
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Leperflesh posted:You can do this with an FHA loan, too, but you still have to pay the MIP for 5 years regardless. No offense to Leperflesh here, but he's wrong. It's a complicated formula that changes constantly so its not his fault. It used to be a minimum of 5 years so it was easy to say it would go away then. You're FHA 92900 form tells you the true length of the MIP. FHA mortgage insurances for all FHA Case numbers pulled after March 31st will have mortgage insurance for a very long time ranging from 11 years to life of loan. If you put down less than 10% on an FHA purchase, that mortgage insurance is on the loan until the last payment is made. Most mortgage brokers and many bankers don't follow the FHA changes as closely as they should but this is a major one.
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Apr 10, 2013 04:43
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Ah, I didn't realize they'd changed the rules again. Oh my god am I glad I refinanced when I did, instead of waiting longer. Paying MIP for the life of the loan sounds like basically a dealbreaker to me. I suspect it's going to massively reduce the number of FHA loans from now on. Thanks for the corrections Randomly, obviously my info was out of date.
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Apr 10, 2013 04:53
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Leperflesh posted:Ah, I didn't realize they'd changed the rules again. Oh my god am I glad I refinanced when I did, instead of waiting longer. If you streamline refinance an FHA loan, there is a way to avoid the change. If you purchase, you are stuck with the new rules. And yes, this is designed to reduce the number of loans done through FHA. It was never supposed to be such a big piece of the market and they are trying to shrink it back down.
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Apr 10, 2013 05:06
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Thanks Randomly and Leperflesh, Randomly you basically summed up the conversation I had today with the lender. As it is we can make 10% down for the house we're looking at, and that's going over the closing costs with the lender. The up front MIP, all estimated closing costs, etc, and still be comfortable with what's left over for move in expenses and the wedding in october. Month-to-month our total mortgage (PITI) works out to 1150 + 37 for HOA, and we're paying 1300 in rent and taking on full house utilities as it is right now. That will give us the 11 year term for MIP which blows considering what we could've had just a little while ago, and at this point we won't consider FHA for a price that we CAN'T put 10% down on. But right now we're looking at making an offer on this awesome house. To make sure we weren't being starry eyed newbs, we walked through again today with my mom and my wife's parents who've bought/sold many times over their lives and each have bought recently post-bubble. Their assessment as well is the house is a great catch, will more than likely appreciate over the years if we don't trash it, is in great shape from all indications and has a couple wow factors that will help with resell not to mention enjoying living in it (slate tile ground floor, gorgeous back yard). On top of that, that 3.375% fixed is hard to roll the dice on and my father in law can't stop telling us how good it is to buy right now (low prices + low rates). In regards to MIP now vs. waiting to go conventional, here is my math on it (PLEASE let me know if I'm missing or misconstruing any important factors to this): 1) If we do it now, w/ example $170k price with 10% down via FHA at 3.375% fixed, the total cost of insurance is $24,556 (monthly 165.75 * 12 mo * 11 year) + 2677 up front, and about $90,000 paid in interest. 2) If we do it later (est. at least 6 months), w/ same example price but under a conventional loan and an unknown interest rate, we will save on insurance because private will be much cheaper, but what about the interest rate? If we pretend it goes up to 4.2%, just for grins, that yields $116,000 paid in interest which is an extra $26,000. So, around 4.2% would be the inflection point, and it's quite a rate hike to presume for 6-12 months out from now, but just for the sake of throwing out numbers it gives me a point of reference. But I still have to factor in the private insurance costs (which I honestly do not have any solid numbers to work with), which makes me think we'd likely will have to stay at or under 4% for that to remain the better deal. #2 is also ignoring the housing market, which in my area the consensus is it bottomed out around 2011 and is slowly growing back (obviously a million caveats but for the type and location of where I'm looking it is definitely the dominant pattern). Maybe that's not worth counting on, but #2 is also contingent on my credit rating getting above 680 which I'm confident it will one day--the causes for it getting wrecked weren't reflective of my normal financial behavior--but like "a watched pot" it's hard to predict exactly when that will happen. Maybe I'll be eating my words but I don't feel like interest rates have much lower to go right now. Certainly there will always be good opportunities, but for right now I'm feeling good about the deal that is in front of me. If we do put in an offer it will probably have to be like tomorrow. But honestly it's not stressing me out anymore and we'll sleep on it one more night and decide in the morning (I think we'll probably go for it). We put three experienced home buyers/sellers through that house who definitely have our interests in mind, and they came away giving it their blessing. And after talking at length with our lender I'm a lot happier about the financing. One because the numbers look a lot better than that worksheet I posted now that it's not calculating for the max amount we're approved for and assuming a minimum downpayment. And Two because I understand how the insurance costs are figured out in a lot more detail now. Nothing more annoying than being confused about something you're paying for. Though if this house doesn't pan out I'm not sure if we'll continue looking or take the risk of waiting for qualifying for a conventional and/or saving up for 20% down. That would likely mean 2014 so we'd just have to hope the prices and rates don't get too far away from us by then. God every post winds up a wall of text, sorry and thanks again for the advice 
Bhaal fucked around with this message at 07:30 on Apr 10, 2013 |
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Apr 10, 2013 07:16
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Your math is wrong in that you are conflating present and future costs. The total amount of insurance and interest paid over the whole term is kind of useless to look at, because dollars later are worth less than dollars now and anyway you almost certainly won't have the loan that long. Unfortunately the only calculator I know of on the internet that makes this comparison easier doesn't know about the new FHA PMI rules, so it underestimates the cost of the FHA loan (http://www.mtgprofessor.com/calculators/Calculator9ci.html). I've refinanced recently and thanks to the vagaries of the housing market I can give you one estimate of PMI cost for a conventional loan at 90% LTV and stellar credit: 0.3% of the loan balance per year. slap me silly fucked around with this message at 14:26 on Apr 10, 2013 |
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Apr 10, 2013 14:21
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Any advice for a guy that's interested in building/buying a small efficient house? My parents have a piece of land they offered me that I could build a house or something on (I could probably fit a few) and I I've realized from living in my own home (1600 sqaure feet) that I really wasn't making use of even half the space. The other benefit I see to living in less space (besides the cheaper utility bills) would be that a smaller home would probably be easier to rent if we decided to move or build something bigger in the future. That said, I'm really not sure where to start. I get the impression building a home from scratch would be expensive even if the home is small but I've heard good things about prefabricated homes. Any thoughts?
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Apr 10, 2013 17:23
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As a funny coincidence I ran into a guy I used to chat with all the time at my old job running poker tournaments about life, philosophy, etc. He had always done really well for himself and came off as a very genuine guy but I never really asked what he did. I ran into him three years after I last saw him today and when we were catching up I mentioned I was home shopping. It turns out that he's one of those folks who buy homes with cash and then sells them to you with whatever renovations you specify (that's the short version anyway, I guess). I sent him an email and we set up a time next week to go over things and talk. Anyone have any experience buying a home like this? He also does "normal" real estate but he has access to many properties not on the MLS down here. What should I be looking out for? It seems like there are some real potential savings in working this way. vv Hah, victim of a quick edit. Originally I just had it as "my old job" but then it seemed odd I wouldn't know what someone did if I knew them at my job ; ) Incredulous Dylan fucked around with this message at 18:51 on Apr 10, 2013 |
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Apr 10, 2013 18:29
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Incredulous Dylan posted:As a funny coincidence I ran into a guy I used to chat with all the time at my old job running poker tournaments about life, philosophy, etc. That sentence made my brain hurt. It took me several minutes to figure out that you weren't running poker tournaments about life, philosophy, etc.
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Apr 10, 2013 18:49
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