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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. 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. Get an actual agent to represent you in cases where you are working with a builder or renovator. Even if you guys are buddies it's important to have some help if you aren't experienced in these matters, because of course he's going to champion his own cause. You need to actually understand what these "potential savings" are and how much of the costs actually fall on your shoulders. Orange_Lazarus posted: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. Were you planning on getting a manufactured/mobile home, or did you want to build an actual house on-site? These are pretty different beasts but it wasn't entirely clear from your post since you mention buying a house on a plot you already will own? Similar to buying on the open market, I'd recommend working with a Realtor who has building experience since it's a good idea to have a knowledgeable buffer between you and a builder, in addition to having someone that can guide you through the process and the costs. What area are you looking to do this in? And what type of house were you looking to build/buy? I Love You! fucked around with this message at 18:57 on Apr 10, 2013 |
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Apr 10, 2013 18:52
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I Love You! posted:Get an actual agent to represent you in cases where you are working with a builder or renovator. Even if you guys are buddies it's important to have some help if you aren't experienced in these matters, because of course he's going to champion his own cause. You need to actually understand what these "potential savings" are and how much of the costs actually fall on your shoulders. Yep, I had spoken with my agent and she was pleasantly surprised. We are looking forward to going over what he has to offer but I'm trying to mentally be ready for any common stumbling blocks. I expect that my agent will be able to protect me against weird shady voodoo. vv Excellent advice, thanks! Incredulous Dylan fucked around with this message at 19:37 on Apr 10, 2013 |
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Apr 10, 2013 19:11
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Incredulous Dylan posted: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). Just be very cautious and understand exactly how this guy makes his money. He creates a margin by buying in cash, and then presumably can expand that margin by increasing the value of the property... but only if his renovations cost him less than the amount by which they improve the value. This means he has a strong financial motive to do renovations as cheaply as possible. This is why you have to be careful buying "flipped" homes. A lot of times the upgrades/repairs seem cosmetically OK from the outside, but have been done cheaply and/or poorly. And if it's painted over/hidden behind drywall or whatever, your inspector may not be able to tell. Now, if this guy is doing upgrades "to spec" I imagine he's actually charging clients the actual cost of those upgrades, and showing paperwork to prove that cost. In that case, you can (and should) insist on high-quality work. Which you will have to pay for. But that'd still be a safer situation. If I were considering this kind of deal, I'd want to see the numbers for everything. The amount he pays for the house is a matter of public record, so you can get that, understand how much profit he's getting, and decide if the final price is worthwhile. Get an independent appraisal to confirm the value. The other worrying thing is that if the house never "sees" the market, it's harder to know whether you're paying too much or not. Appraisals are only somewhat useful... the true test of a property's worth is "what will people pay for it, today" and if you're the only bidder, you can't judge that very well. All that said, I guess it's got the potential to save you some money, and if he's an expert on getting good upgrades/repairs done for a good price, that might be worth paying for (which you will, via his profit margin).
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Apr 10, 2013 19:25
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Dear Thread, Can someone help me read this? My wife has been doing the loan shopping, and I don't have a ton of details just yet. This is the sort-of-GFE letter on a hypothetical $180k-ish house that we'd buy in the near future. We came in with the idea of getting an FHA loan at 3% down. We both have fantastic credit, and qualified for some stupidly high loan amount like $280k. The guy told her something about doing a conventional loan with 3% down, and still paying PMI. The thing that concerns me is the 'convertible fixed' part in the description. I know enough to know that convertible mortgages have a possibility of being "totally screw you over adjustable rate" beasts. Also, does $4k in closing costs (excluding down payment) sound about right? Sincerely, Mystified by Mortgages, AZ
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Apr 10, 2013 19:54
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That's probably pretty close. When we bought our $146k house it was roughly proportional to that amount. At first I missed the "pre payables section" The PMI cost seems low to me on a $180k house, but I dunno. Might vary from market to market.
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Apr 10, 2013 20:21
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canyoneer posted:The guy told her something about doing a conventional loan with 3% down, and still paying PMI. The thing that concerns me is the 'convertible fixed' part in the description. I know enough to know that convertible mortgages have a possibility of being "totally screw you over adjustable rate" beasts. You're in AZ like I am and I have to say every interest rate I see is for 3.5% or less. That's the greater phoenix area at least, maybe it's different if you're out in the smaller towns. If you go to the previous page you can see where I posted the worksheet that my lender gave me (AZ central credit union), a lot of the numbers move around but generally end up near the same sum (prepayables + closing costs, that is), except for the insurance because as you can tell from the recent posts about my situation I'm going with an FHA which has way higher insurance rates. Bhaal fucked around with this message at 20:44 on Apr 10, 2013 |
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Apr 10, 2013 20:32
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canyoneer posted:
Where do you see convertible? "131-Conv. Fixed 97%" looks to me like it describes a Conventional Fixed rate loan. I could be wrong though.
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Apr 10, 2013 20:39
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emocrat posted:Where do you see convertible? "131-Conv. Fixed 97%" looks to me like it describes a Conventional Fixed rate loan. I could be wrong though. You're right and I'm a bonehead. How am I getting a conventional mortgage with only 3% down?  I think the rate he quoted was closer to 3.5%, but this is a worst case scenario or something.
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Apr 10, 2013 21:02
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Just some added info: these estimates tend to run high rather than low. For my own loan, about half the "estimates" were exact figures based on known things (like what that bank charges for a specific fee) and the other half were all overestimates of things that could vary a lot (prepaid interest that varies depending on what day of the month you sign, a hazard insurance estimate that was three times what I wound up paying for hazard insurance, a guess at inspection costs that was 50% higher than what I paid, etc.). So it's good to budget what the estimate comes in at, and be happy when it comes in lower, but the important bits on this form are what the bank is nickel-and-diming you for and how that compares to other banks' offers. Leperflesh fucked around with this message at 22:31 on Apr 10, 2013 |
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Apr 10, 2013 22:29
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We put in the offer. The opportunity presented with this house, and the fact that we're certain it's very affordable for us, pushed the decision in spite of the FHA costs. It does have other offers so we went for asking+1k (there's a good chance the other offer(s) went at or below asking) and have our modest ceiling decided on if they come back asking for highest and best. Might be a conservative way to bid but we're really not looking to get into a bidding war and didn't want to over extend an offer right off the bat. gently caress I can't stop checking my phone/inbox   If this house falls through I'm not sure what we'll do. If a universal creator appeared out of thin air today and allowed me to ask just one question and receive the truth, it wouldn't be how to establish world peace or why we're all here or what is the best course for mankind to take or any of that garbage. It would be how long I'd have to wait if I wanted to qualify for a conventional loan. Bhaal fucked around with this message at 00:14 on Apr 11, 2013 |
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Apr 11, 2013 00:08
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canyoneer posted:You're right and I'm a bonehead. Those are super common but require over 680 credit score. Most people going FHA today should have credit below 680. If not, they need to fire their mortgage guy and get a better one. Bhaal, you can get your scores up 15-20 points in 30 days with proper advice. If you decide to wait, message me privately and I'll refer you over to a non-profit group that does it for free. With you putting down 10 percent, if you get a shot at conventional you should go for it.
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Apr 11, 2013 04:42
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Leperflesh posted:Just some added info: these estimates tend to run high rather than low. For my own loan, about half the "estimates" were exact figures based on known things (like what that bank charges for a specific fee) and the other half were all overestimates of things that could vary a lot (prepaid interest that varies depending on what day of the month you sign, a hazard insurance estimate that was three times what I wound up paying for hazard insurance, a guess at inspection costs that was 50% higher than what I paid, etc.). Exactly. The new Mortgage disclosure laws limit what lenders can legally disclose. Fees that are known to the lender and under their control can get worse by 0%. If they go up 1 cent, the lender has to pay that increase entirely. An example would be calculated state taxes or a bank's origination. Other fees are known but vary due to things out of the control of the lender. These can worsen by 10%. These are things like lender selected attorney fees. Regardless, the lender can not profit at all off these so if it on the GFE at 100 and costs 111, then you pay the 110 and the lender pays the dollar. Other fees are unknown or borrower chosen and out of the control of the lender. These would be a borrower selected attorney or maybe an inspection fee. Since you chose it, they can charge whatever and its up to you to negotiate with that provider. All this is based on increases in costs and costs can decrease with no issues. Now not all mortgage brokers are educated or abide by the laws but they are still in place. What this means is that the better banks will actually show higher costs on things like appraisals or title insurance because they are being conservative. The better places are desperate for business so they can risk disclosing a fee at 200 that they know 99.999% of the time is 75 since they will just lower it later and be protected for the one time that it will cost 200. Basically, you should look at the origination, the processing, underwriting and lender doc prep fees. Those are the lender fees. Everything else is estimates and out of the control of the lender and varies on how conservative the lender is.
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Apr 11, 2013 04:56
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canyoneer posted:Dear Thread, Yes, thats a conventional fixed rate. The rate of 4.00% seems high to me but I don't know your credit score or how your mortgage insurance is handled. Most rates are in the 3.375 to 3.625 percent range for purchases.
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Apr 11, 2013 05:00
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Randomly posted: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. Okay I have a question about this. Are these rules on MIP cancellation applicable only to new loans, or also to current ones (for example on a home purchased in January 2009)?
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Apr 11, 2013 06:51
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Leperflesh posted:Just be very cautious and understand exactly how this guy makes his money. He creates a margin by buying in cash, and then presumably can expand that margin by increasing the value of the property... but only if his renovations cost him less than the amount by which they improve the value. This means he has a strong financial motive to do renovations as cheaply as possible. Speaking of which, I just had a home inspection on a flip that we're buying. There's some minor issues, but the installation of everything looks clean. We can see the plumbing from the access panels and it looks good; the ductwork looks fine. There are some minor issues: some older windows need to be replaced as they're insecure, the back doors were installed improperly leaving a gap between them, and one of the shower heads wasn't secured to a stud so it's loose. (also an old furnace and water heater, a middle-aged AC coil, but brand new condenser; at least we know what we're getting into and we can replace them with efficient units in the future)
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Apr 11, 2013 13:22
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sorry, posted in the wrong thread by accident
lord1234 fucked around with this message at 02:20 on Apr 12, 2013 |
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Apr 12, 2013 02:10
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flowinprose posted:Okay I have a question about this. Are these rules on MIP cancellation applicable only to new loans, or also to current ones (for example on a home purchased in January 2009)? The new rules on MIP cancellation take effect on mortgages originated after June 3rd of this year. They can't retroactively go back and change any existing contract. IANAL
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Apr 12, 2013 02:30
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flowinprose posted:Okay I have a question about this. Are these rules on MIP cancellation applicable only to new loans, or also to current ones (for example on a home purchased in January 2009)? Only new ones started after April 1st see the higher premiums unless they are 'Streamlined FHA refinances of FHA mortgages closed before June of 2009'. June starts the new rules requiring MIP for life of loan. http://portal.hud.gov/hudportal/documents/huddoc?id=13-04ml.pdf Yeah, mortgage rules are crazy complicated and constantly changing. Remember that the next time you try to argue 100 dollars in origination. Randomly fucked around with this message at 04:27 on Apr 12, 2013 |
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Apr 12, 2013 04:22
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Thanks for the info, folks. I read that HUD Letter before posting here and couldn't tell from the language therein whether or not it was going to be retroactive. I got caught right on the front end of the last time this kind of stuff hit, and ended up not being able to cancel the MIP before paying at least 5 years of it regardless of LTV percent. That five years is almost up, and I was afraid this meant it was going to get changed again to 11 years or lifetime, either of which would've been a real pain in the rear end. Thankfully that does not appear to be the case which is a relief.
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Apr 12, 2013 07:41
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I have a housing / estate / tax crossover question. My wife's stepmother's brother just died and it has my in-laws thinking about estate stuff. They're claiming that they would like the put their house (when it's paid for) in someone's name so we "avoid tax" when they die. They're not the smartest financial people, but my wife's aunt and uncle are pretty savvy and they're planning to do the same thing. I would assume you could just sell the house on behalf of their estate, and then that money would not be taxed federally (since it's no where near the $3M cap). Maybe there is a state estate tax (PA)? Does anyone have any ideas about this?
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Apr 12, 2013 14:25
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dreesemonkey posted:I have a housing / estate / tax crossover question. My wife's stepmother's brother just died and it has my in-laws thinking about estate stuff. They're claiming that they would like the put their house (when it's paid for) in someone's name so we "avoid tax" when they die. They're not the smartest financial people, but my wife's aunt and uncle are pretty savvy and they're planning to do the same thing.
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Apr 12, 2013 15:43
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I want to buy a house/half a duplex/nice condo in the Chicago area (<45 minutes from the loop) in the next 15 months. I have an apartment lease ending in 3 1/2 months, at which time I would have approximately 15k savings. In 15 months, I would have more like 50k because I'm currently paying $1200/mo on my student loans I can redirect, I can back my 401k off to employer match, and I'm getting some family help. My target price is approximately $250k, with $300k being highish, and $350k being the most I would want to spend. Pre-tax income right now is approximately $11k/mo, and if my partner gets the kind of job she should, it would be more like 12-14k. My credit is perfect, with a score above 800, and my partner has one in the 700's. What has me concerned is that rent prices right now are ridiculous. The rental company I currently go with are planning on raising rates literally 30% over last year. Other rental prospects are likely to see similar prices. A 15 year mortgage on $250k is going to be seeing similar prices *after* taxes and insurance, and ditto for a $325k 30 year. What do you all think, should I be home shopping shortly and looking at FHA/PMI, or hold off a year and hope for minimal PMI or avoiding it outright? baquerd fucked around with this message at 01:51 on Apr 13, 2013 |
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Apr 13, 2013 01:48
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Hi all, what are your thoughts on earnest money? I'm putting an offer down on a $260,000 condo (5% downpayment) and want to make a good impression as it is going to be a good investment and living space for me. I was thinking 2% to 3% to show that I committed. Thanks!
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Apr 13, 2013 03:01
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ETB posted:Hi all, what are your thoughts on earnest money? I'm putting an offer down on a $260,000 condo (5% downpayment) and want to make a good impression as it is going to be a good investment and living space for me. I was thinking 2% to 3% to show that I committed. Thanks! 5%.
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Apr 13, 2013 07:22
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Just a heads up for anyone who likes to look at listings on their phone or iPad, zillow just released version 6.0 of their app, and it's totally rad -- the app has a nice Facebook-style swiping interface between a map overview and a search filter page. It also now has mortgage rate and refinance calculators for back-of-the-envelope calculations. I found it really fun to use, and the filter especially is now far more intuitive.
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Apr 13, 2013 09:27
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baquerd posted:I want to buy a house/half a duplex/nice condo in the Chicago area (<45 minutes from the loop) in the next 15 months. I have an apartment lease ending in 3 1/2 months, at which time I would have approximately 15k savings. In 15 months, I would have more like 50k because I'm currently paying $1200/mo on my student loans I can redirect, I can back my 401k off to employer match, and I'm getting some family help. My target price is approximately $250k, with $300k being highish, and $350k being the most I would want to spend. Pre-tax income right now is approximately $11k/mo, and if my partner gets the kind of job she should, it would be more like 12-14k. My credit is perfect, with a score above 800, and my partner has one in the 700's. If you can find a $250,000 place to live that's within that distance from the loop and is not in a crime-ridden neighborhood I wish you well. I couldn't find anything I'd want to live in where I'd want to live for less than $325K back in 2009. I can't imagine it's any better now. I'd say your first step would be doing some searches to see if it's feasible to even find things you'd want in the price range you are in. That being said you seem to make enough money to buy a house but you need a lot more ready cash than $15K to even think about buying something in Chicago. Condo fees and special assessments alone could clear you out in a couple of months if $15K was the amount of money you had left after putting your money down, but from what you say that seems to be your entire down payment with no money left at all afterwards. That is a "do not go farther" sign. You need to save at least a year or probably more to really be in a financially secure place to buy. If you're shopping around, make sure you're taking into account HOA or condo fees when you do it. Those things were murder. Edit: Oh god you have student loans too. You're not nearly solvent enough to buy in Chicago, in my opinion, I don't care how much you make. Sophia fucked around with this message at 17:46 on Apr 13, 2013 |
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Apr 13, 2013 17:44
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Evanston is a nice area too... especially up around Main St where you can take both the CTA or the Metra into downtown. I have friends there that just bought a condo in the 150K range.
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Apr 13, 2013 17:58
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Got a pre-approval letter from local lender (w/ billions in assets)... in Comic Sans.
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Apr 13, 2013 21:04
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Sophia posted:If you can find a $250,000 place to live that's within that distance from the loop and is not in a crime-ridden neighborhood I wish you well. I couldn't find anything I'd want to live in where I'd want to live for less than $325K back in 2009. I can't imagine it's any better now. I'd say your first step would be doing some searches to see if it's feasible to even find things you'd want in the price range you are in. That being said you seem to make enough money to buy a house but you need a lot more ready cash than $15K to even think about buying something in Chicago. Condo fees and special assessments alone could clear you out in a couple of months if $15K was the amount of money you had left after putting your money down, but from what you say that seems to be your entire down payment with no money left at all afterwards. That is a "do not go farther" sign. You need to save at least a year or probably more to really be in a financially secure place to buy. I don't know, just looking around on zillow I see plenty of places in safe areas like Ravenswood and Evanston under $300k. Nothing fancy, but not just condos either. Why would condo fees and special assessments run over a few thousand dollars a month? I can't see how anyone would be able to live anywhere with fees and assessments running multiples of actual mortgages. I definitely want to try and avoid HOA areas and get a freestanding house, and the market just doesn't look that bad. I think I'll be waiting a year but I see crazy things like a $150k foreclosure on a 4 bedroom house in Ravenswood and if I could grab that I know I could get "gifts" from family to buy it and then start to pay them back after closing. I mean realistically I save $2500/mo right now and starting in September I'll be able to save $3500/mo as I'll be done with my student loans, and I have another $80k in retirement accounts I could draw on if I really needed to.
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Apr 13, 2013 21:36
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PCjr sidecar posted:Got a pre-approval letter from local lender (w/ billions in assets)... in Comic Sans. Respond with a thank-you written in papyrus. Or, for greatest comedic effect, zapf dingbats.
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Apr 14, 2013 00:22
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I would put down whatever your agent suggests. Earnest money is money that your willing to lose if your deal falls through after all your contingency periods expire. Are you really so confident in your ability to get the other 95% financing approved, that the condo is approved with Fannie/Freddie, that the unit will pass inspection, and will appraise that your willing to risk $5200 to $7800? Especially when $1000 will do?
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Apr 14, 2013 05:09
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Honestly it is a good idea to listen to your agent with regards to earnest money even though they technically aren't supposed to tell you an exact amount to put down. The reason is that sometimes a seller will care about earnest money and other times they will not, and if they do care it's generally something your agent can feel out and give you a rough number to consider. Earnest money means less now than it used to unless you're dealing with bank-owned properties. Most of the time it's option money that actually matters and earnest money is just sort of part of the down payment/closing process unless it's a bank property (in which case they often have a specific percentage or number they want to see). If you are paying all in cash, earnest money can be a more important consideration but it's still something where your agent will probably have a good idea of the amount to consider.
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Apr 14, 2013 06:03
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Randomly posted:I would put down whatever your agent suggests. You don't lose earnest money if your inspection comes back with problems and the seller refuses to fix them. That's why contracts have attorney and inspection review periods.
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Apr 14, 2013 16:58
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I don't know if this has been addressed previously (only started following about 10 pages ago), but I have more of an etiquette question. I have been looking at condos in and around Oak Park, IL, with a realtor, and after seeing several units this weekend I've decided that I'm just not ready (price range doesn't give me what I want, not sure about upkeep, serious relationship with a single mom that could lead to us living together in a year or so, etc.). I feel bad for my realtor because he researched and found several properties in my price range and has been a good guy through all of this. I know his pay comes from commission, which he's not getting here. Should I pay something as a token of appreciation, or is that sort of thing just not done?
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Apr 15, 2013 01:12
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Don't pay anything, that sort of thing just happens.
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Apr 15, 2013 01:36
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10-8 posted:You don't lose earnest money if your inspection comes back with problems and the seller refuses to fix them. That's why contracts have attorney and inspection review periods. In a perfect world. I have a purchase contract on my desk without any contingency clauses at all. Regardless, putting down the level of earnest money he was suggesting would be foolish in most circumstance.
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Apr 15, 2013 03:40
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Double post. My bad.
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Apr 15, 2013 03:42
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PCjr sidecar posted:Got a pre-approval letter from local lender (w/ billions in assets)... in Comic Sans. Hey, so did I! There seem to be a lot of people in real estate-related businesses who have no concept of how to appear professional when using technology. Or in general. My favorite are the listings where the seller's agent blatantly suggests (in the listing!) they don't care if you offer half the listing price, they just want to offload the drat thing.
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Apr 15, 2013 04:14
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Randomly posted:In a perfect world. I have a purchase contract on my desk without any contingency clauses at all. Regardless, putting down the level of earnest money he was suggesting would be foolish in most circumstance.  Robo-Pope posted:Hey, so did I! I see appraisals completed in Comic Sans far too often. That the appraisal software apparently allows comic sans as an option even is worrisome. On the unprofessional front, a surprising number of loan officers will include unflattering photos of themselves in their email signature. I've seen photos of people who are clearly drunk or high, camping photos, kissing their significant other, and other random poo poo you'd expect to see on a Facebook page, not the signature line of a theoretically professional individual. Weird background themes is also a big one.
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Apr 15, 2013 05:10
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I have a friend that has a temp job at an appraisal company. Appraisers pay money to be put on a phone list, and when the appraisal company needs an appraisal done it's his job to call the appraisers to offer them the work. Either they just don't answer or they bitch about the rates not being high enough. Like, how can you be so bad at your job?
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Apr 15, 2013 06:00
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