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Tim Thomas posted:When we bought our 340k house, we ended up doing an 80/10/10 except that the mezzanine 10 was a HELOC. Avoided PMI at the expense of a higher, floating rate (prime plus a point) but it ended up being cheaper than any other mechanism for doing renovations. Immediately paid down the 10 over a couple years thereafter and just ate the prepayment penalty as it was less than a couple month's interest. I also couldn't figure out any reason one wouldn't do that instead of a 90/10, other than maybe people couldn't qualify for that sort of product. Well I'm glad I'm not the only one confused about why others wouldn't do it! The lender we've talked to right now (We haven't attempted to shop around yet, just got pre-approved to get us a ballpark) said their 80/15/5 product is a 30 year fixed for the 80% part, and then a 15 or 20 year fixed for the 15% part. I emailed them to ask about restrictions like people mentioned in this thread to see if there's something I'm missing there. Tim Thomas posted:Making those lines, are lenders still supporting ludicrous debt to income multiples? When we bought in 2012 we qualified for almost 2.5x what we bought for, which was about 5x our income and we also had about 400/mo in student loans. I made thre mistake of asking a loan officer what we could qualify for now and it was upwards 6x now that the student loans are gone. loving madness. I don't know what we would have qualified for if we hadn't hit the 417k conventional loan limit. That's roughly 2.6x my income with zero debt though my credit is not the greatest (they told me my FICO was 664, there's some negatives from ~5-6 years ago from my 21 year old safe making stupid mistakes). They said they require a minimum of 700 FICO for a jumbo loan, so I guess they were limited to what crazy multiple of my salary they could offer by that.
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Sep 28, 2015 00:07
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The better way to go is just do a 20% down payment and avoid the PMI, the higher interest rate, the (undoubtedly) extra closing costs/fees, and the prepayment penalties.
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Sep 28, 2015 07:03
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Steampunk Hitler posted:I don't know what we would have qualified for if we hadn't hit the 417k conventional loan limit. That's roughly 2.6x my income with zero debt though my credit is not the greatest (they told me my FICO was 664, there's some negatives from ~5-6 years ago from my 21 year old safe making stupid mistakes). They said they require a minimum of 700 FICO for a jumbo loan, so I guess they were limited to what crazy multiple of my salary they could offer by that. You earn over $150k a year and you're doing an 80/15/5 loan because you can't afford a downpayment?
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Sep 28, 2015 13:48
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I advise against a sense of urgency about getting into a house instead of saving up the 20%. I was getting to deduct about $12k / year in interest before really cutting at my mortgage this year. That's not money in your pocket, it's just that you don't have tax liability for that portion of your monthly housing expenses. That deduction, for me, might be worth about $4k /year in total tax liability reduction. But I make mortgage payments of ~$1550/mo instead of rent payments of $1200/mo. Amortized over a year, those increases in monthly payments come out to $4200 / year! Even with the interest deductions, owning a house is $200 more expensive on an annual budget basis than renting. If you're going in with very low equity, you'll be paying a great deal to service the interest on what you've borrowed and almost nothing of your monthly payment goes into actual equity in the house. Save up that 20% instead of going for one of the bonkers mortgage products to let you borrow more than 80%. There's no reason to embrace all the additional costs and frustrations to start building miniscule amounts of equity sooner. The myth of the run away real estate market is thoroughly debunked but the shoddy mortgage products it spawned are still lurching around.
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Sep 28, 2015 16:14
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And at that income, you either just started earning or have threadworthy Bad With Money problems if you aren't just looking to save for like a year or two to get your 20% down.
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Sep 28, 2015 16:48
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Not to pile on, but no home is perfect when you buy it, either. There are ALWAYS extra expenses. If you don't have 25% saved you're going to want that money when it turns out that the new place needs new carpet/AC/wiring/stair insulation/ghost busting.
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Sep 28, 2015 17:42
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You should probably save up 100% just to be on the safe side. Maybe 110%.
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Sep 28, 2015 17:44
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Actually, ever since the Feds ended the Homestead Act no one should own land unless they are wealthy and it produces income, and even then only by inheritance never purchased.
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Sep 28, 2015 18:37
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Radbot posted:You earn over $150k a year and you're doing an 80/15/5 loan because you can't afford a downpayment? He said in an earlier post that he's really just playing with the numbers at this point. I'd like to reiterate that you should have 20% down (plus expected closing costs plus a month of payments in the bank at least) before buying a home because it is far and away the best way to save money in this homebuying thing. Piling on all of the extra expense from an 80/15/5 or PMI just makes home ownership that much shittier, and if you can avoid them by just saving for a year or two then you should do that.
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Sep 28, 2015 18:51
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Economic Sinkhole posted:You should probably save up 100% just to be on the safe side. Maybe 110%. Jealous Cow posted:Actually, ever since the Feds ended the Homestead Act no one should own land unless they are wealthy and it produces income, and even then only by inheritance never purchased. Saving 20% downpayment = literal slavery. How can someone earning $150k/yr possibly save that much? Obama is keeping them down. Anyways, should I bother trying to get my radon levels (currently at 4.0 picocuries/L) lower than that? I want to, but it seems like most mitigation systems only get higher levels down to the 4.0 range, and I've got a harder mitigation situation (crawlspace with no sump).
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Sep 28, 2015 19:14
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Radbot posted:You earn over $150k a year and you're doing an 80/15/5 loan because you can't afford a downpayment? Y'all are confusing me stating what the minimum requirements (and maximum limits) are according to the mortgage lender with what I'm personally going to do. During the process of the lender telling me what products they offered they mentioned what they called an 80/15/5 loan (which is just the name they give it. He said it can be for anywhere between 5 and 15% of the house price), and give that there's a decent chance I might end up putting somewhat less than 20% down (but not as small as 5%), I was curious if there was something I was missing that made that particular option something to avoid or not. I currently have just under 80k earmarked in our budget for purchasing a house (across my wife's and I's accounts). That's for covering closing costs as well as downpayment. We're also currently earmarking an additional 3200/month into that bucket. Depending on what house we end up getting and how long it takes us to find a house we actually want we might end up putting less than 20% down (particularly since i don't want to wipe all of that out immediately to handle unexpected new home expenses, as well as purchasing furniture). If I had to guess we're probably looking at putting 10-15% down if we find something quickly, and 15-20% if the inventory stays crummy until the new year. My daughter just started getting really into activities at school, and her school is over 30 minutes away without traffic, blowing an hour and a half to 2 hours 2-4 days a week sucks. Throw in her figure skating once a week for another multi hour drive and missed opportunity costs from her not getting to practice in the mornings or evenings because the closest rink is too far and I'd rather pay more for a few years to aggressively pay down a second loan or pay a primary loan down to 20% then to continue living this far away from the primary things we drive to. We looked at possibly renting close to her school and the ice rink for awhile, but again we decided that we'd rather pay more for a few years to aggressively pay to 20% then move twice within a short time period, especially since my daughter has a large dog which immediately rules out a lot of available rentals in the area (we called around and asked). I've been earning 160k since May 2015, 140k since Dec 2013, 110k since Oct 2012, etc. I'm maxing out my 401k, and two IRAs and I have zero debt to my name. I'm doing fine as far as I'm concerned, I was just confused what the downsides were to the 80/15/5 loan product and I don't trust a banker to tell me why I wouldn't buy some product they are offering me.
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Sep 28, 2015 19:22
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I agree with you that moving is really annoying, but I don't think it's annoying enough to warrant buying the house without 20% plus a buffer for maintenance. I'm sure you're eager to buy a place but you've waited a lot of years, I would see how it looks a year from now. If you have a high savings rate, you'll easily be over 20% next year, not a big deal, and if not, you (hopefully) learned something, saved yourself PMI/interest costs, and can develop good money habits. You're giving sellers a negotiating advantage over you by having (and likely communicating) a time-sensitivity that you don't need to have.
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Sep 28, 2015 19:36
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Have you looked at the rental house market at all? A lot of that poo poo can be word of mouth or managed by companies that don't advertise their properties well, but they usually allow dogs. "We're willing to pay tens of thousands of dollars for the luxury of not moving twice in a year" is kind of insane. If you have $80k already and an income of $160k/year and you're looking at houses less than 440k, then you're already almost to 20% down. In another 6 months you probably won't even need to look at PMI or second mortgages. This makes it sound like you're hellbent on buying a house in the next 2-3 months, which puts you in a dangerous position psychologically. 30 minute commute times are nothing, really, and they're certainly not worth rushing into homebuying over. Get some books on tape and some podcasts. Have you started looking at houses yet? Start looking at houses and don't worry about shortening your commute or any of that. Don't be afraid of slowing down and being really cautious with this potentially life-altering purchase.
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Sep 28, 2015 19:53
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Does anyone have any horror stories, or positive stories, about buying a town home?
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Sep 28, 2015 20:26
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QuarkJets posted:Have you looked at the rental house market at all? A lot of that poo poo can be word of mouth or managed by companies that don't advertise their properties well, but they usually allow dogs. "We're willing to pay tens of thousands of dollars for the luxury of not moving twice in a year" is kind of insane. Yes, among the ones that allowed dogs that we could find in the area around my daughter's school they were limited to "small dogs" which they typically defined as under ~50lbs (my daughter's dog is ~80lbs). When we originally met with the realtor, we did tell him that if he knew of any rentals we'd be willing to look at them, but he said that it's tough to find a rental that'd allow my daughter's dog in the area we're looking at but that he'd let us know if he hears of any. QuarkJets posted:If you have $80k already and an income of $160k/year and you're looking at houses less than 440k, then you're already almost to 20% down. In another 6 months you probably won't even need to look at PMI or second mortgages. This makes it sound like you're hellbent on buying a house in the next 2-3 months, which puts you in a dangerous position psychologically. Like I said, if we find something we like we'll buy earlier, otherwise we're planning to wait until we find something even if it takes a long time. We are already most of the way to 20% down, and unless something great (not acceptable, great) pops up before we do we will be paying 20% down. The lender was telling me about their options in case we did end up putting less down, and I had not previously heard of the 80/15/5 option. QuarkJets posted:30 minute commute times are nothing, really, and they're certainly not worth rushing into homebuying over. Get some books on tape and some podcasts. 30 minutes isn't the worst thing ever, but that's the without traffic number, with traffic it's more like 45 minutes and unlikely a traditional commute we're not driving it once, then waiting 8 hours then driving it again, we're driving it once, waiting 10 minutes, and then driving it again. It's 1.5 to 2 hours basically uninterrupted in the car. I've been doing it for a month and it's horrible, but it's likely what I'll continue to do for the time being until we find something we like. It doesn't help either we're not really setup to handle a commute, my truck is an old gas guzzler (it's a 97, good working condition but it only gets like.. 10-12 mpg) which is emissions exempt because I drive < 5k miles a year (I work from home, so no commute what so ever), probably going to be out the cost to repair my truck to pass inspection either way though since we're not willing to push the process to go fast enough to avoid breaking 5k miles this year. QuarkJets posted:Have you started looking at houses yet? Start looking at houses and don't worry about shortening your commute or any of that. Don't be afraid of slowing down and being really cautious with this potentially life-altering purchase. Depends what you mean by looking. We've followed Zillow/realtor.com/trulia/etc for a year or so, started getting MLS updates that match our criteria immediately sent to our email by the realtor a few weeks ago. Have not yet begun to go to showings or anything of the like because we haven't seen anything that we liked. We're not planning on rushing anything, just running numbers to see what it would look like *if* we found something we liked for a price we're willing to pay sooner rather than later.
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Sep 28, 2015 20:35
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One thing that's helped me a lot in my search is access to setup and save my own searches in the MLS portal. For example I include the million dollar homes in my search because if a house in my price range pops up and is next to a bunch of million dollar homes I will snap it up. I also have a search saved that shows closed listings for the same area so I can look for comps. You can do that stuff on Zillow and Trulia but the MLS tool is much better.
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Sep 28, 2015 20:49
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Dwight Eisenhower posted:I advise against a sense of urgency about getting into a house instead of saving up the 20%. Steampunk Hitler posted:Yes, among the ones that allowed dogs that we could find in the area around my daughter's school they were limited to "small dogs" which they typically defined as under ~50lbs (my daughter's dog is ~80lbs). When we originally met with the realtor, we did tell him that if he knew of any rentals we'd be willing to look at them, but he said that it's tough to find a rental that'd allow my daughter's dog in the area we're looking at but that he'd let us know if he hears of any. 
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Sep 28, 2015 21:34
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Steampunk Hitler posted:Yes, among the ones that allowed dogs that we could find in the area around my daughter's school they were limited to "small dogs" which they typically defined as under ~50lbs (my daughter's dog is ~80lbs). When we originally met with the realtor, we did tell him that if he knew of any rentals we'd be willing to look at them, but he said that it's tough to find a rental that'd allow my daughter's dog in the area we're looking at but that he'd let us know if he hears of any. It sounds like you're more interested in the game mechanics the banks are playing around screwing you out of your money than committed to buying without 20% down. So, having myself bought with less than 20% down, and already emphasized that you should not buy with less than 20% down, the options basically come down to: Mortgage for >80% of the house's value with PMI. Mortgage for =80% of the house's value without PMI, + a second mortgage for the gap between your down payment and the value. (e.g. 15%) You earn too much to deduct PMI, and your present saving rate means you can probably kill off the second mortgage quickly. The problem with PMI is it's all cost, and to get rid of it you have to get an appraisal that is 125% of your remaining principal (that is, your principal is 80% or less of the appraised value). With a second mortgage you will get significantly different terms, usually a much shorter maturity (e.g. 15 vs 30), higher rates, etc. You can deduct the interest for this second mortgage as it will be your primary residence, and the interest portion should be pretty small if you can put $80k down. Additionally you can sock that $3200 you're saving every month into knocking out the second mortgage and probably have it paid off within a year, then begin tackling your primary mortgage. With your savings rate, income, down payment, and circumstances I'm going to go ahead and say that the second mortgage is a not terrible idea compared to saving up 20% first. It strictly dominates getting PMI if you are going to buy with less than 20% down.
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Sep 28, 2015 21:49
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Dwight Eisenhower posted:It sounds like you're more interested in the game mechanics the banks are playing around screwing you out of your money than committed to buying without 20% down. So, having myself bought with less than 20% down, and already emphasized that you should not buy with less than 20% down, the options basically come down to: Thanks! This is what I was looking for (and it matches what I've pieced together from the replies that gave partial snapshots). We're not rushing to buy immediately, but it sounds like if something that's right for us pops up in the meantime, the 80/15/5 loan (with more than 5% actually down!) is the better option. Going for a 15 year fixed rate for the second portion, the interest is .24% higher (today anyways) than the fixed rate on the 30 year for the first 80%. That makes me feel less like this loan product is the bank trying to creatively screw me out of more money than they are with a conventional loan w/ PMI. Thanks a lot!
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Sep 28, 2015 22:24
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Sold my house (was in it for two years only; major move and 50% raise). Managed to be solidly in the black. Will never buy a house again until I'm told to by a significant other.
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Sep 28, 2015 22:26
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Steampunk Hitler posted:Yes, among the ones that allowed dogs that we could find in the area around my daughter's school they were limited to "small dogs" which they typically defined as under ~50lbs (my daughter's dog is ~80lbs). When we originally met with the realtor, we did tell him that if he knew of any rentals we'd be willing to look at them, but he said that it's tough to find a rental that'd allow my daughter's dog in the area we're looking at but that he'd let us know if he hears of any.
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Sep 28, 2015 22:55
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Dik Hz posted:Don't believe your realtor. Asking a realtor about renting a house is like asking a car salesman if you should get your car repaired or just buy a new one. Not necessarily true, you can make plenty of money brokering rentals and it's a lot easier than selling houses
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Sep 29, 2015 01:20
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Does anyone have experience touring a pre-contract home with a general contractor? We found a house that's been sitting on the market for about a month and would clearly need a bit of work (some cosmetic, other potentially costly). Our agent said that he'd be happy to arrange a home visit if we wanted to do a walkthrough with a contractor prior to submitting an offer. Is the general consensus that most contractors won't do a home visit unless the home is already under contract?
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Sep 29, 2015 10:00
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Tortilla Maker posted:Does anyone have experience touring a pre-contract home with a general contractor? This time of year you can probably get them to come out for free, but I wouldn't get the referral from your realtor. They're going to know people in the house flipping business who aren't always known for their quality work. Call around a bit.
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Sep 29, 2015 12:19
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Andy Dufresne posted:This time of year you can probably get them to come out for free, but I wouldn't get the referral from your realtor. They're going to know people in the house flipping business who aren't always known for their quality work. Call around a bit. Thanks for the response. Our agent hasn't referred or recommended anyone. I think it's more a matter of him listening to our concerns/comments as we're first time home buyers. So far he's been top notch for us both offline and when we're touring homes together. The only person he's directly referred to us happened to be the mortgage officer we're already working with.
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Sep 29, 2015 12:24
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Tortilla Maker posted:Thanks for the response. Our agent hasn't referred or recommended anyone. I think it's more a matter of him listening to our concerns/comments as we're first time home buyers. So far he's been top notch for us both offline and when we're touring homes together. You should be wary to take any recommendations from Realtors, including the mortgage provider. That's not to say their recommendations are bad but they are looking out for themselves and generally refer people with whom they have relationships (either tit-for-tat or sometimes kickbacks). It's a really lovely industry. That's not to say that the lender your realtor referred sucks, but the odds that they will beat or match the market including online brokers is low. For me it was a full point different.
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Sep 29, 2015 16:15
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Andy Dufresne posted:You should be wary to take any recommendations from Realtors, including the mortgage provider. That's not to say their recommendations are bad but they are looking out for themselves and generally refer people with whom they have relationships (either tit-for-tat or sometimes kickbacks). It's a really lovely industry.
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Sep 29, 2015 16:18
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Tortilla Maker posted:Is the general consensus that most contractors won't do a home visit unless the home is already under contract?
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Sep 29, 2015 23:16
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Can anyone help me out on fha vs conventional? I would qualify for conventional and have 20k for down payment. I understand that conventional will have a higher interest rate and pmi until 22% LTV, and that fha will be lower interest but permanent pmi. It seems like the differences would pretty much even out given enough time. Am I missing something that makes one vastly better?
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Sep 30, 2015 21:39
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You can refinance out of the fha pmi down the road, something to keep in mind.
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Sep 30, 2015 21:52
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PMI tax deduction may not exist in the future (uncertain after the end of 2014), but the interest deduction is probably here to stay forever. Also, your interest payment will decrease over time while FHA PMI would stay at the same level forever until you refinance. When you refinance, the rates will almost certainly be higher (because they have never been lower and can't stay here forever) I'd take the conventional all day. Check the terms on the conventional PMI, you can sometimes do tricky things like drop PMI at 80% LTV of a newly appraised value after 2 years or whatever. The 78% LTV number is the law intended to give the lender a bit of wiggle room from 80% to 78% LTV in order to drop the PMI. Of course, be sure you can afford a home purchase. Not having 20% doesn't necessarily mean you can't afford it, but it does mean that you're likely adding a great deal of risk to the transaction.
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Sep 30, 2015 23:49
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If you're in a competitive market sellers will always take a conventional offers over FHA, if that matters to you.
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Oct 1, 2015 03:26
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So a conventional is better basically just because the pmi goes away... napkin math says that would save me about 54k over the life of the loan, so yeah. I wonder if it's possible to buy down the interest rate? Then it would be the perfect loan! Edit: Talked to a broker and you can buy it down, and it's not super expensive either. Looks like this is the way to go then, thanks for helping me reason this out everyone! Ghostnuke fucked around with this message at 15:29 on Oct 1, 2015 |
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Oct 1, 2015 15:08
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Ghostnuke posted:So a conventional is better basically just because the pmi goes away... napkin math says that would save me about 54k over the life of the loan, so yeah. Buying down the interest rate probably isn't worth it. You'll come ahead if you live there for the full duration of the loan and never refinance
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Oct 2, 2015 04:40
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Andy Dufresne posted:If you're in a competitive market sellers will always take a conventional offers over FHA, if that matters to you. The appraiser has to know how to use a thermostat to test the AC and the last one I had did't so I had to leave the ac on in 60 degree weather so she could "test" it. Very amusing that our Government is guaranteeing the work of these asshats. Can't wait for the next 4 trillion dollar fannie freddie default.
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Oct 2, 2015 14:21
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I purchased a condo with a VA loan and it greatly affected the properties I could purchase at all, and even more the ones I could make a competitive offer in the bay area. In the end though, the money was more important than waiving inspections and contingencies that a conventional loan would have the advantage.
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Oct 2, 2015 20:27
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Elephanthead posted:The appraiser has to know how to use a thermostat to test the AC and the last one I had did't so I had to leave the ac on in 60 degree weather so she could "test" it. Very amusing that our Government is guaranteeing the work of these asshats. Can't wait for the next 4 trillion dollar fannie freddie default. You sound like you're more mad at the government than your incompetent appraiser which is just 
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Oct 2, 2015 21:16
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QuarkJets posted:You sound like you're more mad at the government than your incompetent appraiser which is just I dislike all systems that promote and encourage incompetence.
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Oct 5, 2015 14:49
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Elephanthead posted:I dislike all systems that promote and encourage incompetence. Ultimately the appraiser's interests are in order 1) ensuring that they don't get sued 2) keeping whoever hired them happy, and that's why the appraisal system is lovely; that's not the fault of the government, it's the fault of a hosed up market where everyone is out to gently caress everyone else
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Oct 6, 2015 09:29
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Elephanthead posted:I dislike all systems that promote and encourage incompetence. You hate capitalism?
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Oct 6, 2015 15:00
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