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couldcareless posted:Your total will come to all your money. These terms are ridiculous. Vonnie, please send me a boatload of information so that I can take most of your money, and then a smaller amount each month for the next 30 years. I'm afraid the sanity portion is consistent though.
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Apr 1, 2018 17:25
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Act quickly and we’ll send you a thirty year supply of all the anxiety you can ever want; it’s our springtime “Honey, that water stain was there when we moved in, right?” promotion
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Apr 1, 2018 18:19
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My wife and I are starting to look for a place near us, but I'm kinda a weird edge case (and I fully admit I'm an incredibly lucky individual). I'm trying to figure out exactly how much house to get (looking up to 400k at the moment), but I'm waiting to do my pre-qualification because we are in the process of dissolving a trust and moving all the accounts into my name personally from the trust. My income right now is only 55k+bonus, and my wife is currently a full time student, and isn't working right now. The trust, however, is worth around 700-750k in liquid assets which will all fully be in my name shortly. I am about to have 0 debt (only debt was a 0% interest loan on my car, which will be fully paid off in 3 months), and pay my credit cards off monthly. My credit score is 803-810 depending on the service. I am a little bit unsure about how the mortgage brokers will look at my case, considering the low (for what I want) income, but high liquid cash. A lot of the stuff I've been reading says it's mainly debt to income ratio, in which case the house I get will be a lot less than I wanted for my area. Most of the stuff I see about high asset value is mainly retirement accounts, which this is not. Does anyone here have any experience with cases like this? Is it better to talk to a bank I have a relationship with, as opposed to just looking online due to my main guarantee being assets? I'm looking to put 20% down, as I'd rather keep the rest of my money earning more money. Gross Income: 55-60k depending on small bonus Liquid Assets: Soon to be 700-750k (not including 401k/IRAs) Debt: Soon to be 0 Dilber fucked around with this message at 19:26 on Apr 2, 2018 |
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Apr 2, 2018 19:16
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Your income has to be high enough to qualify for the loan. You will have to make a higher down payment if your income doesn't qualify you for the amount of house you want. Any special relationship loan will have higher interest rates than a conforming mortgage but they will be happy to loan you your own money at 6% while paying you .01%.
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Apr 2, 2018 19:27
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Based off what I'm reading, asset depletion would count the cash as 100%, and the stock/bonds at 70% to calculate additional monthly income, with a down payment of closer to 30%. Do you think that sounds accurate, or would it be more like down payment being everything except what they would give for a standard mortgage?
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Apr 2, 2018 19:40
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Dilber posted:Based off what I'm reading, asset depletion would count the cash as 100%, and the stock/bonds at 70% to calculate additional monthly income, with a down payment of closer to 30%. Do you think that sounds accurate, or would it be more like down payment being everything except what they would give for a standard mortgage? Buy the house in cash free and clear, then mortgage it after. Talk to banks about how to do it, but it gives you the ability to get the cheapest possible mortgage with no time constraints. Look at rates on all of your options but I think the cheapest loans are closer to 40% down. Again, talk to a bank or broker (or both, it's free) about the process.
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Apr 2, 2018 21:09
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I've been playing with various rent vs. buy calculators. I've come across this one, which seems to be by far the most detailed and thorough. The results have been interesting:  The reason is that if I put rental income as $0, it says buying won't become profitable throughout the entire term of the mortgate. But if I put it as $1400 (i.e. rent out two rooms for $700 each) then it suddenly becomes insanely profitable, as seen in the "Results" box. How legit is this assessment?
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Apr 2, 2018 21:59
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Uhh, yeah? What do you think is weird about this calculator? When you rent out two rooms, you add a ton of money to your income, to the tune of about 17k/year. Why WOULDN'T this make it a much better deal? Are you drastically misunderstanding what this calculator is saying/doing? It's just a fancy excel chart, honestly, doing some math. It's hard for it to be "wrong".
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Apr 2, 2018 22:07
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enraged_camel posted:The reason is that if I put rental income as $0, it says buying won't become profitable throughout the entire term of the mortgate. But if I put it as $1400 (i.e. rent out two rooms for $700 each) then it suddenly becomes insanely profitable, as seen in the "Results" box. Looks legit, you are comparing a $350k property vs. $1k/month in rent. Your mortgage alone is more than $1k/month, so if you can get the same place, renting is a no-brainer.
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Apr 2, 2018 22:09
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H110Hawk posted:Buy the house in cash free and clear, then mortgage it after. Talk to banks about how to do it, but it gives you the ability to get the cheapest possible mortgage with no time constraints. Look at rates on all of your options but I think the cheapest loans are closer to 40% down. Again, talk to a bank or broker (or both, it's free) about the process. Thanks. I'll talk to some banks about it, and also check with our tax attorney about what type of tax event that would cause, as at least some of it would end up with capital gains. I'm probably going to talk to schwabb first, since around 40% of the money is already there in funds anyways, and they have some PAL loans where I wouldn't need to sell off anything.
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Apr 2, 2018 22:12
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For reference, the house next door to my $240k home is renting for $1800/mo. A $1000/mo apartment would be a significant downgrade even for me.
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Apr 2, 2018 22:18
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totalnewbie posted:Uhh, yeah? What do you think is weird about this calculator? Sorry, I should have been more specific. I don’t understand the “it’s like getting paid to buy the house” part. In general it was a bit strange to go from “won’t be profitable for more than 30 years” to “profitable in 3, in fact it is super duper good!” I haven’t dug into the math though.
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Apr 2, 2018 22:36
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enraged_camel posted:I've been playing with various rent vs. buy calculators. I've come across this one, which seems to be by far the most detailed and thorough. It's a minor quibble but you've got two different cap gains tax rates on the sheet, which doesn't make much sense. I'm also questioning how you're comparing a $1000 a month rent to a $350k house that you're renting two rooms out of, are those really comparable? Finally, you probably should not include capital gains tax on resale, because if this is your primary home, you get to profit on its resale without paying cap gains tax: there's a $250k home sale exclusion, so unless you make more than that on the sale, you get to keep your profits. You just have to have lived in the house for at least two of the five years previous to the sale. e. Oh, and a 3.5% appreciation rate might be way low or way high. Definitely read what's on that link because a half-percentage-point difference will make a 80k+ swing in the final number. In fact it's so critical that probably looking at a 30-year projection is going to be worthless because it's very unlikely you'll see exactly the number you guessed at. Leperflesh fucked around with this message at 22:46 on Apr 2, 2018 |
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Apr 2, 2018 22:37
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Leperflesh posted:I'm also questioning how you're comparing a $1000 a month rent to a $350k house that you're renting two rooms out of, are those really comparable? This is what stood out to me. It's not in any way comparable in my opinion, but the young'uns seem to call it "house hacking" these days. Great if that's the kind of thing you like or can deal with, but definitely not the same thing as a private residence where you aren't sharing "common areas."
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Apr 2, 2018 22:46
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enraged_camel posted:Sorry, I should have been more specific. I don’t understand the “it’s like getting paid to buy the house” part. Think about what you're doing. If you buy a house and rent out two rooms for 1400 a month, that means every month YOU RECEIVE 1400/mo. Why doesn't it make sense that getting an extra 1400/mo vs. not getting 1400/mo is not nearly comparable? I'm on trying to be patronizing, but if you really don't get it then you're going to have to explain very well, because you're probably missing something very basic (which is a thing that happens to everyone but if you don't explain in detail, people won't be able to point out your basic misunderstanding, which you may have.)
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Apr 2, 2018 23:17
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Leperflesh posted:I'm also questioning how you're comparing a $1000 a month rent to a $350k house that you're renting two rooms out of, are those really comparable? Motronic posted:This is what stood out to me. It's not in any way comparable in my opinion, but the young'uns seem to call it "house hacking" these days. I currently live with roommates, so from that perspective, this wouldn't be much difference. Our total rent is $2600, I pay $1000 out of that. That's why I'm considering buying a house: instead of paying someone rent, I'd become the landlord basically, and any tenants I decide to rent out rooms to would pay me. If you guys meant it in some other way though, my apologies. Can you elaborate? totalnewbie posted:Think about what you're doing. Yeah, I'm a first time buyer and am very new to this, so there may be something basic I'm missing. It's just that $1400/mo is only $17,000/year, which doesn't seem like a lot of money to me. But I just thought about it some more just now, and it's actually close to 5% of the value of the house, which is a lot. In any case, once I put everything into a spreadsheet it will probably make sense.
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Apr 3, 2018 00:50
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enraged_camel posted:But I just thought about it some more just now, and it's actually close to 5% of the value of the house, which is a lot. Now think about it in terms of your down payment... then you're thinking like a landlord. Edit: keep in mind that your tenants (if they're smart) will want you to fix everything. Since you're living with them though, you might be able to sell them on the idea that you're basically just another renter and split maintenance costs too. 
baquerd fucked around with this message at 01:29 on Apr 3, 2018 |
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Apr 3, 2018 01:26
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enraged_camel posted:
I do not know any places in my area (Orange County/Long Beach, CA) where I could purchase a $350k house and rent out two rooms for $700 each (with $0 in HOA or land lease fee), so unless you are in a different part of the world with different economics, the purchase price seems really low or the rent numbers are optimistically high. *Just ran a quick search in my area for <$400k, 3bd, no HOA, and only got manufactured homes and senior age-restricted communities back in my search
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Apr 3, 2018 01:57
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Mandalay posted:I do not know any places in my area (Orange County/Long Beach, CA) where I could purchase a $350k house and rent out two rooms for $700 each (with $0 in HOA or land lease fee), so unless you are in a different part of the world with different economics, the purchase price seems really low or the rent numbers are optimistically high. I have a $230k house producing $900x4 rent each month. Welcome to flyover country in high property tax counties.
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Apr 3, 2018 02:09
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enraged_camel posted:But I just thought about it some more just now, and it's actually close to 5% of the value of the house, which is a lot. And 5%+ of the mortgage annually for 30 years... is a huge portion of your amortized loan amount. That said, do you really expect to rent out two rooms of your three room house for 30 years? You're never going to get married, or have kids? The 30 year calculation is worthless if your actual time horizon before you'd evict your tenants and/or sell the house is like 10 years or something. The numbers you're showing in that spreadsheet are for holding the house exactly 30 years, paying it off completely over that time frame while collecting rent the whole time, and then selling the house; compared to renting at an inflation-adjusted constant rate for 30 years. Since your up-front costs are fixed for the purchase, the number of years you own matter a lot. Figure out your rent vs. buy calculations using realistic time frames and the numbers will be completely different. Play with the appreciation rate of the property and see how that number radically affects the final figure as well. Leperflesh fucked around with this message at 02:23 on Apr 3, 2018 |
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Apr 3, 2018 02:21
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baquerd posted:I have a $230k house producing $900x4 rent each month. Welcome to flyover country in high property tax counties. That's insanely profitable compared to here. I know a landlord here that's listing a 4bd house for rent for $3,500/mo on a house worth north of $800k
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Apr 3, 2018 02:29
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Leperflesh posted:And 5%+ of the mortgage annually for 30 years... is a huge portion of your amortized loan amount. I thought about this, but if I get married and have kids, the cost of rent (i.e. the alternative to owning a house) would also go up. So at that point it would be like comparing $2,500 or $3000 rent to a $350,000 house. Right? I see what you're saying though. It's very unlikely that I'll be renting two rooms out of three for 30 years. However, it is also unlikely that I will ever live in a 3 bedroom house by myself or with my girlfriend/wife. What will most likely happen in that scenario is that I'll rent out the whole house and rent a studio or one bedroom in a cheaper part of town.
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Apr 3, 2018 03:10
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The point is to make your projections of "what is cheaper" over a much shorter timeline, if you want those projections to be informative towards a choice of whether you should rent or buy in the near future. Project only as far out as you reasonably can know your living situation. If rent is radically more or less expensive than buying in, say, a 10 year timeline, that's much more helpful to know.
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Apr 3, 2018 03:23
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enraged_camel posted:I currently live with roommates, so from that perspective, this wouldn't be much difference. Our total rent is $2600, I pay $1000 out of that. That's why I'm considering buying a house: instead of paying someone rent, I'd become the landlord basically, and any tenants I decide to rent out rooms to would pay me. $1400/month for 30 years is over $500k. That's over half of the number being spit out by the calculator under Home Value (e.g. over half of the value of your house came just from receiving 30 years of $1400/month rent payments). Thinking of it another way: based on how you filled out the form, your payments for mortgage/insurance/etc would be about $2k/month. Accounting for rent payments you expect to receive, the difference is actually between paying $600/month while owning a home vs paying $1000/month while renting. So if closing costs didn't exist, it would be more profitable to own from day 1, with those numbers. But the calculator accounts for closing costs, so it takes a few years to make up that difference. But you shouldn't assume that you'll get 30 years of steady rent payments
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Apr 3, 2018 09:07
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Mandalay posted:That's insanely profitable compared to here. I know a landlord here that's listing a 4bd house for rent for $3,500/mo on a house worth north of $800k Some states have no income tax and only tax property. That rent payment is the tenant's state tax. My state, however, has taken the position that if any other state has a certain type of tax they want it too. They sometimes lose a couple billion dollars and when they find it they send everyone a check. Yes, they literally forgot they had a bank account with a couple billion dollars in it.
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Apr 3, 2018 13:23
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H110Hawk posted:Buy the house in cash free and clear, then mortgage it after. Talk to banks about how to do it, but it gives you the ability to get the cheapest possible mortgage with no time constraints. Look at rates on all of your options but I think the cheapest loans are closer to 40% down. Again, talk to a bank or broker (or both, it's free) about the process.
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Apr 3, 2018 21:16
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My fiancee (husband on April 13) and I are currently scoping houses in Oregon since we'll have nothing tying us to TX anymore. He's leaving his job and I'll be the sole income. All the pre-qualification things at this point are asking if I'm single or married. Technically now I'm single, but by the time all this rolls around, I'll be married. I'm going to be the only one with an income at closing time, and we don't really need/want his credit (we're buying conservatively). Does it matter at this point if I get pre-approved single? He's not coming into the marriage with a bunch of debt or anything (any debt would be an un-sold car that's under my name as well anyway), it's just that my credit score is a bazillion times better because I remember to pay my bills before the red envelope shows up.
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Apr 4, 2018 02:34
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Electric Sugar posted:My fiancee (husband on April 13) and I are currently scoping houses in Oregon since we'll have nothing tying us to TX anymore. If won't matter for your creditworthiness but you should inform your loan officer and realtor when your marital status changes because the closing docs will need to have it listed correctly.
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Apr 4, 2018 03:08
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therobit posted:If won't matter for your creditworthiness but you should inform your loan officer and realtor when your marital status changes because the closing docs will need to have it listed correctly. Thanks, I was hoping it would be that simple but you never know where in paperwork Valhalla something may be screwed up.
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Apr 4, 2018 03:10
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Does it make sense at all to buy in LA when your household income is ~190k? I'm renting in Silver Lake and commuting to Burbank right now. My partner works in Alhambra. I have some savings. But the sticker shock is crazy here. Cheap pieces of poo poo are going for $700/sqft. But I'm also sick of renting. I turn thirty this year. So just curious what people's thoughts are on the LA market in general I guess
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Apr 4, 2018 04:09
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A MIRACLE posted:Does it make sense at all to buy in LA when your household income is ~190k? I'm renting in Silver Lake and commuting to Burbank right now. My partner works in Alhambra. I have some savings. But the sticker shock is crazy here. Cheap pieces of poo poo are going for $700/sqft. But I'm also sick of renting. I turn thirty this year. So just curious what people's thoughts are on the LA market in general I guess I have the same question about the Bay Area...
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Apr 4, 2018 05:20
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A MIRACLE posted:Does it make sense at all to buy in LA when your household income is ~190k? I'm renting in Silver Lake and commuting to Burbank right now. My partner works in Alhambra. I have some savings. But the sticker shock is crazy here. Cheap pieces of poo poo are going for $700/sqft. But I'm also sick of renting. I turn thirty this year. So just curious what people's thoughts are on the LA market in general I guess Yeah do it. How much do you have for a down payment? 190 gets you enough to buy a lovely new construction condo. Sell it in 7 years for a house before it falls over. You will need to get out of hipsterville though.
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Apr 4, 2018 05:27
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A MIRACLE posted:Does it make sense at all to buy in LA when your household income is ~190k? I'm renting in Silver Lake and commuting to Burbank right now. My partner works in Alhambra. I have some savings. But the sticker shock is crazy here. Cheap pieces of poo poo are going for $700/sqft. But I'm also sick of renting. I turn thirty this year. So just curious what people's thoughts are on the LA market in general I guess It depends. We bought in a nice area of Orange County for high $300s/sqft, moving from Long Beach. But I think you need to elaborate on your life plans here first. We had reasons to settle down in a decade or two in the same house that were independent of the economy in general and our metro area specifically. There are still pockets of affordability in SoCal when compared to the Bay Area and NYC. (But not in Silver Lake)
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Apr 4, 2018 05:28
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moana posted:That's what I did, buying cash gives you a huge leg up over mortgage buyers too. It's called a cash out mortgage and I found a lender online using bankrate. Good luck! Thanks! If I can do that without generating a massive tax event I'll do it.
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Apr 4, 2018 15:27
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I'm generally too much of a skeptic and this may be too close to trying to time the market, but if it were my money I would be reluctant to buy a heavily leveraged house in an expensive market like LA or the bay area right now. Prices have been on a consistent upward trend at a pretty crazy rate for the last 4-5 years and I just have a tough time thinking that it's going to be level or increasing over the next 3-4 years. When you're talking about $700k homes it's a very real possibility that you could lose $200k worth of value over the course of a year in a market downturn, which could put you under water. (Or alternatively that $700k house may be $900k in 3-4 years. We just don't know) My wife and I are in a situation where the minimum price for a centrally located home with good schools has shot from $400k to $550k in the last several years (Dallas). Our basic plan now is to sit on our down payment until the next "housing correction" and hopefully buy in at $450k. Luckily we got in on our starter home in the burbs 3 years ago so we aren't in a rush.
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Apr 4, 2018 16:53
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So to be more serious than I was in my last posts, I have actually been thinking about buying a home for a while now. There's one foreclosed house that's sitting at a just reduced price of $37k, it's small, out of the way, and there're obvious issues of needing appliances and flooring in the bedrooms (And drywall on the wall between them), but it doesn't seem awful. The cost calculators I've checked make it look like I'd actually be saving money vs renting basically immediately. The house is 4x bigger than my lovely apartment, has a washer and dryer, and has a second room that could be used as an office or more likely rented out since someone I know has expressed interest in such an arrangement over living in a similarly lovely apartment to mine. My gut is telling me to jump on this, but I worry that I might be setting myself up for failure somehow. For context the place I live right now is a ~150 square foot "studio" apartment which I pay $550 a month for, plus utilities. My biggest problems are that I absolutely can't stand only having a mini fridge, it's always freezing even with the heat on because there's only the thinnest carpet directly on the slab, so the cruel Minnesota winter is always just under foot, sucking all the heat in, and the building can be best described as "sketchy" walking down the halls you get to see plenty of crack in the walls, and quite a few water stains in the ceiling. Most of the other tenants I've spoken to have had issues with the property managers as well, some claim they've come into their apartments unannounced, others have mentioned issue with the sewers backing up into their apartment (!), and I've personally heard them trash talking tenants and divulging way too personal of information about them to random people. So at the end of the day I definitely don't want to continue living here at least, unfortunately every other building in the area doesn't allow pets, which is a dealbreaker, an I'd have to move at least half an hour away and pay even more for one that does. Meanwhile the house, while out of the way and with some issues of it's own, is still within walking distance of my work, will allow me to keep my cat (and adopt another, which I've been wanting to do as well), and has the potential to offset part of it's cost with rental income. So is pursuing this option reasonable, or am I crazy/missing something? Talk me into/out of this goons. Oh, I guess I should expand on way I feel worried about this in the first place, it's not really rational, I just have anxiety.
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Apr 4, 2018 18:00
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It's probably reasonable, depending on some things. What do your finances and credit score look like? Do you already have cash for renovations or would you be looking at using a renovation loan to fix the place up? If you hire a home inspector and he's like "this place could collapse at any moment" are you cool with losing ~$1k and walking away? If you do decide to pursue this house I'd suggest hiring a standard home inspector, a plumbing inspector, an HVAC inspector, and a foundation inspector. Any discovered problems will not be fixed by the bank; the purpose of these inspectors will be to identify problems worth walking away over or that you'll want to have fixed during renovations Also investigate the neighborhood, make sure it isn't break-in central or something Otherwise, good luck. Foreclosed homes are a bitch to buy but you can wind up with a great deal sometimes
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Apr 4, 2018 19:03
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Vonnie posted:$37k Jesus christ.  The payments on that are <$200/month P&I. I would expect to spend that again to get the house into pristine state. Does Minnesota offer any energy efficiency upgrade rebates? You're going to want to do those immediately to keep your utility bills sane. 4x the size in this case is probably going to mean close to 4x the utility bills in the winter if you don't do some serious upgrades. (I don't know when this house was built, or what its current condition is but think: Insulate the walls, attic. New furnace and forced air unit. Windows.) You're probably looking at $7,400 down to even talk to the bank, plus several thousand in closing costs, on top of the inspections you need to order. The bank is going to warranty basically nothing, including the title so you need to also buy "Buyers Title Insurance" (this is different from Lender's title insurance.) Call it $14,800 to buy the mortgage. I wouldn't buy this house below 20% LTV, assuming the value is in fact $37k. You stand to get a serious leg up, but it's going to require a lot of effort on your part. The mortgage payment is the easy part here.
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Apr 4, 2018 19:28
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Holy poo poo, I did a pretty small down payment on a small place and it’s like equivalent to the cash price of that entire house.
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Apr 4, 2018 20:11
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With mortgage payments like that, and rents like that, Minnesota seems like a great place to be a lovely first time landlord!
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Apr 4, 2018 21:00
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