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I'm at the point in my home-buying research where I'm having too much "oh yeah, this is very reasonable and feasible" and would appreciate some devil's advocacy if I need it. I'm a single guy looking for houses in downtown Madison that are under $350,000, and hoping to close between April 15th when I get my bonus and July 15th, to give me enough time to move out of my apartment before my lease is up. (And yes, I would like to move out of this one bedroom apartment that I've been in this entire pandemic over resigning my lease.) Every mortgage payment calculator I've found says the $1900 a month I've been saving for the last few months will cover the monthly mortgage. My two main questions are: 1. If I fall in love with something at the high end of my price point, and I want to avoid PMI, my emergency savings would be tight. Part of that reason is because over the last 3 years, in addition to making sure I get my full 401K company match I've maxed my annual Roth IRA contributions. I've had the account for over 5 years, so I can withdraw up to $10,000 without penalty. I know the conventional wisdom is to never touch your retirement accounts without a great reason. Is the fact that I put money into a Roth instead of leaving it in savings for a down payment one of those reasons? I'm a 35 year old computer toucher, so that withdrawal could grow for a while - or it ends up being a few months of a loan where I "pay" in lost growth. Also, I don't think I'm relying on this possibility, but it would be really awesome to have additional financial flexibility during those first few months when I just paid a down payment. 2. I have two months before I'd even entertain getting emotionally invested in a home. I was thinking about just seeing houses to figure out exactly what I'm looking for. If it wasn't a pandemic (or -10 degrees out) I'd be hitting up open houses pretty regularly. Any advice for just window shopping for homes?
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Feb 14, 2021 04:23
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Interview a couple realtors ahead of time, ask friends and family for a referral. Pick one you are comfortable with instead of going with the first one you talk to or the listing agent
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Feb 14, 2021 04:36
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Hey, a fellow single computer toucher first time buyer! I'm wondering, do you think you'll stay in this theoretical house more than 5 years? With my numbers, that's the typical break even point I'm seeing, although there can be non-financial benefits to ownership. I like this calculator, it's simpler and a bit clearer than the NYT one: https://www.nerdwallet.com/mortgages/rent-vs-buy-calculator. Personally, having to commit to something for 5+ years is freaking me out so I may rent again. I've gone back and forth on this mentally 100 times. I'm in Chicago and I'm going for a condo instead of a SFH also, so that's going to be different. You can take contributions out of your Roth IRA any time, but I would discourage doing so. An edge case where it would be acceptable is pulling out some contributions for the current tax year, but being sure to put those contributions back before the end of the same tax year. Otherwise you are saying goodbye to that tax advantaged space from a previous tax year forever, you will never be able to use it again. For window shopping homes I'm using Redfin, but Zillow is fine too, or any of those sites. I need to be pretty sure a house could be a match for me to actually talk to my agent and set up a showing. I do that with the photos and relevant numbers on each listing (list price, taxes, HOA in my case) and the monthly payment calculator. Inner Light fucked around with this message at 04:49 on Feb 14, 2021 |
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Feb 14, 2021 04:42
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If you want to move quickly, which might be important in this sellers market, I would try to get pre-approved for your mortgage at the high end of whatever you are willing to spend. It will only get worse once the weather heats up. If you want to see what you want try to go out to homes now (even if it is cold). Talk to friends/co-workers and see if they have a good real estate agent they can recommend. A good agent will be able to help you out a ton with private viewings and finding new places that are coming on the market. At the bare minimum start looking at Zillow/Redfin daily and refine by your price range/area/size. You can also just drive around the areas you are looking to buy in and see what the neighborhoods are like and what is nearby. Regarding the IRA stuff, conventional wisdom is to not touch it yea but if you want to move out and your job is stable it may not be that big of a deal. I would talk to a mortgage agent about your finances and see what they think is best.
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Feb 14, 2021 04:45
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Coco13 posted:I'm at the point in my home-buying research where I'm having too much "oh yeah, this is very reasonable and feasible" and would appreciate some devil's advocacy if I need it. I'm a single guy looking for houses in downtown Madison that are under $350,000, and hoping to close between April 15th when I get my bonus and July 15th, to give me enough time to move out of my apartment before my lease is up. (And yes, I would like to move out of this one bedroom apartment that I've been in this entire pandemic over resigning my lease.) Every mortgage payment calculator I've found says the $1900 a month I've been saving for the last few months will cover the monthly mortgage. My two main questions are: 1. Pay the small amount of PMI over being put in a potential position to need to put something on a credit card. Make sure the PITI payment is what you expect, not just the "PI". If you've been saving your expected monthly mortgage payment in full every month on top of your rent then you're probably in a good position, assuming your rent isn't like $300. Don't withdraw from retirement to fund a house. 2. Learn what smoke is getting blown up your rear end early and often. (Hint: I hope you like smoke.) Figure out what kind of layouts and features you want which aren't easily added later.
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Feb 14, 2021 04:51
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Inner Light posted:Hey, a fellow single computer toucher! I'm wondering, do you think you'll stay in this theoretical house more than 5 years? Yeah, absolutely. Thinking in that dimension, I'm hoping to find something that's in my location that has just enough house where a second kid on the way (again, currently single) would probably mean looking. slave to my cravings posted:If you want to move quickly, which might be important in this sellers market, I would try to get pre-approved for your mortgage at the high end of whatever you are willing to spend. It will only get worse once the weather heats up. If you want to see what you want try to go out to homes now (even if it is cold). Talk to friends/co-workers and see if they have a good real estate agent they can recommend. A good agent will be able to help you out a ton with private viewings and finding new places that are coming on the market. At the bare minimum start looking at Zillow/Redfin daily and refine by your price range/area/size. You can also just drive around the areas you are looking to buy in and see what the neighborhoods are like and what is nearby. Ha, part of what made me think "wow, this is going too well" is that right before I posted I contacted 4 realtors that were all referrals from friends. 3 already got back to me. H110Hawk posted:2. Learn what smoke is getting blown up your rear end early and often. (Hint: I hope you like smoke.) Figure out what kind of layouts and features you want which aren't easily added later. This is the one that I kind of can get a feeling on through Zillow or Redfin, but is the big reason why I want to start doing in-person showings. I'm well into the several-times-a-week Zillow habit. (I actually was looking at the multi-million dollar places in rural Wisconsin. I can tell you I do not like any of those layouts.)
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Feb 14, 2021 05:03
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Coco13 posted:Yeah, absolutely. Thinking in that dimension, I'm hoping to find something that's in my location that has just enough house where a second kid on the way (again, currently single) would probably mean looking. Another question. What if the person you eventually start dating or move in with has a commute that is far from downtown Madison? That's part of what is making me hesitate on my rent vs. buy decision. Might be an oddball concern but it could be relevant, no? I asked my realtor what % of his clients are searching as a couple vs. single folks, and he said it is something like 90% / 10% which gave me pause. e: I just looked at the average numbers for Madison... I think they are different than Chicago enough to make this not apples to apples. Average rent is like $1300/mo vs. $1800 in Chicago, and house prices will be very different. Inner Light fucked around with this message at 05:28 on Feb 14, 2021 |
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Feb 14, 2021 05:14
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Coco13 posted:
Is this the high end of your price point while looking just at a mortgage calculator? Or all-in calculation (taxes, higher utilities bills, repairs, insurance, etc?) If you're at the high end just with PMI but before you've included those other item you're guaranteed to start out underwater. If it's just about getting that 20%...most Americans treat their homes as retirement accounts. It's not the worst - just not "bing bong maximizing my returns" advised.
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Feb 14, 2021 07:33
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How difficult will it be in the future to un-bundle my mortgage and home insurance payments? Right now it’s set up to be paid through my lender. So that monthly I just pay the bank one check and they pay the insurance company. My mortgage has been conditionally approved and they’re more or less just waiting in the home insurance info. But as of right now the insurance is tied to the mortgage as a default-setting Is it common to have them separate? Is it even wise to do so?
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Feb 14, 2021 09:23
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Coco13 posted:I'm at the point in my home-buying research where I'm having too much "oh yeah, this is very reasonable and feasible" and would appreciate some devil's advocacy if I need it. I'm a single guy looking for houses in downtown Madison that are under $350,000, and hoping to close between April 15th when I get my bonus and July 15th, to give me enough time to move out of my apartment before my lease is up. (And yes, I would like to move out of this one bedroom apartment that I've been in this entire pandemic over resigning my lease.) Every mortgage payment calculator I've found says the $1900 a month I've been saving for the last few months will cover the monthly mortgage. My two main questions are: I bought in that price range when I was single/your age-ish and it worked for me, but as other people have stated it will not be a good idea to buy if you're not going to be in the area in five years. Kids were not a concern for me, though. If you don't have other debt that $1900/month should be fine for mortgage and insurance. Don't lose the most valuable dollars in your retirement accounts to buy a house. If you can't complete the purchase (and remember that there are several thousand dollars in closing costs on top of the purchase price) with a healthy emergency fund, you can't afford that house. As a homeowner you will need that e-fund more than ever. Finding a local credit union to give you a solid pre-approval (this will involve a credit pull) right now will be a handy exercise for later. Definitely go out and see houses in the area you want to live that meet your criteria. You'll need to get experience walking through them before you're under pressure to buy. Remember that house transactions are often 60+ days long. If you have someone in your life who's done a few renovations, try to take them through the houses as you look (or just have them look at them separately). If you don't have anyone like that around and need a sense of what is easy to change and what isn't, maybe try watching some house flipping shows (just understand that you will pay way more than they do for the work). Talk with your realtor about what you would bid for a home, what they recommend, and then see what those houses close for. Be very distrustful of flips. There's an awful lot that fresh paint and drywall will hide, and it's easy to let the halo from new granite in the kitchen cloud your vision of the terrible storage situation. Think about what you have and where you would put those things, and what you would do with the available space. Bring a measuring tape. Remember that there is always another house. Don't fall in love with a house and compromise your financial future to get it. As long as you continue to save like you do, you'll be better set up to get one that's right for you.
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Feb 14, 2021 10:20
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We did a meeting with a Redfin agent as we prepare to move to Denver. It seems like things are different in that it sounds like agents are salaried, which is definitely nice in some ways, but from what he said, we'd potentially be looking at working with 3 different "groups" of agents if we buy through them: 1. Him, who would work with us to negotiate price/contracts/etc 2. Agents that might show us houses, which could vary depending on time/date/location. 3. A separate agent after our offer was accepted to work on closing We're flying in to Denver this week and we're planning on going to see a house we're interested in that has been sitting on the market for a long time (wondering what the red flags are), but I'm curious if anyone has any thoughts on whether it might make more sense for us to work with a traditional agent since we're remote buyers. In some ways, with everything going on, less face to face might be better, but I think I'm going to have a tough time buying anything without at least seeing it face to face. We're definitely fine holding off on buying for a bit if needed/renting, but my wife knows Denver pretty well from living there before and we have a good idea of where we're looking. Separately, any suggestions on how to handle selling a house/buying a house across the country? We're planning on moving at some point in June, and thinking about timing my job, my wife's job, new jobs, selling house, buying house, getting movers, shipping cars, etc seems like it's going to get annoying. It looks like homes are on the market in our area a median of 38 days. If we're targeting June to move, when should we be putting it on the market/trying to sell it? Residency Evil fucked around with this message at 13:21 on Feb 14, 2021 |
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Feb 14, 2021 13:14
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We are under contract, but via a VERY stupid and risky route that I cannot recommend. Realtor mentioned a pre-market house that we could offer on if we liked it as a drive-by. We liked it because we can't really afford to be picky right now and it was the right size and area - I was able to peek in through the windows and get a quick look at the exterior. Also, I definitely felt like a burglar scoping out the neighborhood doing this. We decide to offer with a staggered due diligence - $250 to see the house, then $14,750 if we decided to go ahead with the offer. The sellers returned with "hell no" because the way it was explained to them was it would go contingent and then back on the market if we backed out, which would look bad. Our realtor said that this wasn't the case, but nothing we can do about how it was explained to the sellers. They said full due diligence or no deal. Hadn't seen the inside of the house yet. We asked about when all of the big ticket items were last updated through our realtor - roof, HVAC, kitchen update, appliances, etc. And they sent us a floor plan. They accepted our offer site-unseen with a due diligence of $15k, offer price 10k over asking, and as-is condition. Because it sounded good on paper and I decided to trust the owners who seemed to care an awful lot about this house. Did our tour Friday after due diligence was picked up and because we are apparently incredibly lucky, this 60 year old house appears to have nothing blatantly wrong with it and it actually very well updated. If it had gone to market, it probably would have gone for $30k + over asking. We really aren't sure why they accepted our offer, but we aren't complaining. Just waiting for the other shoe to drop. Inspection is Tuesday! Also, this 100% would not have been an option if we'd use Redfin. Our agent is incredibly on top of everything and I love her.
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Feb 14, 2021 16:24
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Yeah, that’s what I’m debating. Apparently things move quickly in Denver and I’m not sure if Redfin agents will know about listings like that.
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Feb 14, 2021 16:32
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Koala Food posted:We are under contract, but via a VERY stupid and risky route that I cannot recommend. Realtor mentioned a pre-market house that we could offer on if we liked it as a drive-by. We liked it because we can't really afford to be picky right now and it was the right size and area - I was able to peek in through the windows and get a quick look at the exterior. Also, I definitely felt like a burglar scoping out the neighborhood doing this. We checked out a townhouse a few weeks ago that seemed pretty good, but dithered and it sold. Yesterday another unit in the next building over that looks essentially identical (only difference is that it has a walkout basement instead of an extra room on the third floor) came on asking the exact same price. I'm inclined to just make an offer at the same price the other one sold at sight unseen, contingent on inspection.
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Feb 14, 2021 16:35
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Residency Evil posted:Yeah, that’s what I’m debating. Apparently things move quickly in Denver and I’m not sure if Redfin agents will know about listings like that. You'll be bidding on houses that have 30 offers by the time you make yours. Most of the offers will be over the asking price. You will have to compete against cash offers and waived inspections. Good luck.
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Feb 14, 2021 16:43
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Happiness Commando posted:You'll be bidding on houses that have 30 offers by the time you make yours. Most of the offers will be over the asking price. You will have to compete against cash offers and waived inspections. Cool. Cool. 
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Feb 14, 2021 16:50
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Residency Evil posted:We're definitely fine holding off on buying for a bit if needed/renting, but my wife knows Denver pretty well from living there before and we have a good idea of where we're looking. Don't overoptimize this like you're trying to buy a TV. You're two wealthy doctors. It's going to be expensive and stressful to do what you're hoping to do, do you have kids also? Your fancy pants new jobs don't have a relocation budget? Either way, ask your new jobs if they have a relocation company they work with, and corporate housing they can set you up in for the interim. If you don't have budgets from them for either one, just pay out of pocket. Just pay people to pack and ship your old house and cars. Someone else here or on the internet can tell you how not to get scammed doing that. Hire a real realtor, not some redfin hack job. Denver and the surrounding area isn't crazy hot but there are a decent number of tech bros and similarly wealthy people who are going to be looking at the same houses. If your wife has connections use them, otherwise I can ask at work - though I probably will only get Boulder / Longmont recs. Do a furnished rental for however many months and call it a day at whatever corporate housing is around. It will be eyewateringly expensive, but it's only a few months, I bet you could get by with a 3 bedroom apartment. Same deal on the outbound side, hire a real realtor from your connections in the area.
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Feb 14, 2021 17:08
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Residency Evil posted:Yeah, that’s what I’m debating. Apparently things move quickly in Denver and I’m not sure if Redfin agents will know about listings like that. I've repeatedly said in this thread all of the bad things about realtors. I've often said that one of the very few good things are that good ones know the local market, the other realtors in the market and have access to things exactly like this pre-market house. To paraphrase others: you are a couple of wealthy doctors: why are you trying to use a budget home buying and selling service? This sounds not like thrift, but more like min/max cheapness, and that's not going to serve you well.
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Feb 14, 2021 17:18
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Motronic posted:To paraphrase others: you are a couple of wealthy doctors: why are you trying to use a budget home buying and selling service? This sounds not like thrift, but more like min/max cheapness, and that's not going to serve you well.
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Feb 14, 2021 17:38
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I would 100% always rent when moving to a new city. I can't imagine how much all the poo poo related to buying a house would add to the stress of a long distance move. Not to mention not being able to see the house you're buying in person, or having to cram showings into one weekend trip (an especially tall order when houses are only on the market for a few days). And not to mention not really knowing the city yet or where you would want to live in it. We moved to a pretty easygoing small city and it still took us months of consistently looking and being ready for showings on day 1 or 2 after any new listing to find the right house, inventory is just so low. I can't imagine doing that without living here yet. e: look for a rental with a decent lease breakage clause or month to month, our lease just now cost us one month of rent to break which isn't bad. Some will charge you the entire remainder of the lease 
alnilam fucked around with this message at 17:46 on Feb 14, 2021 |
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Feb 14, 2021 17:38
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I will mention anecdotally that nearly all of the single people I knew who bought a house when single ended up selling that house when they got married; even if they bought a family-friendly house. It’s too major a purchase to not have an influence over for many people; feeling like a guest in “your house” vs “our house.”
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Feb 14, 2021 17:42
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PCjr sidecar posted:I will mention anecdotally that nearly all of the single people I knew who bought a house when single ended up selling that house when they got married; even if they bought a family-friendly house. It’s too major a purchase to not have an influence over for many people; feeling like a guest in “your house” vs “our house.” I've had exactly the same experience with my friends. It's rarely worked out in location and even when it does.......it doesn't work out relationship-wise.
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Feb 14, 2021 17:44
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The last time we told RE he was making sub-optimal choices he ended up bathing in the tears of Comcast executive; so I’m excited to see where this goes. incredible deal on the illuminati cavern complex under DIA
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Feb 14, 2021 17:47
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Thanks guys. We do have a budget for relocation so yeah, the physical moving is being taken care of, but i'm more worried about the juggling of timelines of closing here/moving/packing/etc. I'm not set on using Redfin. My wife has tons of friends in Denver who all know real estate agents, so we have plenty of recommendations. I'm just curious about it since for our current house, we literally met our real estate agent for the first time at the first random open house we went to, saw that house, liked it, and bought it. Our agent was great, but I'm sure that was a pretty unique situation. Thanks for the suggestions, we'll probably just speak to some of the agents our friends like. Dik Hz posted:It's the classic doctor mentality of thinking they're experts at everything because they're experts at one thing. Hire an expert, trust that expert. Nah. FWIW, I pretty much crowdsource my investment/financial advice to BFC and it's worked our pretty well. PCjr sidecar posted:The last time we told RE he was making sub-optimal choices he ended up bathing in the tears of Comcast executive; so I’m excited to see where this goes. No joke, this still makes me smile. H110Hawk posted:Don't overoptimize this like you're trying to buy a TV. Missed this. 
Residency Evil fucked around with this message at 17:58 on Feb 14, 2021 |
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Feb 14, 2021 17:54
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Had our offer rejected on another house last night because people continue to do crazy poo poo like waive inspections and whatnot. Back to the grind...
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Feb 14, 2021 18:40
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The plumbing in our apartment kitchen froze so instead of hunkering down we're out looking for houses because gently caress this place. There's one that's been sitting on the market with no takers, goofy 1950 split level with an addition. Mostly seems to be in OK shape, has a couple windows that will need replacing. It's on a significant artery (albeit a quieter stretch) and has an odd layout, which we think is probably doing the bulk of keeping buyers away. Not ideal for us either but beggars choosers etc. and we probably care less about these things than a lot of buyers. The one big concern for us is the HVAC; the heater/AC units are only 7 years old, but it's a long house and the heat doesn't seem to reach the ends well. The thermostat was cranked to 76 and the far corners of the basement were still on the cold side while the master bedroom (which is directly over the furnace) was sweltering even with the door open and vents mostly closed. How expensive/feasible would it be to fix the air flow issues? It could be an insulation problem too but the cold spots didn't feel drafty.
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Feb 14, 2021 18:58
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Straight White Shark posted:The one big concern for us is the HVAC; the heater/AC units are only 7 years old, but it's a long house and the heat doesn't seem to reach the ends well. The thermostat was cranked to 76 and the far corners of the basement were still on the cold side while the master bedroom (which is directly over the furnace) was sweltering even with the door open and vents mostly closed. How expensive/feasible would it be to fix the air flow issues? It could be an insulation problem too but the cold spots didn't feel drafty. Undersized/incorrectly installed HVAC in the addition. It's gonna be expensive no matter what, but the cheapest route would be a bunch of mini splits. Wouldn't really be able to suggest how many without a floor plan and existing HVAC runs. This is definitely a "get a contractor out there to look at it as part of your contingencies" issue unless you're getting this for significantly below market.
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Feb 14, 2021 19:19
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Mackieman posted:Had our offer rejected on another house last night because people continue to do crazy poo poo like waive inspections and whatnot. Back to the grind... Yeah, this sucks. Sadly, this is how it goes with buying in a overheated market. Heck i've seen some just waive the financial guarantee. meaning if they can't secure the mortgage, they are out 10% of the price.
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Feb 14, 2021 19:50
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Residency Evil posted:We did a meeting with a Redfin agent as we prepare to move to Denver. It seems like things are different in that it sounds like agents are salaried, which is definitely nice in some ways, but from what he said, we'd potentially be looking at working with 3 different "groups" of agents if we buy through them: Having just sold a house in Denver (technically Aurora) and trying to buy in San Diego/Seattle within the last 4 months I will say that the Denver is not nearly as competitive as it seems to be advertised online. Admittedly, we were not downtown, but houses stay on the market for a good amount of time and don't really go for much over asking that other parts of the country do. Depending on how well your wife knows Denver and it's surrounding communities, you may be fine without a traditional agent's knowledge of the areas to help guide you (we weren't and ended up in Aurora because of our realtor and it was a great decision in hindsight), but I think you really need to be looking at interviewing agents to find the ones that can best facilitate remote house hunting. I'm not saying a redfin agent can't necessarily be capable of this, but in my experience they're usually not as experienced or trained and I wouldn't count on then to be as flexible and accommodating as you need. When interviewing agents to sell our house there were a ton of agents who had specifically adjusted and tailored their services to the COVID/'new' technology/remote viewing world and you definitely want one of them to make remote hunting not be completely miserable. If you find the right one there's no reason you need three different agents instead of just one. I wasn't excited about remote hunting (but can't travel for reasons) but we found an agent that does it and it's actually super simple and easier than in person since I don't have to drive anywhere; it's basically through Zoom/Facebook messenger/etc and then we can either fly out to look at a place when we are ready to offer or for the inspection after an accepted offer. This only works if you absolutely trust your agent and they are incredible responsive and flexible to your constant texts and requests to look at houses, take measurements and pictures, etc, which is why I would not go with generic assigned redfin agent. A good traditional agent should be able to answer your questions on timing as well. PageMaster fucked around with this message at 20:00 on Feb 14, 2021 |
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Feb 14, 2021 19:52
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Sefal posted:Heck i've seen some just waive the financial guarantee. meaning if they can't secure the mortgage, they are out 10% of the price. Some people are paying cash. And they're out their earnest money plus what they've spent on inspections, etc, not 10% (unless you are in a market where somehow that's exactly the amout of earnest money everyone charges) if they have financing fall thought without a finance contingency.
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Feb 14, 2021 20:56
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nvm
biceps crimes fucked around with this message at 04:24 on Feb 15, 2021 |
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Feb 15, 2021 00:38
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Coco13 posted:1. If I fall in love with something at the high end of my price point, and I want to avoid PMI, my emergency savings would be tight. Part of that reason is because over the last 3 years, in addition to making sure I get my full 401K company match I've maxed my annual Roth IRA contributions. I've had the account for over 5 years, so I can withdraw up to $10,000 without penalty. I know the conventional wisdom is to never touch your retirement accounts without a great reason. Is the fact that I put money into a Roth instead of leaving it in savings for a down payment one of those reasons? I'm a 35 year old computer toucher, so that withdrawal could grow for a while - or it ends up being a few months of a loan where I "pay" in lost growth. If you have good credit PMI can be very small. I pay $82.50 a month on a $500k mortgage that I put 10% down on, and next month it will drop to ~$50 with a refi, and drop off completely in october (they would not waive it at 19.1% value, oh well). I strongly recommend keeping ample emergency funds, buying and owning a house is extremely expensive.
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Feb 15, 2021 07:50
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Not really falling in love with anything that's coming up on the market these days and it's all getting sold within hours for probably more than I was willing to pay. I'm leaning more and more into the idea of buying a pre-construction build in the outer suburbs, on the theory that the stuff that's in less developed areas have a greater potential for more rapid appreciation in the future. Such a build wouldn't be finished until early next year so I'll rent for another year which is fine, my rental situation is great and I'm only buying because of FOMO.
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Feb 15, 2021 08:02
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Can someone help me understand the bi-weekly mortgage payment "trick"? I'm trying to figure out what to set my mortgage payments at, as most calculators use PI not PITI to calculate how much it should be. Should I make my escrows payment (the TI part of the payment) as part of the first payment each month? or should I make it as a part of each biweekly: For a math example: Lets assume my mortgage Principal+Interest is 1500 a month. My Taxes and Insurance is another 500. Total payment 2000. Option 1: Pay 1000 every 2 weeks Option 2: Pay 1250 in payment 1, 750 in payment 2. Which of these is the right way to do biweekly mortgage payments? For those who are asking "WTF is lord1234 talking about?" here's a handy link: https://www.mortgagecalculator.org/calcs/biweekly.php
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Feb 15, 2021 15:39
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lord1234 posted:Can someone help me understand the bi-weekly mortgage payment "trick"? I'm trying to figure out what to set my mortgage payments at, as most calculators use PI not PITI to calculate how much it should be. Should I make my escrows payment (the TI part of the payment) as part of the first payment each month? or should I make it as a part of each biweekly: In theory, you pay half a mortgage payment every 2 weeks, and then at the end of the year you've made 13 mortgage payments instead of 12. If it lines up with your paychecks, so much the better. I've only ever seen it done when taxes and insurance are paid separately, and I suspect you need to be constantly ahead of schedule in case your first bi-weekly payment of the month doesn't line up with the due date. The whole thing seems like a very 1950s solution to a problem that isn't a problem in 2021 if you have access to auto-draft and a calculator. With escrow involved I'd just add on 8.333% (1/12th) to each monthly payment, pay them on the first, and never worry about anyone mischaracterizing them as partial payments or something. You can even pay a different amount that works better for you! Maybe $2200 fits in your budget just as well as $2167 and you shave another month off the mortgage. Or $2150 for an "extra" month. It's all just different ways to pay extra on your principal.
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Feb 15, 2021 16:20
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Intetest rates are so low right now, you’re almost certainly better off paying the mortgage as slowly as possible and investing the rest.
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Feb 15, 2021 16:44
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lord1234 posted:Can someone help me understand the bi-weekly mortgage payment "trick"? I'm trying to figure out what to set my mortgage payments at, as most calculators use PI not PITI to calculate how much it should be. Should I make my escrows payment (the TI part of the payment) as part of the first payment each month? or should I make it as a part of each biweekly: Don't do this. If you want extra to go to your principle just add that amount in the "extra principle" line of your autopay. The biweekly thing only applies the extra payment at the end of the year when you hit 26 halves. You then have to also run 1 half payment ahead to ensure you aren't "late" ever. It's a bad idea these days. It's also suboptimal if you want to min/max your investing assuming your rate in <=3%. Auto deposit the 1/12th of your payment into a low fee index mutual fund. If you want to pay your mortgage early, add 1/12th to the "extra principle" line in the autopay.
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Feb 15, 2021 17:02
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Mackieman posted:Had our offer rejected on another house last night because people continue to do crazy poo poo like waive inspections and whatnot. Back to the grind... We waived inspection and financing contingency and did a partial appraisal contingency to get the house we wanted in the overheated D.C. market. You can still get a pre-inspection before putting in an offer, but there's no question it's a gamble. And I was sweating pretty hard ITT about the appraisal. It's stupid that it comes to that, but your choices are basically to either be really patient, make compromises or be willing to out-stupid other people.
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Feb 15, 2021 17:28
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SlapActionJackson posted:Intetest rates are so low right now, you’re almost certainly better off paying the mortgage as slowly as possible and investing the rest. Depending on what you're investing in, of course. If you hold bonds in your portfolio, paying your mortgage likely pays better than those right now. It's important to realize that you're investing in stocks using your mortgage as additional leverage. This will *probably* work out in your favor based on various assumptions and historical performance. The biggest risk is probably behavioral: you need to know yourself well enough that you won't do dumb things like spend that difference instead of investing it and that you won't panic when a market crash happens.
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Feb 15, 2021 20:58
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B-Nasty posted:Depending on what you're investing in, of course. If you hold bonds in your portfolio, paying your mortgage likely pays better than those right now.
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Feb 15, 2021 21:26
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