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I guess I'm gonna lurk here for a while. I should be getting my school loans forgiven here soon and after that I'll (finally) start lookin to buy my first home. Hi, thread!
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Oct 8, 2021 15:41
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can someone tell me if this is the (incredibly approximate) way to think about the cost of getting a new home, I'm ignoring all the fees and poo poo for simplicity the total p+i I owe on my current home is about 115k (935 for 124 months). Let's say I sell my home for 300k. This means my equity is 185k, so that's how much money I get from the mortgage company. If I were to put all this towards a new home, I would look at how much p+i I would pay for that loan, but also subtract off the 115k that I'm no longer going to pay since I sold my first home, to get an idea of how much additional cost a new home would be.
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Oct 8, 2021 20:47
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actionjackson posted:the total p+i I owe on my current home is about 115k (935 for 124 months). Let's say I sell my home for 300k. This means my equity is 185k, so that's how much money I get from the mortgage company. Unless I'm misunderstanding, you'd get more since when you pay off your loan, you pay off the principal plus the interest accrued for the current month, not the interest that would have accrued for the remainder of the original term. You should be able to find remaining principal either from your servicer or if you stuck to exactly your monthly payments, the amortization table you got when you signed
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Oct 8, 2021 20:55
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actionjackson posted:can someone tell me if this is the (incredibly approximate) way to think about the cost of getting a new home, I'm ignoring all the fees and poo poo for simplicity That's not how this works. If you pay the mortgage as agreed, yes, you owe $935/mo for 124 months. But you also have a payoff amount that's just the remaining principal on the loan, which depending on your interest rate could be anywhere from somewhat to significantly less than $115k. Also, when you sell, the money technically comes to you from the escrow company, paid to them by the buyer/buyer's bank. The escrow company sends your mortgage servicer the payoff amount and sends you the rest (minus all the other transaction costs as well - commissions, etc) Edit: to address the second part, because unless you're dealing with one of the various ibuyer-type companies that let you 'trade in a home', buying your new home and selling your existing one are two separate transactions. If you're in a position where you can sell the old house first, or you make the new purchase contingent upon the sale of the old house, then you can put some/all of the money from your old house sale into the new down payment. IOwnCalculus fucked around with this message at 21:00 on Oct 8, 2021 |
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Oct 8, 2021 20:58
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Go check your last mortgage statement and see how much principle you owe still. This is +/- 1000 of what you'll pay the bank when you sell your house. If your principle is $149,000 and you sell the house for $300,000 then you have $151,000 in equity, which you can then roll that over into a new mortgage. In theory if your income matches your desired house, you could put that $151k down as 20% equity on a $755k mcmansion/30 more years of debt
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Oct 8, 2021 21:03
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actionjackson posted:can someone tell me if this is the (incredibly approximate) way to think about the cost of getting a new home, I'm ignoring all the fees and poo poo for simplicity Sale of current home: Starting with the home sale price of $300,000, subtract the realtor fees. Let's say 6% for simplicity. Then subtract the principal owed on your current home mortgage, ignoring interest that hasn't accrued. Your mortgage statement should show you the current principal value. For illustrative purposes, I'll use $100,000. $300,000 - $18,000 goes to seller agent -$100,000 goes to mortgage lender Net proceeds = $182,000 goes to you. There may be other fees associated with selling/closing (seller credit, staging, etc), or variations depending on timing, but this more or less what you'll see. With that $182,000, you can do whatever you wish. Want to put that toward another house? Consider down payment, closing costs, and any other improvements you wish to make to the house, as well as whether you can afford the new payment. e: f,b but whatever Magicaljesus fucked around with this message at 21:06 on Oct 8, 2021 |
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Oct 8, 2021 21:04
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thanks - my outstanding principle balance is 96K. So in your example, if I sell for 300K, and the new home is 300K, subtract 6% giving 282K, then subtract 96K giving 186K. If I did a 10 year mortgage at 2.875%, I would owe 1011 p+i, for a total of 121320. But if I stay where I am currently, I will owe 115940. So about a 6k increase given the sell and new home price are the same. If the new home is 350k, that's 1477 over the same ten year period with the same interest rate, so 177240. So about a 62k difference vs. my current home. I'm really trying to just get an idea of what new max home price I'd be comfortable with, conditioned on my current home selling for X. For whatever it's worth, the zillow estimate tends to be between 240-250k - I bought in 2011 for 170k (good timing!). But I'm also almost completely remodeling/modernizing my place (for myself, not as a financial thing, though that's obviously a nice side benefit), so that will certainly increase the value to some extent. I think the only things that stay with my place when I sell that I have not improved are uh... the dryer? actionjackson fucked around with this message at 21:24 on Oct 8, 2021 |
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Oct 8, 2021 21:21
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A couple more things to keep in mind: Your bid on a new home, if it is contingent on the sale of your current home, will be less attractive than an exact same dollar amount bid from someone who does not have that sale contingency (and they, in turn, are less attractive of a bid than an all-cash no-contingencies bid). So, if you can, it may be to your advantage to sell first, move into a short-term rental, and then buy. Lots of people don't, and they mostly manage anyway, but you might have to overbid by more in order to win a house with multiple bids, if you go in with a sale contingency. You probably won't owe any capital gains taxes on the increase in value of your home - for most people in most situations and at the dollar amounts you're talking about, it's exempt. But, make sure, by asking your tax advisor, particularly if you have any unusual tax situations. Definitely if the home you're selling isn't your primary residence, for example. Also keep in mind the property tax and insurance on a more expensive house will probably be higher. Maintenance costs could be the same, higher, or potentially lower if the new house is in better shape/higher quality construction/etc. e. also "Zestimates" are absolute garbage. Look for actual recent sales that are actually comparable, and adjust for condition, square footage, neighborhood, etc.
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Oct 8, 2021 21:44
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thanks. this would be in the same city so the property taxes should be similar. Unfortunately there's very few condos in my area - I am in a small 15 unit building. The one right above me does have the exact same layout, and was sold last May (for 223.5K) but obviously the market has gotten hotter since then. It's also kind of a weird comparison because that condo had to be completely gutted (down to the rafters and concrete) because the previous owner left water running while gone on a long trip, and it got mold. That owner almost never lived there, so while new flooring was put in, everything else was original, like all the appliances, HVAC, and all the flooring in the areas that weren't carpeted. It was bought when it was 15 years old, so I think it was with the expectation that the appliances and HVAC were at end of life (not surprisingly they all died soon after) As for me, I'm in the process, or have completed: replacing all carpet with hard flooring (2020) retiling the hideous bathroom and kitchen floor (2020-22) new appliances (2021) new AC (2020) new furnace (2020) new water heater (2020) new washing machine (2019) new countertops and vanity top (2019) updated fixtures and sinks (2021) refinished shower (2019) full repainting (2021) and probably the biggest thing, remodeling all the cabinets from framed to frameless (and with those cool doors that pop out when you push, so no handles needed :p) I'm having a realtor visit soon, more just to get a gauge on what I might be looking for in the future, but I don't think whatever value she tells me will be that useful, because the biggest changes haven't been completed yet, and who the hell knows what the market will look like in a few years. I lived here because I could walk to work, but now I'm WFH indefinitely, so I'm thinking about moving into the downtown area for more walkability. actionjackson fucked around with this message at 22:00 on Oct 8, 2021 |
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Oct 8, 2021 21:55
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actionjackson posted:If I did a 10 year mortgage at 2.875%, I would owe 1011 p+i, for a total of 121320. But if I stay where I am currently, I will owe 115940. So about a 6k increase given the sell and new home price are the same.
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Oct 8, 2021 22:38
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actionjackson posted:thanks. this would be in the same city so the property taxes should be similar. The property tax rate should be similar, meaning, a home that has a higher value will have a higher dollar amount to pay in taxes. Although in many places some portion of property taxes are per-lot "ad valorem" taxes which don't go up by value, so inspect your tax bill carefully. But also I didn't realize you were talking about a condo till just now, which means: also you gotta take your condo assoc. fees into account, and those can vary significantly from one condo complex to the next. You should also check the condo assoc.'s financial situation, e.g. reserved funds, upcoming liabilities... how long has it been since they replaced the roof, that kind of thing. Special assessments can be big nasty surprises. You may know all this stuff already of course, just covering the bases.
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Oct 8, 2021 22:48
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moana posted:Just to hit on this - if you are planning on selling the new home within 10 years, then it's debatably fine to get a 10 year mortgage. But if you are just planning on getting a 10 year to save a slight amount on interest, I would highly recommend that you consider getting a regular 30 year mortgage and use the extra cashflow each month to max out other investment opportunities like your 401k etc. The lower payment gives you a ton more flexibility in case of an emergency job loss or some such, and mathematically you come out ahead if your investments beat the mortgage interest rate (not hard to do at 3% over 30 years). The only reason I would say get a 10 year is if you are a spender and know you would just spend the extra cash instead of investing it. It's Friday afternoon and I don't feel like thinking too hard, but does the fact that the average mortgage is paid off after 7 years change the calculus at all? IE: you're primarily paying for interest those years?
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Oct 8, 2021 22:53
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Do you mean the average person refinances after 7 years
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Oct 8, 2021 23:02
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Hadlock posted:Do you mean the average person refinances after 7 years It varies. That includes refinancing, selling, paying it off early, etc.
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Oct 8, 2021 23:07
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Leperflesh posted:The property tax rate should be similar, meaning, a home that has a higher value will have a higher dollar amount to pay in taxes. Although in many places some portion of property taxes are per-lot "ad valorem" taxes which don't go up by value, so inspect your tax bill carefully. yep, Minnesota enacted some very strong laws about ten years ago about condo disclosures. It's also why I wouldn't buy anything older than like 2005. there's this huge report detailing everything that needs to be done in the next 30 years that you are required to do every three years by an auditor moana posted:Just to hit on this - if you are planning on selling the new home within 10 years, then it's debatably fine to get a 10 year mortgage. But if you are just planning on getting a 10 year to save a slight amount on interest, I would highly recommend that you consider getting a regular 30 year mortgage and use the extra cashflow each month to max out other investment opportunities like your 401k etc. The lower payment gives you a ton more flexibility in case of an emergency job loss or some such, and mathematically you come out ahead if your investments beat the mortgage interest rate (not hard to do at 3% over 30 years). The only reason I would say get a 10 year is if you are a spender and know you would just spend the extra cash instead of investing it. so I get this, my main concern with doing a 30 is that I feel like it could lead to me overestimating how much I should really be spending in terms of home price. If I moved it would definitely be for at least ten years, as I'm almost certainly going to be tied to this area for at least that long. actionjackson fucked around with this message at 23:47 on Oct 8, 2021 |
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Oct 8, 2021 23:30
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actionjackson posted:so I get this, my main concern with doing a 30 is that I feel like it could lead to me overestimating how much I should really be spending in terms of home price. If I moved it would definitely be for at least ten years, as I'm almost certainly going to be tied to this area for at least that long. They're suggesting you take the amount you calculated originally for a 10yr mortgage and just do a 30 instead, not keep your monthly payment the same and go to 30 yr.
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Oct 9, 2021 00:03
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gwrtheyrn posted:They're suggesting you take the amount you calculated originally for a 10yr mortgage and just do a 30 instead, not keep your monthly payment the same and go to 30 yr. ok, so going back to the 186k down, 350k new home, a ten year would give me p+i of 1574 (higher than I could afford at this point) a 30 year would be 680 (less than I am paying now) and for fees, they are similar in this building I am looking at, maybe 100 higher I guess it just seems weird to think that it's only the mortgage payment that matters. Also all the additional interest.
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Oct 9, 2021 00:09
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The point of doing the 30 year loan is that you're borrowing money at 3% against an appreciating asset, and using the money saved to invest into a tax advantaged investment account that yields 7% apr compounding on average Maybe someone over in the long term investing thread can phrase this more simply TL;DR buy money at 3% cost premium, invest remainder at 7% average return, net 4% apr profit Hadlock fucked around with this message at 00:16 on Oct 9, 2021 |
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Oct 9, 2021 00:13
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Hadlock posted:The point of doing the 30 year loan is that you're borrowing money at 3% against an appreciating asset, and using the money saved to invest into a tax advantaged investment account that yields 7% apr compounding on average no I totally get that part. I think it's more of the psychological aspect of continually being in debt, but at the same time, you still have equity, and number go up, so yeah
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Oct 9, 2021 00:15
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actionjackson posted:no I totally get that part. I think it's more of the psychological aspect of continually being in debt, but at the same time, you still have equity, and number go up, so yeah Nothing wrong with that, but numbers don't always go up. Magicaljesus fucked around with this message at 00:17 on Oct 9, 2021 |
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Oct 9, 2021 00:15
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actionjackson posted:I think it's more of the psychological aspect of continually being in debt, but at the same time, you still have equity, and number go up, so yeah Eventually you will feel a creeping desire to invade another oil producing country to protect your energy interests, but don't worry, that's natural I hate debt too but this
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Oct 9, 2021 00:20
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Also also, you can keep making the same payments you would have with a 10 year. You'll pay slightly more interest, because your rate will be higher, but not a whole lot more: and you're buying payment flexibility. So you'd pay $1k a month or whatever, but you'd have the flexibility to drop to $680 any month you needed to due to money being tight for whatever reason. For what it's worth, I decided not to do this and went with a 15 year when I refinanced, it's not a thing everyone does. Just, you should consider it an option. At the amounts you're borrowing, the total differences are not huge: I think this sort of calculus makes more sense for people borrowing half a million bucks, where being able to free up a thousand+ a month in house payments (or invest it) matters more than plus or minus $350/mo. Leperflesh fucked around with this message at 00:24 on Oct 9, 2021 |
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Oct 9, 2021 00:22
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yeah that makes sense. "number go up" is a cspam meme, but the area I'm looking at is considered very desirable (basically the north edge of downtown, right on the mississippi), and also the city is moving towards a lot more walkability (as part of a giant thing called minneapolis 2040, you may have heard of the "no single family only zoning" aspect) which will increase the appeal of downtown areas even more. they are building a pretty tall condo in the same area, the MINIMUM price for it s 1m lol (which is insane for this city)
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Oct 9, 2021 00:44
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And when the ocean swallows your house the more you owe the bank the better.
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Oct 9, 2021 00:49
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Vox Nihili posted:Bank of America finally got their docs to the title company, only a week after the closing was supposed to occur. Fun new development. Bank of America initially told us this was some sort of clerical error and promised to fix it. Now they're saying this is actually the correct rate and amount. That's right, they're saying a week after closing was supposed to be scheduled and a day after they sent over the docs to the title company that we actually owe them $3,000 for points rather than them giving us a $3,000 credit. Even though none of them seemed to know about this and we never received any sort of hint, much less full disclosure, they're claiming a document was uploaded somewhere in their online portal on September 30 that would have contained these details. Obviously, all of the loan estimates, disclosures, etc. that we had on hand very clearly say it's a credit. I have never been angrier in my life.
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Oct 9, 2021 02:30
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lol tell them to show you the document. BofA lost a bunch of money post-08 because they couldn’t provide docs prooving they couldn’t prove they owned the mortgages they were trying to foreclose. Demand the docs and be a dick if they try to gently caress around.
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Oct 9, 2021 02:39
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Do you have a rate lock with BOA? If the rate lock includes that rate w/ a credit I’d fight like hell for it. My loan officer with BOA told me straight up ignore the portal, and only do what they told us, so I would have never seen that. They can also tell if you’ve opened a doc on there or not.
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Oct 9, 2021 02:50
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Pilfered Pallbearers posted:Do you have a rate lock with BOA? If the rate lock includes that rate w/ a credit I’d fight like hell for it. We rate locked with them ages ago. And yeah, we're now in the fighting like hell stage of things.
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Oct 9, 2021 02:53
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Vox Nihili posted:Fun new development. Bank of America initially told us this was some sort of clerical error and promised to fix it. Now they're saying this is actually the correct rate and amount. That's right, they're saying a week after closing was supposed to be scheduled and a day after they sent over the docs to the title company that we actually owe them $3,000 for points rather than them giving us a $3,000 credit. Even though none of them seemed to know about this and we never received any sort of hint, much less full disclosure, they're claiming a document was uploaded somewhere in their online portal on September 30 that would have contained these details. Bank of America told my coworker, a former employee of theirs that they would waive his late fee this one time, that time was after 9-11 when all postal deliveries were suspended. They wanted him to plan ahead for 9-11.
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Oct 9, 2021 03:22
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Elephanthead posted:And when the ocean swallows your house the more you owe the bank the better. I forgot about our wonderful ocean views in Minneapolis
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Oct 9, 2021 04:10
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Residency Evil posted:It's Friday afternoon and I don't feel like thinking too hard, but does the fact that the average mortgage is paid off after 7 years change the calculus at all? IE: you're primarily paying for interest those years? Obv not the case for you, RE, but general advice I would give: Trying to save a few bucks on interest is a pretty bad idea imo if you aren't maxing your retirement savings already. Assuming a long time line to retirement, you should be able to beat 3% interest handily. Even if you invested in boring treasuries or whatever at a loss, it could still be worth it just for the flexibility. poo poo happens, you lose a job or your kid gets sick or you have to support a parent... so much can happen over a decade span that it could well be worth it to keep the money aside even if you don't invest the money in stocks. If you want to pull out cash from your home equity in 7 years or whatever and rates have gone back up, you will be refinancing into a much shittier position or eating the higher rate of a HELOC.
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Oct 9, 2021 07:27
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So basically given how low rates are, and also how small of a rate difference there is a between a 10 and 30 year, there's no reason not to do a 30 unless you plan on only being there for a short time? I will say I definitely am not maxing my 403(b) this year because of all the home remodeling I'm doing (plus I forgot that oh yeah, my HVAC and appliances were turning 15 years old the same year, whoops they need to be replaced). If I had to do it again I'd definitely do a home equity loan. Then again, my place is pretty small, and I've spent less in total than some people do just on their kitchens
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Oct 9, 2021 15:07
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Vox Nihili posted:Fun new development. Bank of America initially told us this was some sort of clerical error and promised to fix it. Now they're saying this is actually the correct rate and amount. That's right, they're saying a week after closing was supposed to be scheduled and a day after they sent over the docs to the title company that we actually owe them $3,000 for points rather than them giving us a $3,000 credit. Even though none of them seemed to know about this and we never received any sort of hint, much less full disclosure, they're claiming a document was uploaded somewhere in their online portal on September 30 that would have contained these details. If the LE and CD both say the same thing, I would expect the CFPB can resolve this pretty drat quick for you. Sucks to be BoA, but the LE and CD are pretty set in stone by law and can only change under very specific circumstances. They need to proofread better next time. They can have all the documents in the world, but if they're sending you a LE and CD with numbers on it, that's done. DaveSauce fucked around with this message at 15:21 on Oct 9, 2021 |
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Oct 9, 2021 15:18
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Long story short, but Ill be selling a house in the chicagoland area. There are some sizable cracks in the basement wall, but there has been no water issues in the basement at all. My realator and I are being proactive and getting repair estimates before listing, but i have no interest in doing the work myself. Just gonna be open about it and adjust the price accordingly. This is the only major problem with the house. Everything else has been recently remodeled or replaced in the last 5 years. Is that a big turnoff for buyers? Or is this common?
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Oct 9, 2021 17:37
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ZombieCrew posted:Long story short, but Ill be selling a house in the chicagoland area. There are some sizable cracks in the basement wall, but there has been no water issues in the basement at all. My realator and I are being proactive and getting repair estimates before listing, but i have no interest in doing the work myself. Just gonna be open about it and adjust the price accordingly. This is the only major problem with the house. Everything else has been recently remodeled or replaced in the last 5 years. Depends on the cracks and foundation material. Vertical and diagonal are mostly settlement problems and can be DIY epoxied in place, so not really a deal breaker. Horizontal cracks are walls caving in and that should be repaired in major ways, so could be $$$. Most people don’t know enough about any of this so it could be a major turn off or negotiation point. If you get the inspection it would legally have to be disclosed anyways.
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Oct 9, 2021 17:48
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Redfin email comes in = I'm like "what the hell is Washington Park?" Click on it......oh, I've been looking at too many houses Residency Evil has been looking at.......
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Oct 9, 2021 17:52
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It was here or in the Home Ownership thread that Motronic was lamenting the use of drones for inspecting a roof. Because you need to get up close and personal, and walk on a roof, to sense some issues.... Just want to say this is 100% a correct take and when scheduling your home inspection you should confirm that the inspector will get on the roof to do a physical inspection. Why? Well the house we bought had a new roof put on in 2018, and while the inspector spotted a flashing issue, we thought that would be a reasonable repair. Now I've had three different roofing companies, one being the local "this guy can repair anything, seriously, he un-fucks bad roofing jobs" guy ALL tell me that they won't even try to repair the roof because of the number of issues with its installation, and that a new roof is the only thing they'd be comfortable doing or stand behind. Yay.
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Oct 9, 2021 20:31
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GEMorris posted:It was here or in the Home Ownership thread that Motronic was lamenting the use of drones for inspecting a roof. Because you need to get up close and personal, and walk on a roof, to sense some issues.... drat man. Any idea who did the poo poo job on the current roof?
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Oct 9, 2021 20:34
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Sorry to hear it. It gives me no joy to hear I'm retrospectively correct when one of us got screwed. I'm pointing these things out hoping to prevent it in the future, but we live in a really stupid timeline so chances are good we're all gonna get bones somehow anyway.
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Oct 9, 2021 21:26
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I'm pretty close to finally paying off my mortgage completely and it will paid off entirely sometime early next year. While this obviously is a great thing, this also means that I lose whatever little protection I might have had from the bank. Would it be a good idea to have title insurance even after my loan is paid off? I know the odds of needing it are highly unlikely (and I'll confess I'm not entirely sure what it covers anyway) but I still have this irrational fear in the back of my mind that some joker will come out of nowhere and try to claim he has a deed to my condo that predates mine or some other highly unlikely scenario that would cause me to either lose my property or spend huge money defending it. Also, if anyone has any tips in general about what to do after the loan is paid off that would be great.
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Oct 9, 2021 22:51
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