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I looked at ARMs since I have no intention of living in my first home for 15+ years. With the traditional 5 year ARM (5/2/5) and rates at all time lows there is a very good chance that your rate will rest higher in five years - even up to 8% (if the initial ARM rate is in the low 3s). Basically you are betting that you will sell the home (or pay it off I guess) before you lose all the money you saved by going with the ARM initially. The break even point for the worse case scenario was around 7-8 years. The FHA 5 year ARM has much better terms (1/1/5), but the additional amount of PMI over a conventional ARM wiped out any potential savings. Everyone I talked to said I'd be nuts not to lock in a sub 5% rate for 30 years, especially since I have deductions that all my mortgage interest is deductible.
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Jun 7, 2011 04:30
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TraderStav posted:Not to mention that the only benefit is over whatever your standard deductions would normally be. Unless you have a monster mortgage, or a very high interest rate, that's likely to either be less than the standard or only a little bit over. I have enough deductions in state income taxes and other stuff that I'm over the standard before considering property taxes and mortgage interest. If all of your mortgage interest is deductible, than the spread between a 5 year ARM and 30 year is smaller, is it not? For example if a 30 is 4.5% and ARM is 3%, the spread is 1.5%. If you're in the 28% bracket and it's all deductible the after tax spread is down around 1.1%. Certainly the ARM is less interest paid, but you have to accept that the rate may eventually jump (it won't be dropping with the funds rate already at 0%), which can very quickly erase those gains made in the first years. The belief that people could easily refinance out of ARMs was a major issue in 2008-2009 (granted many of them were option ARMS, but the concept is the same).
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Jun 10, 2011 01:43
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Leperflesh posted:FHA loans are for people who don't have 20%+ down payment. In that case, the FHA terms are superior to bank terms, because banks charge more in PMI than the FHA does in mortgage insurance. It depends. You just need to find a lender that will do 5% down. There are plenty of them out there. FHA has recently really cranked up their PMI charges. If you can swing 5% down a bank loan with PMI may be better. With traditional monthly PMI I was quoted .85% a year, FHA was 1% at for the MIP and then .9% at the time I believe. I ended up finding a lender that did single payment PMI with is 1% at closing and then nothing monthly which is clearly superior to FHA 1% at closing (or financed) and 1.15% year for at least five years.
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Jun 14, 2011 20:50
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Untagged posted:Do. No. Buy. Yes, they will. Make sure you need a pre-approval and not just a prequalification. The preapproval means running your credit, while the prequal does not. If you don't need to have your credit run (ie if a prequal is enough to get into the system), then don't. A preapproval is almost like a promise from a bank to lend a certain amount - it shows that you SHOULD be able to get a loan for that much, but isn't a guarantee. A prequal is more of a "we looked at your basic numbers and here is what we came up with" type thing that is no way a promise or guarantee (since there is no credit pull).
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Sep 2, 2011 14:25
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Cascadia Pirate posted:I can do the math to figure out if it saves money to use this service but I wanted to ask here if anyone has heard of such a loan program or used it. I am not familiar with it and a previous loan officer we had used did not offer such a program. Any advise or information would be helpful, and I can provide more information if it helps. I did it on my loan - it cost me 1% of the loan amount, paid at closing. When you consider that FHA is 1% upfront (plus 1.15% a year), and conventional loan PMI is around .9% a year, the savings after the first year (basically the break even point) are quite substantial. On a $300K house it will save you ~$15K in PMI payments compared to FHA (5% down each case). I feel like single premium is the best way to go about PMI if you have the credit to qualify for it. The other nice thing about is that it is listed as an interest rate deduction (points) on your closing papers meaning it's tax deductible - which may not be the case with monthly PMI if you make too much or if they stop extending the PMI tax deduction. Realjones fucked around with this message at 04:04 on Sep 6, 2011 |
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Sep 6, 2011 03:55
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Pillowpants posted:The wife has a question for you guys that I can't answer. Another big factor worth mentioning is that with a house every dime of nondeductible interest, property taxes, and PMI is "thrown away." Likewise, what you spend in general maintenance (things that would be covered by a landlord were you renting) is also "thrown away." If you move from a smallish apartment to a house it's very likely you could throwing more money away in interest and taxes than you were spending for your rent.
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Sep 26, 2011 01:47
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Leperflesh posted:As far as I know, a townhouse is just a two-story semi-detached condo; in terms of HOA fees, maintenance responsibilities, parking difficulty, lack of owning the land, busybody rules-nazis, and worse resale-price stability, they're the same. Right? Townhouse is a type of housing; condo is a type of ownership. So no, not all townhomes are condos. You can have townhomes that are just attached houses where you own the land, roof, etc. An HOA fee usually covers snow, trash, etc. Of course HOAs are often as bad as condo associations. Generally speaking newer townhomes tend to be of the condo variety, older townhomes (think 90s and before) tend to not be. THs are not bad if you don't mind sharing two walls (does make utilities a little cheaper) and not having much of a yard. You can get more interior space (albeit on more levels) for the same price that what you could with a SFH. Many of the newer ones do have garages or little driveways so parking is not always an issue. In some areas where space is at a premium THs are more common than SFHs and are plenty desirable (most of DC comes to mind here). To me buying a TH near or in a major city makes perfect sense, but if you are way out in the burbs that TH is more likely for people that want ownership, but can't afford a suburb SFH. Realjones fucked around with this message at 03:34 on Nov 2, 2011 |
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Nov 2, 2011 03:29
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jerkstore77 posted:Are we at a disadvantage for putting in an offer so soon before they undoubtedly get more on Sunday? I don't think so, especially since it was a full asking price offer. Are the sellers aware of your full price offer, or are they not accepting offers at all until after the open house? If they know they have a full price offer on the table the only reason to even have the open house is to hope that someone else is interested and it creates a bidding war (or perhaps they will get a better offer, like all cash). For the seller this tactic is understandable. As the buyer, how willing are you to let the house go? If you don't want to get caught in a bidding war, make your offer expire before the open house. Force the seller to choose. It may be too late for that, so set it to expire on Monday or Tuesday. If the home is priced such that there will be more than one full price offer on the table you have to either accept that there will be a bidding war or walk away.
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Dec 4, 2011 06:29
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Inept posted:I'd be curious to know what kind of counter they made. If they didn't drop the price much, they might already have an offer that is close to what they want, or they might just be getting greedy since they had so many offers. I believe jerkstore's offer was at list price, so I'd assume there was no place to drop down too. Was the counter something like "offer more?" I think they are being greedy and trying to incite a bidding war (responding to four offers when they already have one at list price), but you can't blame them for that. It's also possible the home was priced below market value as well.
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Dec 10, 2011 01:01
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Aren't home appraisers sort of "under the table" expected to appraise a home for at least the projected sales price? For an appraisal to come in below the contract price it really must be an issue. The hard part of buying a home is taking the emotion out of one the biggest financial decisions you'll ever make and it's good to see that you realize that paying over appraisal is silly and the seller will have to come to terms with that as well. The home next door to mine has been vacant for over two months after the people that were renting it moved out. Renting a home is awesome when you have good tenants, but losing $2K a month while it sits empty can't be too great.
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Feb 4, 2012 21:10
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Residency Evil posted:No, it was her answer to the question I asked. I was curious because when I've run some numbers for my area through the NYT calculator, it always comes out to approximately 5-6 years or so on rent vs buy. She made it sound like a no-brainer. I'm not saying that it's a bad calculator, but the results it gives of the time period to break even are ENTIRELY based on the home appreciation rate, which cannot be predicted (rent increases also factors in as well). It is a good comparison tool for comparing expenses of renting vs buying, but it is not a crystal ball. Historically speaking a small appreciation that barely beats inflation is a reasonable guess, but ask anyone who bought in 2006 how that worked out for them.
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Feb 24, 2012 02:25
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NitroSpazzz posted:They list them as new high efficiency ones so maybe the old windows were garbage. I'll mention that to the inspector though. "Them" paying your closing costs just means you are rolling the closing costs into the loan. The sellers aren't really paying for anything. You might already realize this, but I didn't until I was looking at making an offer myself and put 2 and 2 together.
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Mar 8, 2012 01:25
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Residency Evil posted:It's just the NYTimes calculator, not one sponsored by a broker. The break even point for the NYT calc is based on home appreciation, which can't be predicted. If the market for homes heats up in your area, the break even point could be as short as 2-3 years. If homes in the area depreciate, you will NEVER break even. It's a big guessing game. I'd stick with renting for the reasons previously mentioned plus your income/mortgage interest likely won't be high enough to go beyond the standard deduction anyway (one of the nicer perks of ownership).
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Mar 22, 2012 23:01
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$50K in cash needed for a $110K home purchase? Seriously? I wonder what percentage of first time buyers have 50% cash before their first purchase.Gabriel Pope posted:It looks like getting the location and features I want would probably take somewhere in the $110-130k range--how much should I have piled up before I start seriously looking? I'm not telling you to buy right now, but you have the cash to do it if you so desire. Consider: - if you continue stockpiling money for two years before buying and rates rise, your payment could higher than if you bought now and paid a little PMI (if you do less than 20% down) - what's your rent vs what will your mortgage payment be? How much of that 1K savings will be eaten up by housing costs? - I wouldn't touch your IRAs
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Apr 1, 2012 17:38
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Advent Horizon posted:If possible, I don't think we'll be going through FHA. My understanding is that if you have at least 5% down it's better to avoid them, is that incorrect? If you had good credit, yes. I was able to get 5% down, 1% one time PMI paid at closing (no monthly PMI) - which obviously destroys FHA requirements. Look for local mortgage companies that plan on flipping on your loan immediately as opposed to big banks (your loan is going to end up at a big bank anyway). Keep in mind that pretty soon FHA rates are going up AGAIN (to 1.75%) with yearly PMI of 1.25%. Over the first five years of ownership that's literally ~6% of the value of the home you are pissing down the drain compared to the mortgage I received. Unless you have lovely credit I really see no reason to go FHA anymore; the origination fee and MIP have just risen way too much.
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Apr 6, 2012 00:38
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Astro7x posted:Can't you avoid PMI by putting 20% down though? Yes, but most first time buyers don't have 20% to put down. A lot of people have the income to afford the mortgage, but just don't have the cash savings. Rather than spend years saving to get to 20%, they put less down and can own their own place sooner.
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Apr 9, 2012 22:44
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I still think your best bet is to put 20% down. $50K in savings (I'm assuming this doesn't include retirement funds) is pretty substantial. Whether you want to wait or not is up to you. Since you haven't even found a house yet just keep saving and you'll be fine. No one knows what mortgage rates will do in the future.
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Apr 10, 2012 02:11
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Astro7x posted:I found it quite interesting that their agents work on salary and not commission (Although their "bonus" is determined based on a survey you fill out on them, so it's basically a commission...), but if you use them as your agent they will give you a refund of what their half of the closing costs would be. Has anyone actually done this before? Yes, I used one of Redfin's competitors, I-Agent, and they refund 2/3 of their commission. I did not go with Redfin because at the time the person showing you a home was not the same person that would be placing an offer on the home, and I didn't like that (with I-Agent I worked with one realtor the whole time). Redfin has since changed their model to the one transaction one person thing, but they have also really jacked up their prices (ie lowered their rebate). Redfin cut their rebates down to some silly tiered system earlier this year, so I don't think the 1/2 back thing still applies. I randomly chose a $500K home and they are offering a $5300 rebate - that's only 33%. A $350K is under 28% and a $800K is 44%. See: http://www.inman.com/InmanINF/lowes/news/178656
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Apr 11, 2012 22:40
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Bucket Joneses posted:This seems really sketchy. How can people, in good conscience, purchase a home (worth in excess of $400,000) without first finding out if it's going to be a money pit? I agree. I'm guessing the buyers wanted the home bad enough ($27K over list drat) that they were willing to roll the dice on their earnest money to get their offer accepted. If something really ridiculous (foundation damage or something) showed up during the inspection they could technically still walk away. Not a great tactic for most people, but if you REALLY want the home and know there will be a ton of offers on it, you have to do what you can to present the best one...
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Apr 14, 2012 05:22
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Untagged posted:How does this thread feel about Affordable Dwelling Unit purchases? Why are you looking at the program? The max allowable income is really low since it is affordable housing for poorer people. If you have a family and kids and just don't have the income I sort of get it, but if it's just you and you are looking for a cheap way to get into a home it makes no sense. I can't imagine that the homes are very well maintained since the people living in them technically can't afford them at their market value. Honestly I think you are just better off living further west wherever your price range is met like everyone else in northern Virginia does.
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May 1, 2012 02:58
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Jibo posted:We've known each other for 12 years, and have been dating for three. Our relationship is very stable. No one buys a house with a non spouse expecting to break up with them, but people change. Your 30 year mortgage with your ex won't. Seconding that you should just rent a house - you won't lose money renting a home for a few years before you get married.
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May 30, 2012 15:41
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I'm running the numbers on possibly doing a refi and wanted some thoughts: $1863 current PI payment with no pmi (did spmi at closing), 4.75% 30 year fixed, ~8% equity with a $348K loan I could refinance to 3.25% with Amerisave. It looks like closing costs are covered by a credit so I'll just need to pay $1000 or so in transfer taxes/fees + escrow. new payment 1515 + 185 pmi = 1700 Obviously I'm not thrilled about the PMI, but I would still save $163 a month (break even in six months). Once the PMI is gone it'd be $300+ a month. I don't have the cash to get to 20% equity to avoid PMI right now. Assuming the fees are right with a break even of six months it seems like a no brainer to refi, especially considering that someday the PMI will be gone?
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Sep 22, 2012 03:45
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I Love You! posted:For example, if someone has a rep agreement with me, I'm going to spend extra time generating price comparisons, searching for more targeted comparable properties and lots, investigating comparable neighborhoods and making calls on the client's behalf. Serious question what percent of a realtor's time would you say is spent working with people that never close a house with that realtor? Honestly I think the 6% cartel fees should be a thing of the past considering all the information that is available via the internet today. However, I also realize that when you close you are in effect "subsidizing" all those that look, but never buy (ie those clients that you don't get you paid). It will be interesting to see what happens as the generation that grew up without the internet stops buying homes as they get older and the internet is used more by more people buying homes.
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Oct 26, 2012 22:38
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I Love You! posted:I was adding that part in, but you beat me to it. Since the buyer isn't paying the fees for a buyer's agent typically, it's usually to their benefit to have SOMEONE with expertise fighting on their side in the negotiation process. They are paying the fees indirectly though, as that 6% comes out of the seller's bottom line and the money to pay the seller comes from the buyer. During the "housing never goes down" years no one cared because the fees just meant slightly less profit. The buyer and seller each paying their 3% makes sense logically, but the way it is setup now it lets first time buyers get into homes with less cash (which is a good thing). It's like "seller concessions" or "seller pays closing costs." Just more weasel words to make buyers think they are getting something for free when really they are still paying for them. A FSBO should theoretically be cheaper since there is no seller's agent fees to pay for and I assume most still pay for the buyer's agent if they expect people to come look at it.
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Oct 27, 2012 05:22
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imandyyo posted:While I was inclined to give her something for the advice she gave on our purchase, it certainly wasn't going to be .5% of our sale. How should we handle this? The fact that you brought it up and she did not immediately remember and agree to give you the 0.5% says that she has no intention of giving you the rebate and is justifying this further by mentioning the "free" advice she gave you with regards to your purchase as offsetting anything she may have said earlier. The nicest way to go about it is to contact her again and make it abundantly clear that you expect the 0.5% rebate she promised. I wouldn't make any threats yet, just ask. If she values a future referral from you she may just agree and be done with it. If she does anything beyond immediately cutting you a check you are probably screwed since it was verbal. You'll have to dig into the laws in your state to see if the verbal contract is something you can enforce and collect on in small claims court. Realjones fucked around with this message at 21:48 on Oct 28, 2012 |
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Oct 28, 2012 21:45
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tiananman posted:Well, the contract says she'll remove the stuff. Since you waived the deadline the official deadline would have become when you closed the contract, yes? If you really wanted the stuff moved you should have done a walk through before closing and demand it be removed and be willing to delay closing to get it removed. It's like if a house had a broken sink and you asked it to be repaired and it wasn't, but you closed anyway...well it's your broken sink now. You can't go back and demand the seller fix it once you've closed. I'd say it's your problem now and the easiest thing to do is just get rid of it and move on. Perhaps a neighbor with trash service would let you put the stuff out on the road? I do like the comedy option of dropping it off at the realtor's house.
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Nov 2, 2012 22:40
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FCKGW posted:You can also call your bank at 20% equity and have them take it off before it automatically falls off. You have to pay PMI for a minimum of five years with FHA regardless of your loan balance. Some other lenders also require two years regardless of balance. Speaking of PMI, any word on a PMI being deductible extension for 2013? Obviously the home lobbying groups will want it continue, but I haven't seen any official word on it yet. With the fiscal cliff thing coming I'm wondering if this is a deduction that will be killed off.
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Dec 5, 2012 03:39
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Weinertron posted:The rule of thumb I used to hear for buying a house possibly making sense was 7 years, has this changed because of how low mortgage rates are right now?annoying. Lower interest rates let you get into more house if you so choose. For example the common rule of thumb was 3x gross, but with rates below 4% you can go 4-5x. You do pay more principal off faster with lower rates as well. I still think it is at least five year break even because you need appreciation to offset the cartel fees (~6%). If you sell you want the money you paid towards the principal back on top of your original down payment. The whole making sense thing (vs renting) boils down to appreciation, which you can't predict. Ask anyone who bought their first house in 2006 how the five year break even thing is working out on their "investment."
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Dec 6, 2012 06:11
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tiananman posted:I know I'm probably getting a reputation as a nitpicker, but a house does not 'appreciate' in any real sense of the word. I think it's just as big of a mistake to call a house an "investment" as it is to say that houses "appreciate." Appreciation is a general term used to describe the idea of selling a home for more than you purchased it for. Google "home appreciation" and you get 250 million results, so clearly I am not the first person to describe a housing transaction in such a way. A home may not be an investment in the purest sense of the word, but it is a huge factor in many American's net worth calculations and is in many ways a forced savings account...one in which you hope to get a "return" of at least the inflation rate. You're arguing meaningless semantics for no real reason other than for the sake of arguing.
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Dec 8, 2012 00:01
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Not sure if this has been mentioned yet, but the PMI deduction has been extended for 2013.
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Jan 6, 2013 18:12
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