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re: First Time Homebuyer purchasing a home without 20% down.
Posted on 6/19/16 at 8:50 pm to Mr.Perfect
Posted on 6/19/16 at 8:50 pm to Mr.Perfect
quote:
You may never have kids...
I know my parents (and most if not all) were definitely figuring it out as they went along. It's nice to pretend I'll be able to have everything under control though.
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Posted on 6/19/16 at 8:52 pm to kaaj24
quote:
What part of Dallas are you looking?
Not looking in Dallas proper, but Frisco and Allen seem to be the two suburbs that I'm leaning towards. Open to pretty much anything on the North Side though as my office is in Addison.
Posted on 6/19/16 at 10:20 pm to tlsu15
Market in Dallas and suburbs is competitive right now with low supply and large companies moving here. Good luck. I live a couple miles from Addison.
Posted on 6/19/16 at 10:30 pm to tlsu15
Do a partial loan to get to 20% and then a conventional after that. Work on knocking out the partial loan ASAP and enjoy the MUCH lower payments.
Posted on 6/19/16 at 11:33 pm to TheHiddenFlask
quote:
Do a partial loan to get to 20%
Can you expound on this? I'm not exactly sure what you mean.
What kind of loan?
Posted on 6/20/16 at 5:58 am to Teddy Ruxpin
It doesn't matter what type, but normally people do a second mortgage at a significantly higher rate. However, even if it is 5% higher than what you would be paying on a house, it's about the same as PMI and you will save ~1% on the rate on the other loan, which will be a net savings on the front end and a significant savings once the first loan is paid off. Additionally, it gives incentive to prepay on the front end without giving up the benefits of the long term fixed rate.
Posted on 6/20/16 at 7:15 am to kaaj24
quote:
Market in Dallas and suburbs is competitive right now with low supply and large companies moving here. Good luck. I live a couple miles from Addison
I've noticed this. Just looking at recent trends, it seems there has been a huge spike over the last two years. It is still Texas though, and $250,000 will get you a decent (although fairly small in today's market) house most of the time.
Posted on 6/20/16 at 8:04 am to tlsu15
Yes, houses aren't lasting more than a couple of days in many cases and are going for full ask. Farther north you go the bigger house you will be able to afford... Eventually the expansion has to catch up to you. I wouldn't be surprised if Frisco is one of the hottest markets in the entire country right now.
Posted on 6/20/16 at 9:21 am to Lsut81
quote:
Yeah, you may pay 10-15k in rent, but if you spent that same 10-15k on mortgage payments during that time, 90% of it would just go towards interest anyway plus the 5-7k in PMI you are quoting.
Even after factoring in insurance, from the beginning of the loan you're putting more like 20% toward the principal. Assuming zero appreciation in the value of the home (and to be fair, we'll also assume no major repairs), it would take approximately 115 months to get to 20% equity. If PMI is $120/month, that's $13,800. So you'd have $40,000 in equity, minus the PMI, you're left with a net gain of $26,200.
For the OP's case of needing to save for that last 10%, you'd be talking about roughly 65 payments with PMI, $7,800. But he'd gain $20,000 in equity while making those payments, so again a net gain of $12,200.
That's a lot better than just renting while you save IMO, and that's not even considering that the house you want may be available now and not after you've saved that 10%.
Posted on 6/20/16 at 10:18 am to lynxcat
quote:
I wouldn't be surprised if Frisco is one of the hottest markets in the entire country right now.
It almost definitely is. Are you from the area?
Posted on 6/20/16 at 10:19 am to TheHiddenFlask
Thanks. For some reason I thought you were referencing something I hadn't thought of.
After selling our house and moving, we're considering some options like 80/10/10s. Sort of similar situation as OP, while monitoring market conditions.
After selling our house and moving, we're considering some options like 80/10/10s. Sort of similar situation as OP, while monitoring market conditions.
Posted on 6/20/16 at 10:36 am to tlsu15
I live in Dallas... So yes. I rent though and have no plans to buy until I know where I want to live long term.
Posted on 6/20/16 at 10:44 am to lynxcat
Well I was going to ask where you would recommend living long term, so there goes that
Posted on 6/20/16 at 1:23 pm to tlsu15
Depends on lifestage a lot in my opinion. M streets is great if younger and no kids.
Richardson is a hotbed of young families and so is Lakewood / White Rock Lake area. Those work great for people trying to stay close to downtown / the city but want to own a home. White Rock area is super expensive now.
Frisco, Allen, Plano, etc. are great if you work up there or want to put your kids in public education. The city is rapidly expanding North so these areas are great long term buy and hold properties.
Addison has some neighborhoods but I think it is generally more geared towards rentals. Or this my perception.
Richardson is a hotbed of young families and so is Lakewood / White Rock Lake area. Those work great for people trying to stay close to downtown / the city but want to own a home. White Rock area is super expensive now.
Frisco, Allen, Plano, etc. are great if you work up there or want to put your kids in public education. The city is rapidly expanding North so these areas are great long term buy and hold properties.
Addison has some neighborhoods but I think it is generally more geared towards rentals. Or this my perception.
Posted on 6/20/16 at 1:24 pm to LNCHBOX
quote:
Even after factoring in insurance, from the beginning of the loan you're putting more like 20% toward the principal. Assuming zero appreciation in the value of the home (and to be fair, we'll also assume no major repairs), it would take approximately 115 months to get to 20% equity. If PMI is $120/month, that's $13,800. So you'd have $40,000 in equity, minus the PMI, you're left with a net gain of $26,200.
For the OP's case of needing to save for that last 10%, you'd be talking about roughly 65 payments with PMI, $7,800. But he'd gain $20,000 in equity while making those payments, so again a net gain of $12,200.
That's a lot better than just renting while you save IMO, and that's not even considering that the house you want may be available now and not after you've saved that 10%.
Looks good but you didn't factor in closing costs with the equity gained.
My only concern that I've seen over and over especially with some of my young professional friends, is moving in under 3 years. Obviously this can only be controlled to a certain extent, but many professions are much easier than others. I can't tell you the amount of military, engineers, etc. I know that bought a house and needed to move in under two years. That just kills, it's a lot of work and frustration for one. Rarely worth the stress to buy and need to sell a house quickly unless you bought it investment grade with that idea in mind.
Posted on 6/20/16 at 1:33 pm to lynxcat
That's pretty much my perception as well. The public school districts are my number one priority as I would like to take advantage of the good schools in the area for my future children.
Plano works great location wise, but the schools seem to be very hit or miss depending on which neighborhood you are in. That makes me nervous, and right now it's much less of a problem in Allen and Frisco. I like the idea the Frisco will basically be its own city at this rate in the next decade, but the downside to that is the real estate prices are going up fast.
Plano works great location wise, but the schools seem to be very hit or miss depending on which neighborhood you are in. That makes me nervous, and right now it's much less of a problem in Allen and Frisco. I like the idea the Frisco will basically be its own city at this rate in the next decade, but the downside to that is the real estate prices are going up fast.
Posted on 6/20/16 at 4:32 pm to baldona
quote:
Looks good but you didn't factor in closing costs with the equity gained.
Closing costs aren't part of the principal. OP is buying at some point, so he's going to spend that money either way. No sense in including it since it will be spent in either scenario.
Posted on 6/20/16 at 5:58 pm to tlsu15
Planning for owning this house for the next decade feels wayyyyyyyyy far out for a young family that doesn't even have kids yet FWIW.
Posted on 6/20/16 at 6:09 pm to lynxcat
I understand that, but if I'm buying the house, I at least want to have the option that I can raise my family there for the long haul.
Posted on 6/20/16 at 8:43 pm to LNCHBOX
quote:
Closing costs aren't part of the principal. OP is buying at some point, so he's going to spend that money either way. No sense in including it since it will be spent in either scenario.
Tomato tomatoe. For a loan like a heloc yes, but as a long term investment on the rent/ buy perspective it certainly matters. At the end of the day it does you no good to have $15,000 in equity if you are going to have to spend $18,000 in closing costs.
Op I think you are way overthinking it personally. Kids change so much. Does your wife work now? Is she planning on after you have birth? Are you sure she'll be able to handle kids in day care if so?
I would look at moderately 'good deals' in a house you could live in for at least 5 years. Any 3/2 in a fun young neighborhood for single folks but also good with kids. Trying to buy a house that you would live in for 10-20 years before you even have kids is idealistic but not realistic. Its hard to plan life perfectly.
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