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3
Posted on 7/29/16 at 5:44 pm to HailToTheChiz
I'm closing Tuesday. I did conventional and 5% down, 30yr fixed.
My (ideal) plan is to pay extra on it to get rid of the PMI quicker. PMI is an additional $175 on the mortgage per month, so that is something you could definitely live without (saving $2100 a year!).
I'd say go with the 5% down and pay off PMI. If it is a condo/townhome and you don't plan on living there in 15 years, you could always keep it as a rental. If you did this, I'd get rid of the PMI quick and start saving money towards your next purchase.
My (ideal) plan is to pay extra on it to get rid of the PMI quicker. PMI is an additional $175 on the mortgage per month, so that is something you could definitely live without (saving $2100 a year!).
I'd say go with the 5% down and pay off PMI. If it is a condo/townhome and you don't plan on living there in 15 years, you could always keep it as a rental. If you did this, I'd get rid of the PMI quick and start saving money towards your next purchase.
Posted on 7/29/16 at 5:57 pm to HailToTheChiz
Because if u buy a house for 200k putting down 40k over 7k to save 133 a month is crazy so everyone fears MI
Id rather have 33k in my bank and pay an extra 133 a mnth than that money be in the wall paper of my home where i cant access it
Id rather have 33k in my bank and pay an extra 133 a mnth than that money be in the wall paper of my home where i cant access it
Posted on 7/29/16 at 10:55 pm to WG_Dawg
if you are not going to be there for more than 5 years, id just keep renting.
not sure why you are even considering buying a home
not sure why you are even considering buying a home
Posted on 7/29/16 at 11:18 pm to rocket31
quote:
not sure why you are even considering buying a home
because at least he will get some equity out of the deal?
Posted on 7/30/16 at 7:13 am to rocket31
quote:
if you are not going to be there for more than 5 years, id just keep renting. not sure why you are even considering buying a home
real estate threads are as close to OT threads as the Money Board gets
Posted on 7/30/16 at 9:36 am to HailToTheChiz
You mean while throwing money away on closing costs, insurance, interest, taxes, home repairs, etc?
Not sheriff srs.
Not sheriff srs.
This post was edited on 7/30/16 at 9:38 am
Posted on 7/30/16 at 9:39 am to ItNeverRains
Far better ways to invest ones money short term than buying a home. Wtf at your 1960s logic
Posted on 7/30/16 at 10:27 am to rocket31
Here are some realistic numbers for you first time buyers:
Closing costs for $150-200k home are about $3,000 to buy it
Closing costs to sell it are about 8%, 6% to realtors and sub $200k homes often times the seller has to pitch in for closing costs.
So you are realistically looking at $15-20k to buy and sell a house, if you only own it for 5 years that is $250/ month. Add in your insurance, taxes, PMI, etc. and if you don't have 20% down then you are not paying off much principle at all.
Don't forget that not having 20% down you are paying a lot more interest so your payments are higher and you are not paying down nearly as much.
The housing market it high right now. It very well may keep rising who knows, but its also likely we could see a 10% correct if interests rates increase or something else.
I was bent on buying a house asap also, but once you own a property or two you realize its not nearly all you think it should be. There's a lot of money to be made on real estate, but also a lot that can be lost.
Closing costs for $150-200k home are about $3,000 to buy it
Closing costs to sell it are about 8%, 6% to realtors and sub $200k homes often times the seller has to pitch in for closing costs.
So you are realistically looking at $15-20k to buy and sell a house, if you only own it for 5 years that is $250/ month. Add in your insurance, taxes, PMI, etc. and if you don't have 20% down then you are not paying off much principle at all.
Don't forget that not having 20% down you are paying a lot more interest so your payments are higher and you are not paying down nearly as much.
The housing market it high right now. It very well may keep rising who knows, but its also likely we could see a 10% correct if interests rates increase or something else.
I was bent on buying a house asap also, but once you own a property or two you realize its not nearly all you think it should be. There's a lot of money to be made on real estate, but also a lot that can be lost.
Posted on 7/30/16 at 10:57 am to rocket31
quote:
You mean while throwing money away on closing costs, insurance, interest, taxes, home repairs, etc?
Depends on how you look at it. I don't consider it "throwing money away".
Sellers paid all closing costs for me. Luckily I have not had any serious home issues repair wise
I will agree that you probably shouldnt buy a home if you know you won't even stay 5 years.
Posted on 7/30/16 at 1:23 pm to rocket31
quote:
You mean while throwing money away on closing costs, insurance, interest, taxes, home repairs, etc?
Well I'm 30 and the last 9ish years I've been throwing money away by renting with zero to show for it in return.
Posted on 7/30/16 at 2:39 pm to WG_Dawg
quote:
Well I'm 30 and the last 9ish years I've been throwing money away by renting with zero to show for it in return.
Just because you are renting doesn't mean you are throwing away money. There are plenty of situations where renting is your cheapest and best financial option.
You can rent nice places to enjoy yourself currently or you can rent crappy places to save money for your future. When my wife and I first got married our first place together was a 600 sq ft $600/ month townhome that was basically a college style place. We did that intentionally for 2.5 years to save a ton to buy a house. We were able to save over $10,000 a year from less utilities, less rent, and needing less crap to fill the place. There were plenty of our friends who were and still are renting nice $1200-1500 places making similar incomes. So just because you rent, doesn't mean it's a financially bad idea for your long term future.
Posted on 7/30/16 at 8:51 pm to baldona
Regardless of how much you put down I'd encourage you to pay extra each month especially if you will only be there around 5 years. Like others have said the cost of selling might eat up all of your equity. The first few years of a 30 year mortgage you're not putting much towards the principle so you don't build much equity. In 5 years you could find yourself upside down on the loan and feeling stuck there or having to do a short sell just to get out. These are scenarios where you can get yourself in trouble if you're not careful. If only staying for 5 years your should consider a 15 year mortgage with 5% down. That would ensure you are paying towards principle. I learned from experience. My first home I did an 80/20 loan with zero down. I paid down the 20% in about 2 years once I realized what a bad decision it was. I'm in great shape now. Just don't buy more than you can afford. I'd say whatever you get approved for buy 20% less and pay that extra towards principle. You thank yourself 15 years later.
Posted on 7/31/16 at 8:14 am to rocket31
quote:
You mean while throwing money away on closing costs, insurance, interest, taxes, home repairs, etc?
Not sheriff srs.
Wow
Posted on 7/31/16 at 5:48 pm to WG_Dawg
baldona makes good points re: renting vs. buying.
That said, if you are going to buy and hold only for a short period, ARMs may be better than fixed rate (lower initial interest for first several years depending on the ARM).
Another expense of owning is maintenance is yours. The a/c breaks you can't call the landlord--you are him.
This is a topic worth discussing with an accountant to help you crunch the numbers and make a decision based on what's best for you.
There are intangibles about "owning" something, but if you are doing it strictly on an economic basis, crunching the numbers is the rational way to go.
That said, if you are going to buy and hold only for a short period, ARMs may be better than fixed rate (lower initial interest for first several years depending on the ARM).
Another expense of owning is maintenance is yours. The a/c breaks you can't call the landlord--you are him.
This is a topic worth discussing with an accountant to help you crunch the numbers and make a decision based on what's best for you.
There are intangibles about "owning" something, but if you are doing it strictly on an economic basis, crunching the numbers is the rational way to go.
Posted on 7/31/16 at 9:51 pm to WG_Dawg
I'm purchasing a home right now and I'm using lender paid MI
Basically, I'm taking a hit on the interest rate but I won't have to pay any PMI
The only way this come away more expensive is if I stay in the house for 30 years, then it might end up costing me an extra 5k or so.
My interest rate is basically 0.5% higher than if I had gone with PMI
My monthly P+I will be higher but the lack of PMI makes my total monthly payment lower.
Things to consider:
This higher rate never goes away, unlike PMI, but there is less cost on the front end of the loan.
Mortgage interest is all tax deductible while PMI is not.
Basically, I'm taking a hit on the interest rate but I won't have to pay any PMI
The only way this come away more expensive is if I stay in the house for 30 years, then it might end up costing me an extra 5k or so.
My interest rate is basically 0.5% higher than if I had gone with PMI
My monthly P+I will be higher but the lack of PMI makes my total monthly payment lower.
Things to consider:
This higher rate never goes away, unlike PMI, but there is less cost on the front end of the loan.
Mortgage interest is all tax deductible while PMI is not.
Posted on 8/1/16 at 7:52 am to LSUtoOmaha
quote:
If you go the FHA route, it's much more difficult to get PMI taken off.
It's very easy now to refinance to get PMI removed. Yes, there is a chance that you will have a higher interest rate two years from now, but payments will still be lower without PMI, and you will have saved that extra cash from the down payment.
Posted on 8/1/16 at 7:54 am to Croacka
quote:
This higher rate never goes away, unlike PMI, but there is less cost on the front end of the loan.
Sure it can, just refinance once you have 80% equity and PMI is no longer a requirement. Again, we have no idea what interest rates will be going forward, but never say never.
Posted on 8/1/16 at 7:58 am to HailToTheChiz
I have an Rural Development Loan and I pay zero PMI.
Posted on 8/1/16 at 8:14 am to tigerbaittrick
quote:
I'm closing Tuesday
Congrats bro
OP, I'll echo a lot of the responses here and advise going with 5% down, conventional loan. That is the route I went, and I have been paying extra and finally reached 22% equity last week to get rid of PMI after 3 years and 2 months.
You only need to put 1.5% more down than FHA. Just pay extra and PMI will automatically go away at 22% and you won't need to go through a whole refinance. After living in my house just over 3 years, I think it has been a better financial decision than renting, and especially considering the 7-10% appreciation in my area during that time frame (though that's not something I would count on).
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