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re: Advice for a First Time Home Buyer
Posted on 3/19/19 at 12:49 pm to frankthetank
Posted on 3/19/19 at 12:49 pm to frankthetank
quote:
If you buy a $220,000 house w/ 5% down, your monthly payment (Mortgage, PMI, Property Tax, and Homeowners Insurance) will be around $1,800 -$2,000.
Not for me, ha. I pretty much lived this scenario. I'm in DFW and my property value has gone up quite a bit, so that's probably the reason mine is so high. My monthly payment was never close to $1500 though.
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Posted on 3/19/19 at 12:57 pm to JohnDoe00
I'm in my 20s and took a loan out on 268k... my mortgage with insurance payed monthly is $1890. Thats 10% down so I'm currently paying PMI. 4% interest on loan.
This post was edited on 3/19/19 at 12:59 pm
Posted on 3/19/19 at 1:01 pm to JohnDoe00
Some banks do offer mortgages that allow for 0% down and no PMI if you have decent credit that I would advise looking into. Also, diy for home/appliance repairs. If you are decent at following directions, you can learn how to fix just about anything on youtube.
Posted on 3/19/19 at 1:24 pm to BoardAtWork
I appreciate all the input. I plan to reach out to some financing companies this week to get a real sense of what I will be looking at note wise. I have an idea in price range right now. I am just starting the process so I will have time to consider everything and not be rushed into something. Also my credit is pretty good.
Also, I get paying PMI is a pain in the arse and "throwing money away," but lets say its $100 dollars a month so $1200 a year. Apartment wise for my area its at least $1000-1400 depending on 1 or 2 bedroom and overall quality of the apartment or rental. All of that money is technically being thrown away instead of the $1200 dollar a year PMI cost (example from previous comments). So in my mind its better to pay that over throwing money away on rent. Am I thinking of that correctly?
There are lot of up front costs I do not have an idea of yet because i am just getting into the process. And of course its not going to be a cheaper monthly total cost, but in the long run spending the extra 300-500 bucks a month is worth the increase in equity, right?
Also, I get paying PMI is a pain in the arse and "throwing money away," but lets say its $100 dollars a month so $1200 a year. Apartment wise for my area its at least $1000-1400 depending on 1 or 2 bedroom and overall quality of the apartment or rental. All of that money is technically being thrown away instead of the $1200 dollar a year PMI cost (example from previous comments). So in my mind its better to pay that over throwing money away on rent. Am I thinking of that correctly?
There are lot of up front costs I do not have an idea of yet because i am just getting into the process. And of course its not going to be a cheaper monthly total cost, but in the long run spending the extra 300-500 bucks a month is worth the increase in equity, right?
This post was edited on 3/19/19 at 1:27 pm
Posted on 3/19/19 at 1:26 pm to Willie Stroker
quote:
2nd loan
Someone else has mentioned two mortgages to avoid PMI. An 80/10 split for example. I will have to look into this more.
Posted on 3/19/19 at 1:28 pm to BoardAtWork
quote:
Some banks do offer mortgages that allow for 0% down and no PMI if you have decent credit
My credit is pretty good. Do you have an examples of lenders that do this?
Also I am pretty handy, and basic maintenance and upkeep shouldn't be an issue.
This post was edited on 3/19/19 at 1:30 pm
Posted on 3/19/19 at 1:42 pm to JohnDoe00
I bought a condo last year when I was 25. I'll cut out all the BS and tell you my exact experience.
The condo was $260,000. I put 10% down and I pay PMI. My PMI is only $50/m and my credit score at the time of securing the loan was 785. To me, why would I put down another 10% ($26,000 that I didn't even have) when the PMI comes out to $600 extra a year. Yes, that's money that is essentially being burnt but if I took that $26,000 and invested, could I beat $600/year? Probably. Either way $600 is really nothing. In 2-3 years you can even do another appraisal on your home to close out your PMI if your home appreciated the difference between 20% and however much you put down. Appraisals run $500 so it's generally not worth it. In the end, if you can secure a low PMI it's 100% okay to put less than 20% down. How would they expect anyone to buy their first home? PMI should not scare you away.
Another thing that people don't mention: You're not necessarily paying your home off in big chunks when you start paying a mortgage. The way the loan is structured means that you pay off the interest of the loan before you pay off the principal. My monthly mortgage cost is $1550. About $1400 of that goes to interest
. So I'm really only putting $100 per month into my home. Of course, over time, this increases as you pay off the interest.
I actually found a loan officer who basically plugged all my numbers in and spit out a final cost sheet of all the upfront costs associated and my monthly fee (which included taxes/pmi/etc). I recommend going this route. He helped tremendously and answered all my questions. People always talked about how stressful buying a home was but I thought it was enjoyable.
I think the toughest thing was paying the money up front. The monthly cost was never an issue for me. I actually negotiated with the seller to pay $5k of the closing costs. This brought my closing costs down to $4k-ish.
Either way, good luck. Most important thing is to pick somewhere you'll be happy to be. The rest will fall into place.
The condo was $260,000. I put 10% down and I pay PMI. My PMI is only $50/m and my credit score at the time of securing the loan was 785. To me, why would I put down another 10% ($26,000 that I didn't even have) when the PMI comes out to $600 extra a year. Yes, that's money that is essentially being burnt but if I took that $26,000 and invested, could I beat $600/year? Probably. Either way $600 is really nothing. In 2-3 years you can even do another appraisal on your home to close out your PMI if your home appreciated the difference between 20% and however much you put down. Appraisals run $500 so it's generally not worth it. In the end, if you can secure a low PMI it's 100% okay to put less than 20% down. How would they expect anyone to buy their first home? PMI should not scare you away.
Another thing that people don't mention: You're not necessarily paying your home off in big chunks when you start paying a mortgage. The way the loan is structured means that you pay off the interest of the loan before you pay off the principal. My monthly mortgage cost is $1550. About $1400 of that goes to interest
. So I'm really only putting $100 per month into my home. Of course, over time, this increases as you pay off the interest. I actually found a loan officer who basically plugged all my numbers in and spit out a final cost sheet of all the upfront costs associated and my monthly fee (which included taxes/pmi/etc). I recommend going this route. He helped tremendously and answered all my questions. People always talked about how stressful buying a home was but I thought it was enjoyable.
I think the toughest thing was paying the money up front. The monthly cost was never an issue for me. I actually negotiated with the seller to pay $5k of the closing costs. This brought my closing costs down to $4k-ish.
Either way, good luck. Most important thing is to pick somewhere you'll be happy to be. The rest will fall into place.
Posted on 3/19/19 at 2:00 pm to JohnDoe00
I know bancorpsouth has one, I believe they call it the right at home mortgage or something along those lines. I'm sure there are a few others. The interest rate may be about 0.2 or so higher than a conventional loan though. Essentially the pmi is factored into the rate but it can save you money upfront.
Posted on 3/19/19 at 4:24 pm to Aubs10
Can someone break down all of the “closing costs” and how these are calculated?
Posted on 3/19/19 at 8:44 pm to GeauxPack81
quote:
So your mortgage will actually be at least a couple hundred more per month than what you probably think it would be by just looking at online mortgage estimates like on Zillow.
Zillow factors in property tax and insurance. I don’t know why everybody says it doesn’t. It literally gives you P&I, PMI, Taxes, Insurance and you can even adjust all those amounts however you want
I’m going through buying a house right now and Zillow’s mortgage is pretty spot on. Of course I did the property tax search on houses I was looking at though.
Posted on 3/19/19 at 10:53 pm to JohnDoe00
It definitely seems like a better option because you’re ‘building equity’ instead of
‘Throwing your money away’ in rent, but houses aren’t appreciating like they once have, in general. We built our house in 2008 (shreveport), and have made some upgrades over the past 11 years (pergola, extended patio, new floors, etc). Judging by the going rates in our neighborhood, we’ll recoup the costs that we’ve put in the house, but we’re not going to profit from any of our upgrades. We’ll get back what we put in,which is great, but we won’t make a profit from any of it, besides our personal enjoyment for what we’ve done to the house- so take that into consideration, too. Houses aren’t an investment like they used to be. If you’re going to buy a house you like and want to stay there for several years, then I say go for it, but don’t just expect to buy a house for $150,000 and be able to sell it for $200,000 in 5 years just because that’s how it’s always been in that certain area.
‘Throwing your money away’ in rent, but houses aren’t appreciating like they once have, in general. We built our house in 2008 (shreveport), and have made some upgrades over the past 11 years (pergola, extended patio, new floors, etc). Judging by the going rates in our neighborhood, we’ll recoup the costs that we’ve put in the house, but we’re not going to profit from any of our upgrades. We’ll get back what we put in,which is great, but we won’t make a profit from any of it, besides our personal enjoyment for what we’ve done to the house- so take that into consideration, too. Houses aren’t an investment like they used to be. If you’re going to buy a house you like and want to stay there for several years, then I say go for it, but don’t just expect to buy a house for $150,000 and be able to sell it for $200,000 in 5 years just because that’s how it’s always been in that certain area.
Posted on 3/20/19 at 2:14 am to LSUGUMBO
Regarding PMI, I wouldn’t let that scare you off from putting less down.
I just bought a house last year and my option was to either put down 10% and pay a small PMI at 5% interest or put 20% down and at 5.25% interest with no PMI. They told me that the lender prefers PMI over more down because that insurance is worth more to them than that extra 10% is. I have the option to recast with enough money and remove PMI any time I want. Recast will lower your monthly payment instead of just paying down the loan.
Ultimately, if you have the monthly income and enough money up front, it’s a good idea to buy a place, even if it’s just 10% down.
I just bought a house last year and my option was to either put down 10% and pay a small PMI at 5% interest or put 20% down and at 5.25% interest with no PMI. They told me that the lender prefers PMI over more down because that insurance is worth more to them than that extra 10% is. I have the option to recast with enough money and remove PMI any time I want. Recast will lower your monthly payment instead of just paying down the loan.
Ultimately, if you have the monthly income and enough money up front, it’s a good idea to buy a place, even if it’s just 10% down.
Posted on 3/20/19 at 11:50 am to Aubs10
(no message)
This post was edited on 10/19/21 at 1:55 pm
Posted on 3/20/19 at 12:14 pm to JohnDoe00
Any chance you could buy in an area/qualify for a rural development loan?
Posted on 3/20/19 at 2:12 pm to LSUfan20005
A friend of mine mentioned this. I will have to ask.
What are the benefits to this?
What are the benefits to this?
Posted on 3/20/19 at 6:57 pm to JohnDoe00
This is just speculation on my part, but I wouldn’t buy now. Another crash coming.
Posted on 3/20/19 at 9:49 pm to JohnDoe00
Zero down without PMI
Posted on 3/21/19 at 6:40 am to JohnDoe00
quote:
Just started looking into buying my first home
My advice, to you and everyone else, is don’t go into buying a house knowing you will just sell it and move down the line. The whole process we have of buying “starter homes”, then upgrading when we have kids, then downsizing when the kids are gone, just seems like a scam that real estate agents love.
My advice is try and find a home that you really like that is reasonable for all phases of your life, and go into it planning on staying there. Combine with this definitely look into getting a 15 year mortgage. If you start buying a home in your early 20s then you’ll have it paid off before you’re 40, which would give so much financial freedom.
Of course life is long, you never know what changes might occur that will force a move one day or what have you, but I just think people should get away from the whole “starter home” mentality.
Posted on 3/21/19 at 11:06 am to JohnDoe00
Will you qualify for a Rural Development loan (area and income requirements)?
You can get away with putting 0 down, and PMI is substantially cheaper than a conventional mortgage. The catch is, it is for the lifetime of the loan. But you can always re-finance once you're at 80% LTV.
Mine was $55/mo on a $170k house.
You can get away with putting 0 down, and PMI is substantially cheaper than a conventional mortgage. The catch is, it is for the lifetime of the loan. But you can always re-finance once you're at 80% LTV.
Mine was $55/mo on a $170k house.
This post was edited on 3/21/19 at 11:07 am
Posted on 3/22/19 at 6:21 am to lynxcat
quote:
Can someone break down all of the “closing costs” and how these are calculated?
It’s a number of things: loan origination fee, inspections, appraisals, etc.
It will vary depending on value of house, but most conservative estimates say to factor 5%. If the house is very expensive then it will be less.
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