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re: Looking to purchase first home
Posted on 8/2/12 at 11:02 am to Pilot Tiger
Posted on 8/2/12 at 11:02 am to Pilot Tiger
quote:
what do you mean build up your equity? What kind of equity do you currently have?
Zero besides cash, IRAs, and 401ks.
quote:
I would not advise people in an ok financial situation to purchase a home
What is great financial situation? Most people my age don't have large sums of money unless they are in a rich family that gives them money.
quote:
well for one it provides for flexibility regarding job situation, you aren't liable for major repairs, ie AC unit craps out or you need a new roof. Those can be major costs associated with owning a home, along with other things. If you can't save enough for a down payment, how would you afford those kinds of expenses?
Home is a brand new garden home, all brick, well made. Most likely won't have any expenses at least for 1 year.
quote:
right, but owning a home won't automatically mean you are building your net worth either.
Owning a home fully over time means you have an asset to your name. Thus, adds to your net worth.
I agree with everything you said ab saving.
2
Posted on 8/2/12 at 11:26 am to AUtigerNOLA
quote:Is this in New Orleans?
Home is a brand new garden home, all brick, well made. Most likely won't have any expenses at least for 1 year.
Posted on 8/2/12 at 11:30 am to saderade
quote:
Is this in New Orleans?
. No, this is in birmingham. Not sure if they have brand new garden homes in new Orleans anywhere. But on the northshore, yes. 
Posted on 8/2/12 at 12:02 pm to AUtigerNOLA
quote:being able to pay for all of your necessities AND save money would be a good start imo
What is great financial situation?
quote:well perhaps being young and not in great spot financially means you should wait to buy
Most people my age don't have large sums of money unless they are in a rich family that gives them money.
quote:maybe....maybe not...
Home is a brand new garden home, all brick, well made. Most likely won't have any expenses at least for 1 year.
quote:owning a home with minimal a down payment(FHA is 3.5%) would take quite a while to build any net worth. The majority of your payment will go toward interest, PMI, taxes, etc. It will take quite a while to build equity. So like someone else said, unless you're planning on being there for a good while, it may not be worth it
Owning a home fully over time means you have an asset to your name. Thus, adds to your net worth.
Personally, the idea of not being able to save enough to put an adequate down payment on a house, and without having sufficient alternatives like parental help, I would not buy. But again, this is just my opinion
This post was edited on 8/2/12 at 12:03 pm
Posted on 8/2/12 at 4:50 pm to Pilot Tiger
quote:
being able to pay for all of your necessities AND save money would be a good start imo
We both have decent paying stable jobs. We are at the beginnings stages of our careers and we take in around 100K. We can pay for whatever we need and save.
You make it sound like its not worth getting a house if you have to go thru FHA. I'll try to look at conventional deals.I don't believe it's crazy to think I can sell the house for profit in 5-10 years given the school district and area the home is located. It's a garden home too and it's under warranty the 1st year. These homes are for people who downsize and are just starting. Won't be a hard sell.
Posted on 8/2/12 at 5:03 pm to AUtigerNOLA
quote:you didn't say you were saving earlier in the thread
We can pay for whatever we need and save.
quote:I never once said that. I said you have to evaluate your situation and see what fits best
You make it sound like its not worth getting a house if you have to go thru FHA
quote:yea living there 10 years is probably a good goal. You mentioned earlier that you weren't planning on living there long. I'd say 10 years is longer than average for a first home purchase nowadays
I don't believe it's crazy to think I can sell the house for profit in 5-10 years given the school district and area the home is located.
just do your due diligence and run the numbers, budget, etc.
dont just assume you have to buy right now because you and your family think it's a good idea
Posted on 8/2/12 at 10:27 pm to Pilot Tiger
Thanks for the advice. Yea we don't plan on moving anytime soon once we are in the home. I know I said we would like to sell earlier in the thread, but only if it's a good time to sell and make money.Posted on 8/3/12 at 6:47 pm to Pilot Tiger
quote:
Personally, the idea of not being able to save enough to put an adequate down payment on a house, and without having sufficient alternatives like parental help, I would not buy. But again, this is just my opinion
Hey I just got offered by a family member to help put down the 20%. I just have to pay him monthly for it back. My fiancé think its the same thing as paying PMI. This is stupid right? I would think that it's a good deal.
Posted on 8/3/12 at 6:53 pm to AUtigerNOLA
quote:
My fiancé think its the same thing as paying PMI.
It's not.
quote:
This is stupid right?
Yes
quote:
I would think that it's a good deal.
Yes, on a purely $ reasoning. Mixing $ w/family is a horrible idea.
Posted on 8/3/12 at 7:11 pm to wegotdatwood
quote:
Yes, on a purely $ reasoning. Mixing $ w/family is a horrible idea.
I understand that. It's my grandpa and mom that are offering it though. We aren't going to not pay back and if we sell for profit down the road we are using some of that to pay them back
This post was edited on 8/3/12 at 7:14 pm
Posted on 8/4/12 at 9:36 pm to AUtigerNOLA
I agree with wegotdatwood...mixing money with family is usually a bad idea. But it could work with some families. Let's look at it numbers wise.
Appears to be a $215k purchase by your previous posts. To go FHA, you will have to put 3.5% down for amount of $7525. And you will pay $205/month in PMI for a minimum of 60 months more than likely.
FHA loan:
Loan amount $207,475
Monthly payment @ 3.75% for 30 years = $960 + PMI + Escrow
FHA PMI premium included in closing costs approx $3600
PMI monthly $205 X 60 months = $12,300
Total paid to PMI over 60 months = $15,900
Conventional Loan:
Family puts down 20% = $43k
Loan amount $172k
Monthly payment = $800/month + Escrow (No PMI)
No PMI premium in closing costs
Your monthly payment would be $365 lower per month due to loan amount being lower and not paying 205 each month in PMI. If you paid your family back the $365 each month then you would have them paid back in 118 months assuming they did not charge you interest.
The $15,900 not paid to worthless PMI is a big deal. Just have to determine if it is worth involving your family.
Disclaimer: I am far from a PMI expert. Just going by what I have researched and what others have posted on the board. Some have said it will be a 5 year mandatory PMI, others have said you have to get it down to 78% LTV. For the numbers purpose I used 60 months of paying PMI.
Appears to be a $215k purchase by your previous posts. To go FHA, you will have to put 3.5% down for amount of $7525. And you will pay $205/month in PMI for a minimum of 60 months more than likely.
FHA loan:
Loan amount $207,475
Monthly payment @ 3.75% for 30 years = $960 + PMI + Escrow
FHA PMI premium included in closing costs approx $3600
PMI monthly $205 X 60 months = $12,300
Total paid to PMI over 60 months = $15,900
Conventional Loan:
Family puts down 20% = $43k
Loan amount $172k
Monthly payment = $800/month + Escrow (No PMI)
No PMI premium in closing costs
Your monthly payment would be $365 lower per month due to loan amount being lower and not paying 205 each month in PMI. If you paid your family back the $365 each month then you would have them paid back in 118 months assuming they did not charge you interest.
The $15,900 not paid to worthless PMI is a big deal. Just have to determine if it is worth involving your family.
Disclaimer: I am far from a PMI expert. Just going by what I have researched and what others have posted on the board. Some have said it will be a 5 year mandatory PMI, others have said you have to get it down to 78% LTV. For the numbers purpose I used 60 months of paying PMI.
Posted on 8/4/12 at 10:17 pm to mglsu21
Hey I really appreciate you putting together that research. From what I have read, the numbers look right. I was really hung up on the PMI and paying that for at least 5 years, like you said. I wouldn't mind paying my family back than to pay a worthless PMI. I did not ask for the money tho, they just offered. I would feel too guilty just taking it as a gift and not paying back. Regardless, like you said, we have make sure it's a good idea to involve them.
Anyway, we just got the appraisal today at 202k compared to the 219 sales price. So we might be getting it cheaper or we might have to walk away.
Anyway, we just got the appraisal today at 202k compared to the 219 sales price. So we might be getting it cheaper or we might have to walk away.
Posted on 8/4/12 at 11:10 pm to AUtigerNOLA
Seems as though that "great neighborhood" is getting devalued. Don't buy your first home as an investment. Buy it as a home and make some memories.
Posted on 8/5/12 at 7:45 am to AUtigerNOLA
No problem at all. I have been running all the numbers for my purchase in about 8-9 months. It's a somewhat stressful and confusing purchase, so being fully informed is very important to me. I worked in the industry up until the credit crunch of '08 and everything has changed since then.
As for the appraisal coming back lower, it sounds like you are either going to save about $13k on the sales price or the buyers will pull the plug. The bank not loan more than $202k on it (or 96.5% of 202k for FHA).
I'm hung up on PMI as well, but I will not be able to avoid it for this purchase. Luckily I will be buying in a rural development loan area and the PMI will be so much lower than FHA. Now if my Dad offered me 20% for downpayment I would snatch it up in a heartbeat. I would never ask him for it but wouldn't turn him down either. Too much money going towards nothing with PMI.
As for the appraisal coming back lower, it sounds like you are either going to save about $13k on the sales price or the buyers will pull the plug. The bank not loan more than $202k on it (or 96.5% of 202k for FHA).
I'm hung up on PMI as well, but I will not be able to avoid it for this purchase. Luckily I will be buying in a rural development loan area and the PMI will be so much lower than FHA. Now if my Dad offered me 20% for downpayment I would snatch it up in a heartbeat. I would never ask him for it but wouldn't turn him down either. Too much money going towards nothing with PMI.
Posted on 8/5/12 at 8:04 am to AUtigerNOLA
Take the down payment from your family and pay them back monthly. Just make sure to actually pay them back because they are saving you a ton of money.
This post was edited on 8/5/12 at 8:05 am
Posted on 8/5/12 at 9:04 am to AUtigerNOLA
legally they cant make you pay back the money so just take it and tell them to GTFO!
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