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Message
re: First Time Buying a House
Posted on 1/20/16 at 3:12 pm to slackster
Posted on 1/20/16 at 3:12 pm to slackster
quote:
People are misled all the time on FHA loans saying that PMI will go away after you build up the equity to 20%, but no one ever tells them that the only way that happens is with a refinance and that will only save you money if rates are fairly close to where they are now.
well luckily it worked out for me
because I went with FHA with a 3.5% down payment at 4.5% IR
and refinanced at 3.25% IR and removed the PMI
and this only 4 years after buying the house
my monthly note went down $300/month
2
Posted on 1/20/16 at 3:13 pm to Salmon
quote:
but you are working on the assumption that "if you can only afford 3% down payment" in this thread, while I don't see anyone advocating that
Huh? If you can afford 20% (money that is sitting in a savings account), why would you opt for any less than that?
I'm assuming someone is putting 3% down because they cannot afford 20%. If they could, they would have done so.
I'm well aware of how low interest rates are and how cheap the money is - I'm not advocating that someone pay cash for their house. There is little upside to putting MORE than 20% down, but putting anything less than that will cost you money one way or another.
Posted on 1/20/16 at 3:13 pm to Salmon
Good job. Most people don't end up pulling it off.
Posted on 1/20/16 at 3:16 pm to Salmon
quote:
well luckily it worked out for me
Given the current interest rate environment, it is unlikely that will continue to be the case for buyers in 2016 and onward.
Posted on 1/20/16 at 3:20 pm to lsunurse
quote:
So if you live in an area where 300k is the low end of the real estate market for homes in the area you are just SOL and should rent the rest of your life?
If you live in an area where that is the case your income should be commensurate with the cost of living in that area. If you're not saving money while renting it is HIGHLY unlikely that you'll find a way to start doing it when you buy a home.
I'm genuinely taken back by how many people think owning a house is some safe-haven investment where they can just get their money right back out whenever they need it. It is already as if 2008-2009 did not happen.
Posted on 1/20/16 at 3:22 pm to slackster
quote:
Huh? If you can afford 20% (money that is sitting in a savings account), why would you opt for any less than that?
Im a local Mortgage lender and this is ideal, but not always works for everyone
What people also don't know is that you can put down as low as 5% down for Conventional. But you wont have as good of a Interest rate as you would FHA.
And the RD loan for first time home buyers is awesome. That and VA loans are great (given you qualify). You can do FHA Bond as well, which the government will help you with your down payment.
So many different options.
This post was edited on 1/20/16 at 3:27 pm
Posted on 1/20/16 at 3:23 pm to slackster
quote:
I'm genuinely taken back by how many people think owning a house is some safe-haven investment where they can just get their money right back out whenever they need it. It is already as if 2008-2009 did not happen.
This is another factor for me. I know that if I lose my current job (which is legitimately possible with oil prices), I have a significant amount of equity in the home I purchased a year ago because I put down 20%. If I need to sell quickly, I can put my house at a competitive price without owing more than what I can sell it for. Even if I take a loss overall, I'm not still in debt after selling my house.
Posted on 1/20/16 at 3:23 pm to slackster
quote:
but putting anything less than that will cost you money one way or another
Not if:
Mortgage + PMI - equity built < rent
This post was edited on 1/20/16 at 3:24 pm
Posted on 1/20/16 at 3:25 pm to CE Tiger
quote:
it's not that all you can afford is the 3%. It makes a hell of a lot more sense to keep the extra $30,000 in an investment account or savings and gives you the ability to you know buy furniture and all the first time home owner costs associated with that house.
Posted on 1/20/16 at 3:27 pm to slackster
Bought first house for 100k with 0 down.
Stayed 3 years, sold for 118,500.
Pocketed 10k
Built house for 343k
Put 10% down.
We afford the shite out of it and do just fine.
So I guess we are rule breakers.
Stayed 3 years, sold for 118,500.
Pocketed 10k
Built house for 343k
Put 10% down.
We afford the shite out of it and do just fine.
So I guess we are rule breakers.
This post was edited on 1/20/16 at 3:29 pm
Posted on 1/20/16 at 3:27 pm to CE Tiger
quote:
it's not that all you can afford is the 3%. It makes a hell of a lot more sense to keep the extra $30,000 in an investment account or savings and gives you the ability to you know buy furniture and all the first time home owner costs associated with that house.
If you could only put 3% down because you needed the rest of the money to furnish the house, then you made an incredibly risky decision.
All of this anecdotal evidence from those on this board does nothing to change the fact that it was a poor financial choice. It may have worked out just fine for you, but you won't find many people advocating that route for the average Joe because it entails a ton of downside.
There are hundreds of thousands of versions of this story that went the other way in a hurry in 2008 and 2009.
Posted on 1/20/16 at 3:29 pm to slackster
quote:
If you could only put 3% down because you needed the rest of the money to furnish the house, then you made an incredibly risky decision.
I don't understand how that is extremely risky if you can easily afford the mortgage payment.
Maybe someone really wanted a house and didn't have the savings at the time to put 20% down?
Posted on 1/20/16 at 3:29 pm to PhiTiger1764
quote:
Mortgage + PMI - equity built < rent
You can always question if you are overspending on rent as well
Posted on 1/20/16 at 3:32 pm to BoogaBear
quote:
Bought first house for 100k with 0 down. Stayed 3 years, sold for 118,500. Pocketed 10k Built house for 343k Put 10% down. We afford the shite out of it and do just fine. So I guess we are rule breakers.
Jesus some of you swear this is some kind of personal attack against your lifestyle.
I'm aware of the fact that things can still work out fine when you're putting down less than 20%, but that doesn't change the fact that it is not a sound financial strategy. You can have success story after success story since 2009, but let's not ignore what happened then. The idea that you'll always get more for your house than you paid is a bit foolish.
Posted on 1/20/16 at 3:33 pm to TheCaterpillar
quote:
Maybe someone really wanted a house and didn't have the savings at the time to put 20% down?
I really want a Porche right now, and I can afford an extra $2500 a month note technically. I mean I wouldn't starve. Doesn't make it a good financial decision. It would be "risky".
Especially when the value of the house could easily swing 3% and you would be upside down in a time when you really need to offload the house. You can get evicted if you can't pay rent. Not so easy if you can't pay your house note.
Posted on 1/20/16 at 3:36 pm to TheCaterpillar
quote:
I don't understand how that is extremely risky if you can easily afford the mortgage payment.
If you CAN afford to put 20% down, furnish the house, and maintain an emergency fund, you should do so.
If you CANNOT afford to do that, there are other options, but the first one you should explore is a cheaper house.
If you do make bad decisions during the bubble you won't know it until it bursts.
Putting down 20% is sound financial advice. Not putting down 20% isn't necessarily a terribly decision, but you have to judge that decision on a case by case basis. That is all.
Posted on 1/20/16 at 3:37 pm to slackster
quote:
Putting down 20% is sound financial advice. Not putting down 20% isn't necessarily a terribly decision, but you have to judge that decision on a case by case basis. That is all.
I think most agree with this
it was the "if you can't put 20% down, you can't afford the house" line that got all the jimmies rustled
Posted on 1/20/16 at 3:39 pm to KG6
I remember back in 07ish when mortgages were can't lose because houses always go up in value....but then they didn't
you put 3% down on a 300k house and lose your job a year later
what if that house is no longer worth 300k?
even if you can get your money back you'll still have to come out of pocket to sell after fees
that's hard to do with no job
you put 3% down on a 300k house and lose your job a year later
what if that house is no longer worth 300k?
even if you can get your money back you'll still have to come out of pocket to sell after fees
that's hard to do with no job
Posted on 1/20/16 at 3:39 pm to lsupride87
And looking at just the kitchen, it needs to be gutted & renovated...
If the whole house needs to be redone then you're looking at a $30-50k remodel on top of that purchase price.
If the whole house needs to be redone then you're looking at a $30-50k remodel on top of that purchase price.
Posted on 1/20/16 at 3:39 pm to TheCaterpillar
quote:It isnt. I dont know why he is failing to grasp that
I don't understand how that is extremely risky if you can easily afford the mortgage payment.
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