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re: PMI: Is it as bad as I think it is?
Posted on 12/8/19 at 8:08 am to GentleJackJones
Posted on 12/8/19 at 8:08 am to GentleJackJones
I know what you mean, but the banks have no one to blame but themselves for 2008.
The area around here is booming. It's the Huntsville area. I'm just not sure how long I'll stay. Depends on a few different things. But I'm looking more in Decatur which isn't as hot as Madison and the other areas. As far as I know anyway.
The area around here is booming. It's the Huntsville area. I'm just not sure how long I'll stay. Depends on a few different things. But I'm looking more in Decatur which isn't as hot as Madison and the other areas. As far as I know anyway.
1
Posted on 12/8/19 at 8:23 am to EarlyCuyler3
quote:
It's the Huntsville area. I'm just not sure how long I'll stay. Depends on a few different things.
Well, keep in mind, as a buyer, you're typically on the hook for all closing costs. As a seller, you're typically on the hook for the agent's fees (buyer and seller).
Of course, this can be negotiated, but as an example (using the standard buyer and seller's agent fees of 3%), for a $300,000 house, you'd be responsible/have $18,000 of the agent's fees taken out of your proceeds when you sell. If you do the math, it is very possible that you will lose money by staying for less than five years. Obviously, it depends on what type of home you by, how it appreciates, where it is located, and other factors.
For such a short period of time, you may be better suited to rent and continue saving. Just something to contemplate.
This post was edited on 12/8/19 at 8:29 am
Posted on 12/8/19 at 8:31 am to GentleJackJones
Good point, thanks. I'm reallly just tired of being in apartment. So maybe I need to decide if I'm going to stay here beyond how long I initially planned or not.
Posted on 12/8/19 at 8:34 am to EarlyCuyler3
quote:
Good point, thanks. I'm reallly just tired of being in apartment
Rent a house, townhouse, or condo.
Posted on 12/8/19 at 8:35 am to GentleJackJones
Problem there is that the area is such in high demand any place worth renting is astronomical. It's absurdly expensive due to the influx of people constantly.
Posted on 12/8/19 at 9:08 am to EarlyCuyler3
quote:
So is it worth biting the bullet on it and start building equity and getting out of a rental?
That is an A/B analysis you will have to make, unique to your situation.
However, I like to make the analogy that PMI is like paying homeowner's insurance as a renter. Does that make a lot of sense?
Or the whole "credit life" insurance.
Posted on 12/8/19 at 9:09 am to GentleJackJones
quote:
it is very possible that you will lose money by staying for less than five years.
Because of transaction costs, you will almost always lose money in less than 5 years - some folks need 7 to recoup transaction costs and break even.
Posted on 12/8/19 at 9:19 am to Ace Midnight
Many of the responses are not fully educated on the topic. Call a local lender in your area and run the numbers. There are many types of loan programs for different situations. Evaluate the cost of renting in the same place you are looking to buy. The truth is every situation is different.
Posted on 12/8/19 at 9:23 am to Upperdecker
quote:
It matters bc people in debt convince themselves its ok. But it’s not
It makes it super easy to spot the financially illiterate when they post shite like this lol
Posted on 12/8/19 at 9:33 am to Ace Midnight
quote:
That is an A/B analysis you will have to make, unique to your situation.
However, I like to make the analogy that PMI is like paying homeowner's insurance as a renter. Does that make a lot of sense?
I think people need to avoid over-analyzing it and thoroughly grasp what they are doing. You are borrowing money. The bank is giving you a loan.
For example, let's say you purchase a home for $300,000 and put 5% down ($15,000.00). You are on the hook for/owe $285,000.00. You are responsible for paying that note off whether you sell the home for $250,000 or $350,000.
With PMI, your monthly note will consist of your (1) principal, (2)interest, (3) property taxes, (4) homeowners' insurance, and (5) private mortgage insurance. I've seen people state that "Oh, our PMI is only $30 a month; it isn't a big deal." That's not the point. Your are borrowing more money from the bank. You have more debt than (maybe) necessary. The less you put down, the more you will pay monthly, and more importantly, the more you are responsible to pay off once you decide to sell at closing.
Having PMI isn't an obstacle that is absolutely detrimental to a borrower, but let's make one thing clear, it isn't a "good thing."
This post was edited on 12/8/19 at 9:36 am
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