Home buying thread

I actually have a really good broker right now who said since I'm not in a rush to close he can just back out of the current lock and start the paperwork with a different bank at the lower rates.

The brokers I've worked with in the past wouldn't do it and I had time frames I needed to close by so I couldn't take my business elsewhere. This time around I have no deadline which is nice

Khane what if you start with a 30 year and convert to a 15 year? How soon after starting with a 30 should you convert to a 15 before to much damage has been done? Is converting within 5 years. And how do you get rid of PMI when they refuse to remove it due to lack of credit history?

As an aside the lack of credit history is bullshit. Me and my wife have just never paid credit card interest in our life. We've bought and paid off 2 cars (currently have 2 new cars nearly paid off). Both lived multiple years in apartments. Both have had debt and paid it off on time and in full without missing payments.

I've never heard of a mortgage company refusing to remove PMI because of lack of credit history but if you're looking at refinancing there are a lot of things at play.

Old interest rate vs new interest rate
PMI removal like you mentioned
New terms like you mentioned

Use this mortgage calculator:

Mortgage Calculator

Right under the calculate button there is an "output parameters" link. Click that and then hit the checkbox to show annual amortization tables.

First put in the loan amount you had when you first mortgaged the home with your current 30 year loan, and your current interest rate and payment start date. Also figure out your PMI percentage rate and add that in, I would leave the taxes field blank since that's going to remain the same regardless of refinance. Check the amortization schedule to see how much interest you've paid already and how much you'll continue to be paying if you stay with the 30 year. You can also check your mortgage statements/tax return documents.

Then do the same thing for the new 15 year loan and compare.

You're principle payments don't start to eclipse your interest payments until about 15 years in on a 30 year loan so if you're only 5 years into your current loan it's probably going to end up saving you a lot of money in interest if you refinance (especially if you remove PMI in the process)

Fiance and I are considering getting an upgraded house. We each have houses now. Renting hers and living in mine.

She owes 170k on hers and is renting it for 1900/mo. Payments are about 1400. I owe 65k about mine's probably worth 110. I've been fixing it up and am close to finishing. Then i'll hopefully rent it for 1/1.2k a month.

She make 105 and i make 75 but we've both just started our jobs in the last few months, but have been continuously employed.

What should be our price range? Should we be cautious and ensure we can make all 3 mortgages in the event we have no tenants or just have 6 months saved or something?

We have about 6k/mo after expenses at this point living in my place (and she's putting like 16% in 401k). I would be comfortable going to 500k if i thought it was a great deal on the house, but that may be setting ourselves up for trouble.

Will the bank balk on us already having 2 houses, or is it a plus?

500k in WV pretty much gets you a mansion doesn't it?

Having 3 mortgages is definitely a risky proposition. Even having just one or two months vacancy in either or both of the homes could cause issues. You guys make a lot of money for your remaining loan amounts. I'd honestly pay down your house (should take less than a year at your current saving rate according to you) and then revisit.

500k can get a great place, but it's no better than anywhere else with cheap land. Maybe even a little worse due to topography.

I have an aversion to paying down balances when they could be generating positive cash flow and building equity on a larger scale..but I'm mainly just impatient, i realize it's good advice. She is more anxious to move than i am i think. She needs a fuck ton of closet space.

Bros not sure what to do.

Ignoring any $$ considerations, I don't reallywanta house in the classic sense of homesteading, you kids get off my lawn, oh boy I can paint that wall taupe, etc. I guess that's after years and years of living in other people's property (parents, school, landlords) so I'm just used to living with 100% removable items. That said, houses of course have certain benefits but suffice it to say that I'm wholly ambivalent on the whole affair. Doesn't mean I don't have 'preferences' or what not, but just that I'm having a hard time pinning down exactly what I should do because I'm not exactly emotionally invested.

Back to $$, this is why I'm looking now. I don't 'like' paying rent but after I moved cross country about a year ago, I finally got to the point 3ish months ago where I could start saving money in earnest towards a house down payment. My plan was to wait another year or so with 20% and a better grasp of what I wanted but admittedly I had not tracked the market at all so once I did, I realized I had to move up my time table due to pending rate increases, overall market recovery and the like. So by March-April I should have enough saved up for an FHA or low-down conventional. Not ideal but better long term than waiting another year for 6-7% rates + buying at 5-10% increased property values depending on area in that time frame.

So I'm trying to decide what to buy now. The max I want to afford places me at the ~350K range. I don't really want to spend that much because I'd rather put the money towards other things because I don't need the raw sq footage for 2 people, don't want kids, etc. The problem is basically area, house type and lot depend greatly on what I want to do:

1) Spend 150K for older build in an OK area that will appreciate at nominal rates. Have more money for other things, maybe refurbish a bit. Pros: cheap, blank canvas, potential easy investment property. Cons: won't be in the *best* area, will never be a house I reallylike, will take more work (updates and repair).
2) Spend 200K-250K for a slightly newer/better property with more space and/or in a better area. Keep a bit extra money but not as cheap. Pros: not as much maintenance, probably more livable long term, better areas. Cons: bit of a wash, neither the "perfect" house that I want nor the cheapest. Essentially, I'll be paying for something more livable, but still a compromise.
3) Spend 280K-350K for a new build or very upscale smaller home in a choice area. Pros: new, less money in maintenance/updates, basically as "perfect" as I want it to be for a long term house, best potential RoI from a sale down the road (in theory). Cons: more expensive, less money for other stuff, potentially tougher to flip, less likely to be an investment property if the rental market eventually deflates a bit. These houses seem to be less 'friendly' to things like ATVs/boats/etc. if I want one in the future.

So what would you do for a first house? I keep going back and forth between 'cheapest acceptable', 'affordable mediocrity with potential' and 'best investment/long terms'. I guess the problem is houses are a long term investment and if I make the wrong choice, it's years before you recoup enough not to take a loss.

That was a long post, you are obviously thinking long and hard however do not rush, you don't need to. Interest rates are not going to move even close to that much in a year. They've been sub 5% for about 6 years now and property values also are not going to move 10% within a year. You will not be saving yourself any money by having to get into a lifelong PMI payment (PMI lasts the life of the loan on FHA loans now) by taking an FHA loan and being forced to cover refinance costs if you ever want to get rid of it. Wait until you can afford a conventional loan.

I'd even recommend waiting until you can afford a 15 year fixed rate instead of getting into a 30 year fixed and paying astronomical interest amounts.

Is length of planned residency a consideration in the 10 vs. 30 year argument? Hypothetically if I was planning to stay in a house for 5-10 years,then sell, and could afford either the 10 or 15 or 30 year mortgage.

Khane_sl said:

That was a long post, you are obviously thinking long and hard however do not rush, you don't need to. Interest rates are not going to move even close to that much in a year. They've been sub 5% for about 6 years now and property values also are not going to move 10% within a year. You will not be saving yourself any money by having to get into a lifelong PMI payment (PMI lasts the life of the loan on FHA loans now) by taking an FHA loan and being forced to cover refinance costs if you ever want to get rid of it. Wait until you can afford a conventional loan.

I'd even recommend waiting until you can afford a 15 year fixed rate instead of getting into a 30 year fixed and paying astronomical interest amounts.

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I'm qualified for 3% conventionals at < 4% through my broker so that's my likely path so I can drop PMI vs. eternal PIM (even with reduction). I thought about it a lot more last night and ultimately I think the thing that bothers me most is that more money doesn't mean a better property for *me*. For instance, all lots with large land (.25 acres+) are all old construction - 80s at the latest which means they are in some affordable areas (not necessarily bad just not 'updated'). Part of the point of getting a house in my mind was the LAND part - you know, maybe not absolute privacy (ie 15 acre estate) but at least enough land to do whatever you want with.

Well all the new plots are TINY, you can't get new construction (or recent, like 1995+) on huge acreage without millions of dollars because you are competing against developers who want to put 18 houses on that and make bank. So I guess it's bugging me in my brain that I'd be buying what I consider a 'detached apartment' for 300K which, while nice and an investment, means I couldn't buy a trailer and ATVs, a boat, make a large sweeping landscape out back, etc. So even the expensive houses in high-end areas feel like a compromise.

The joys of house shopping begin again. Apparently the #1 job of a real estate agent now is financing coaching. When you tell them you don't need help in that department they get all bitchy. I talked with two locally and they couldn't get past the entie "how much do you make" crap and they want to find you a house that 99% of what you can get financed for. I already had approved financing and told both of them what I was looking for, find it and I will pay for it and I never heard back from either one.

Borzak_sl said:

The joys of house shopping begin again. Apparently the #1 job of a real estate agent now is financing coaching. When you tell them you don't need help in that department they get all bitchy. I talked with two locally and they couldn't get past the entie "how much do you make" crap and they want to find you a house that 99% of what you can get financed for. I already had approved financing and told both of them what I was looking for, find it and I will pay for it and I never heard back from either one.

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Yea I think there's a new breed of 'rebound quickstars' that just want to flip houses quickly for small commissions and kickbacks from brokers at high volume. If you don't impulse buy at your income limit because of all the extras you didn't think you could get, they just find another victim.

I asked this one from pics if the floor was solid or engineered wood and he was like "oh it's not pergo for sure"...