About to buy a house

[Cased Heel]

We will save more than 13K in 5 years. You are just including the saving from renting and not buying now.

However, in addition to thosse savings, her and I can put away 2K/month right now (finally, after paying of thousands in credit debt, thank god). So in 5 years, we'll have a lot more than 13K. (knock on wood). Plus, I will be able to put some poker earnings towards that as well. Although I cannot successfully predict or forecast how much my bankroll will be in 5 years.

Right now I just got out of "serious" debt (still have student loans, but at low interest rates so I'm not "bogged down" like the 24% cash-advance credit card interest I was paying (Holy S.hit).) So since i just got out of debt, I have no capital, which means its not a good time to buy. If I wait 5 years, I'll have plenty of capital to put down, and a newer house.

Plus, I'm an architect, and I may want do design/build my first home. Another reason for waiting/saving.

Renting isn't horrible IF you have a "plan". Which I do.

And yes, she could dump me any day. haha.

[adios]

A think alot of your numbers are fuzzy but your take that owning a home is usually a long term committment (if you were lucky enough to have a home skyrocket in value right away sell in two years, it's tax free gains basically) is right and that's probably as important as anything. I've done pretty well owning homes but I've owned for long stretches and the market has gone through some soft times.

[Cased Heel]

At this point in my life I'm not "investing" in homes. I'm not looking to "turn a profit".

I do know people who buy run-down homes in high land-value areas and fix them up and re-sell them for a nice profit, but I'm years away from ventures like that.

EDIT: What numbers are fuzzy? I refute your claim.

[swolfe]

- don't get a 30 year fixed

- get interest only if possible; talk to a broker about it

- there are a lot of good mortgage programs for financing over 80% without having to pay PMI

- have the seller pay 3% of the price to closing costs. this will raise the purchase price and amount financed, but save you money out of pocket

- ignore the guy that said mortgage debt is bad

- think about how long you're going to be in the house when deciding on mortgage terms. less than 5 years? do a 5/1 ARM

- even if you will be in the house for a million years, you'll probably refinance every few years to shorten your term, get cash out, or take advantage of rate changes

- try not to use a realtor, you'll pay too much

- definitely get an inspection...walk around with the inspector while he looks

- my favorite loan program is the interest only 1st position HELOC from countrywide (FlexSaver). finance up to 95% with no PMI. interest only at prime rate.

i'm about to buy my 5th house. i have 3 rentals and the house that i live in, which will become a rental as soon as i close on the new place. my fiance has been a mortgage processor, underwriter, and loan officer.

[astroglide]

i think people that tell renters they're wasting money either got help with their down payment or bought before housing costs were so ridiculous. i own a condo, but i think that renting is fine and everybody who talks about how their "payments are the same" probably had their parents pay their down payment and aren't factoring taxes, repairs, etc.

[Lottery Larry]

Where did you get that animated Vanilla Ice avatar?

[Cased Heel]

Exactly. I'd have to buy a lawnmower, pay taxes, get insurance, pay for every repair in the home.. all that nonsense.

At an apartment your washer/dryer breaks...get maintenance to fix it. They cut your grass, they fix everything. It's their property. No worries.

He cited an article in the local paper that said young 20-somethings were buying homes. Yeah.. kids whom are either really rich, or really dumb, or pro baseball players.

I figure you could easily live in an apartment until your first kid is 5 years old (at which point it would be nice to live in a neighborhood).

I've got a friend who rents right now, is 27 years old, and claims that by age 35 he will own a home. I believe him too. He listens to Dave Ramsey everyday at work. haha.
How many people who buy at 25, own at 35? Probably less than 1%. He can rent all these years, and own by age 35.

[smokingrobot]

im a mortgage broker:

for the best rate, you might consider paying a 1 point, but make sure you get quotes from 3 people.

ask them ALL to send you a GFE (good faith estimate). That GFE should be pretty close to what you would be looking at at closing. Also, a good comparison is your APR rate. The APR will include all the fees and is the % rate you use to compare one loan against another in terms of fees. Be weary of APR's less than or exactly at your interest rate. Your interest will/should always be lower than your APR. This does not mean you interest rate IS the APR however.

You'll also want to supply as much as possible up front so you dont get into a back and forth with them asking for more crap. Dont just cough it up, but ask the broker or whoever you are dealing with to supply you with a list of things you will need to give them.

it will include things like 2 pay stubs, 2 months bank statements, W-2's or 1099's etc etc.

Inevitably, the underwriter's will then ask for a few more things down the road, but it will make things easier.

Dont give out your SS to everyone. If there are 3 companies that you are talking to that seem to not be BSing you, then go with them.

An 80/20 is not 20% down. An 80/20 means a first and a second mortgage: 80% 1st, 20% 2nd.

This avoids PMI if you are a FNMA Prime borrower (middle FICO above 600 usually).

PMI comes into play when you borrow above 80% of the value (as determined by the purchase price) in a FNMA loan. If you go with a subprime, there is no PMI, but the rate is higher, so you're pretty much in the same situation as if you paid PMI. A higher rate means you'll be paying that till you refinance or sell your home, PMI will fall off after the mortgaged amount reaches 80% of the value of the home. If your area is appreciating, you may end up only having to pay PMI for 6 mo's to 1 year.

PMI amounts vary depending upon your downpayment and the coverage demanded by the PMI company. There is no exact science to it.

If you are not getting a prime loan, go for a 2/28, dont demand a fixed. 2/28 means you have a fixed rate for 2 years, after which it adjusts upwards.

Right before the adjusment period, refinane, and hopefully by then your credit will have improved etc.

If you have any other questions, PM me. What state are you purchasing in?

Another good idea is to get quotes from a direct lender, like Wells Fargo, a mortgage brokerage outfit, and your Bank, if they are willing to write you a loan.

If during the process you have any questions, feel free to write me and i can help you out all you want.

[swolfe]

subprime doesn't necessarily mean that the interest rate will be higher, it just means that the loan doesn't conform to Fannie Mae guidelines.

if you have good credit, but want something unusual (no doc, interest only, high LTV with no PMI), you're going to have to get that from a subprime lender, but the rates are basically determined by your credit.

[Lottery Larry]

Have you already done things such as:

Close out old credit cards and reduce the number of active ones you have accounts with?

Gotten credit history checks yourself from 2-3 of the companies, to make sure there are no surprises you need to fix first?

Gotten some information on housing resell values, both for the builder and the area that you're in?

Gotten a ranking and history of the school district you're in, which could affect your resell ability?

Gotten an estimate on taxes for the residence and compared them to neighboring areas?

I hope this place is going to be bigger than your current place? Will the builder have any problems configuring the gaming room?

Think very hard about the loan you'll get. I don't see interest rates dropping in the next few years, but how high they go, and how long you estimate you'll be there, is a key factor in your loan type.

We went from an apartment, to a twin (because of A-man) to an apartment, to the current location (because of Z-man)
We sold the twin for what we paid for it, and felt lucky to do so given the area/school district, so we lost money on that.

BTW- are you *ahem* buying this with anyone?