Home buying thread

Palum_sl said:

As your avatar might say "Won't... can't... what's the difference?"

You won't be able to fund a loan at the same ltv if your offer is above appraised value, if at all.

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Interesting, not an issue at all in Canada. Is not a 3% difference negligable? aprasials have some subjectivness with respect to ware and tear, seems insane to have a deal blown over this.

Nester_sl said:

Interesting, not an issue at all in Canada. Is not a 3% difference negligable? aprasials have some subjectivness with respect to ware and tear, seems insane to have a deal blown over this.

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Banks don't want to loan someone more money than the asset they are covering is worth in case they have to foreclose. Seems insane NOT to have a deal blown over it if you ask me (from the banks perspective). Also seems insane to be OK with paying more for a house than it's worth as a buyer.

Khane_sl said:

Banks don't want to loan someone more money than the asset they are covering is worth in case they have to foreclose. Seems insane NOT to have a deal blown over it if you ask me (from the banks perspective). Also seems insane to be OK with paying more for a house than it's worth as a buyer.

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Of course not, in Canada you need a min 5% down which makes the loan less than the asset. I assumed you need 5% in the USA as well. IMO if you only have 5% down you should hold off and save more.

Also worth is subjective On a product that is not uniform. If he did 5 appraisals would you expect all 5 to be $309k on the button?

You can do 0% down in the US. There really isn't a reason to put a lot down while the rates are so low. Sure, you'll have to pay PMI and may not get quite as great of a rate, but if you don't plan on living there forever it doesn't make sense to tie 5% or more up.

Check into paying the PMI up front. If you're in the home longer than about 2.5 years it's a better option if you have to go that route.

I don't understand the idea of "paying PMI up front". Isn't that just putting 20% down so you don't have PMI? What do they mean by paying PMI up front? Sounds like a scam to me.

a_skeleton_03_sl said:

Oh there's the rub. Just got an email saying that now that all the paperwork is done and we are good to go if we could mail in a check for 50% of the upgrades we chose. I have to write a check for $10.5k about 6 months before I wanted to.

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Those are the terms every new build I looked at offered.

We didn't have to put anything down for the upgrades. We did $1000 to hold our lot, while we sold my house and then $4000 to start building.

Khane_sl said:

I don't understand the idea of "paying PMI up front". Isn't that just putting 20% down so you don't have PMI? What do they mean by paying PMI up front? Sounds like a scam to me.

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This. If you have all that money to pay up-front PMI (nothing but an insurance). Why not just put it towards your 20% down (principle) to get rid of PMI and wasted money altogether?

I checked the numbers on my mortgage. PMI is 29.60 a month and I've owned for 2.5 years now. 5% down would have been $4,250, so I'm still way ahead. Plus I can file Schedule A so I get some of that $355 back every year.

Zillow is showing a value of about $120,000 for my house now. It actually seems somewhat reasonable, since smaller and more outdated houses on my street have been selling for more than that. Hopefully the market doesn't crater before I sell later this year, or early next year.

But the thing is, that 5% is your money, it goes towards the principle of the home and you would (in theory) get it back when you sell the home, its equity. PMI is just nothing. You pay it and then all that money is just gone, you get absolutely no benefit from it at any point in time. You don't get it back if you sell your home, or if your home burns down, or if your home is foreclosed. You're basically paying the insurance premium on a policy that benefits your bank, and thats it. Its a horrible, horrible, deal. It's the homeowner equivalent of a Ticketmaster "convenience" fee on a concert ticket. Its just completely wasted money(from the consumer/buyers standpoint)

I agree that PMI is definitely wasted money. You also have to consider that the downpayment doesn't appreciate when it's sunk into a home. There is also no guarantee that you'll actually get the principle back out of your home.

I suppose I should add a disclaimer saying that it just happened to work for me since I planned on owning the home for a short amount of time in the first place.

Buying a house you aren't either flipping or planning on living in forever is a huge risk and almost always a losing proposition (from a financial perspective).

Knocking $8k off your principle over 5 years but paying $30k in interest and hoping you can sell for at least as much as you bought it for while also completely discounting any maintenance costs? Why even bother?

But this is what we do in the USA. We've been sold on the idea that buying a house is ALWAYS a good investment when in reality it almost never is. And so people put 0-3.5% down on a 30 year loan, pay PMI, disregard everything that comes with homeownership, and then do it all over again every 5 years all while fooling themselves that the money they didn't invest in home equity they'll make way more on in the market. Like it's some investment guarantee when really it's just a treadmill going nowhere.

Stupid question incoming

My realtor contacted me today (friend) and told me his wife wanted to speak to us (works in mortgages). She's going to call me tomorrow, apparently she believes she can help us get rid of our PMI.

I was under the understanding that PMI exists until 20% of principal is paid, at which point we need to re-finance or work with the bank. My question is - what kind of scam is she trying to run on me?

Edit: And to clarify - I contacted them and told them we were still below 20%, she said it "didn't matter"

Guessing it's gonna be one of those "pay the PMI up front" offers.

Noodlemod_sl said:

Stupid question incoming

My realtor contacted me today (friend) and told me his wife wanted to speak to us (works in mortgages). She's going to call me tomorrow, apparently she believes she can help us get rid of our PMI.

I was under the understanding that PMI exists until 20% of principal is paid, at which point we need to re-finance or work with the bank. My question is - what kind of scam is she trying to run on me?

Edit: And to clarify - I contacted them and told them we were still below 20%, she said it "didn't matter"

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Maybe they know your house will be appraised higher? When I redid my mortgage the home went from being appraised at ~180k to ~230k. I had about 40k into the home at the time (140k left on mortgage) but since the value of the home went from 180k to 230k and I only owed 140k left my LTV shifted. If I knew that would happen I would have refinanced my loan before I was comfortably below 20% of the principal done with.

Cad_sl said:

Could be a combo loan to avoid PMI.

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What's a combo loan?

Another additional detail, my credit was 2 points shy of qualifying for some loan type that eliminated PMI - if I were to refi and my credit was higher (it is), would that also come into play?