Home buying thread

Fogel said:

A little over a week later and I saw a spike in people viewing the property on zillow, got a bunch of viewings this week, and signed a contract for full asking price yesterday. Light at the end of the tunnel if you have a property to sell. Not sure if it's a combination of people tired of the quarantine tied with the timing/season.

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Your place probably also has some appeal =)

HOly fuck... I was just reading up on VA loans and they don't require PMI!!!

7. They don’t have mortgage insurance. Mortgage insurance is a monthly fee you pay with other programs when you're not putting at least 20 percent down. The VA's guaranty eliminates the need for any mortgage insurance or mortgage insurance premium, helping borrowers save even more money each month.

TJT said:

Caveat here is that while this is useful each time you use the VA loan the loan origination fee increases significantly.

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Yeah I was looking at this. I'd be a first time buyer and I can pull some cash out of my 401k to put down 10%. I'd have to run the numbers to see if I'm better off long term paying the 2.3% or putting 10% down to save .9%. As my 401k recovers the next year or 3 I expect the answer likely is to pay the 2.3%. I'm guessing a $500k home so 10%=$50k. $50k @ 6% will grow the total amount of my 401k more than $11.5K for the fee and the total $500k loan at 3.125%?

Got time to figure that out...

First time selling and potentially buying a house in the next 3 months here, as I took care of my disabled Mom at our family home since senior year of High School (She made it 17 years into the "6 months to live", so hopefully I did pretty okay job), so never really did the whole 20s "launch recklessly into the world" phase.

It seems aggressively stupid how expensive apartments look compared to houses. I know there's a ton of "hidden" costs to houses, in repairs, in random shit cropping up, replacing stuff over time, but the cheapest 2 bedroom apartments in town (that don't have bullet holes in the siding) have *higher* rent than a mortgage on a 3-4 bedroom split level with a finished basement.

Going to have to do a lot of research to make sure I'm not getting fucked whatever I end up going with. Doesn't help that the plague has the teaching situation all fucked up so I don't even know if I'll still have a job in the fall. Feels dumb to not buy a house with how low interest rates are right now, but also feels dumb to buy one and then end up having to move next year for work.

Looked at building a new house outside of the city proper, but the construction companies won't even touch new house construction under 300k here (Housing prices in the area ranging from ~150k to ~375k normally, with a couple gated neighborhoods going up into the low million), too much demand/profit to be made in making the big ol suburban houses, ain't nobody got time for a starter home. So all the starter homes are 70s constructions that'll probably need random repairs/replacements in the first 5 years.

I think taking advantage of low interest rates is a really bad reason to buy right now. The FED is going to do everything it can to keep them suppressed for a long, long while. It will not increase the FED funds rate for a couple years at least. If you have job uncertainty, i wouldn't consider it without at least first seeing some decent (10-20%) price drops from here.

I have a new place getting built that I had made the agreement on back in November, and now it won't be done until Oct. But due to delays I've had some additional time to consider backing out. I"m sticking with the purchase because we love the place and it was in the middle of our price range. The worry is if the housing market crashes again I'll be kicking myself, BUT… I also think there's a good chance that 5-6 years from now (or even sooner) prices are even more inflated due to the FED's insane pumping right now that is dwarfing all previous QE. Short term who knows what happens, but long term I think the old "if you're going to live there at least 5 years" needs to be the top consideration right now. If you have a lot of uncertainty about that, probably not a good idea to buy now.

People are delaying rent and mortgage payments all over the place. Its anybody's guess where this ends, if the FED money and govt bailouts can keep things afloat long enough until things start to get back to a little bit of normalcy. But if I wasn't locked into a place already there's no way I'd be looking to buy. I'd be waiting and hoping for price drops. As is I'm hoping and trying to convince myself there may be some chance for price stability, or at least drops that aren't too big..

Makes sense. I'll probably be staying in this city regardless, but I definitely don't want to get a home that ends up being a 45+ minute commute from where I end up working next year. Did the 2+ hours-of-driving-a-day shit out in Denver years ago and that's very much not something I want in my life again. So I'll probably just look for an interim apartment until I figure my life out a bit more from here. I've got a few folks I can room-mate with for the next 3-6 months of plague-instability.

Kuro said:

So I'll probably just look for an interim apartment until I figure my life out a bit more from here.

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I considered buying last fall and chose to downsize rentals instead. Feeling good about that decision as of right now but I think a year from now could be a whole different situation. I'm paying ~2x mortgage on rent essentially but the freedom to buy out and leave or just finish the lease and leave is too good for me right now. Wait and see where the cards fall

Flobee said:

I considered buying last fall and chose to downsize rentals instead. Feeling good about that decision as of right now but I think a year from now could be a whole different situation. I'm paying ~2x mortgage on rent essentially but the freedom to buy out and leave or just finish the lease and leave is too good for me right now. Wait and see where the cards fall

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Question: Say I'm paying $2400/month for rent on an apartment near work plus monthly parking fees at my apartment $50-$100... If I can afford that much in rent why can't I go all in on an equivalent mortgage at say $2400/month even if the total cost of the home is more than 5x my annual salary?

I've seen the rule of thumb range from 2-5x annual salary for the reasonable price of a home but why not go higher if my coworkers making the same as me are paying $2400-$2500 in rent for a 2 bedroom apartment?

If 5x my salary is $600k but a $700k home mortgage is $2300/month isn't that still affordable for me? (And consider that $2300/month being all in property taxes etc etc)

The best sense I can make is to get a 15 or 20 year mortgage on a $300k home and pay a shitload off on it but $300k houses around here look like tiny wrinkled dicks from the 50s. Who wants that shit?

$2,400 a month in mortgage is certainly something you might be able to swing. What about utilities and upkeep? The mortgage isn't the only thing you pay for in a house. If you own it, you pay for everything.

Cathan said:

Question: Say I'm paying $2400/month for rent on an apartment near work plus monthly parking fees at my apartment $50-$100... If I can afford that much in rent why can't I go all in on an equivalent mortgage at say $2400/month even if the total cost of the home is more than 5x my annual salary?

I've seen the rule of thumb range from 2-5x annual salary for the reasonable price of a home but why not go higher if my coworkers making the same as me are paying $2400-$2500 in rent for a 2 bedroom apartment?

If 5x my salary is $600k but a $700k home mortgage is $2300/month isn't that still affordable for me? (And consider that $2300/month being all in property taxes etc etc)

The best sense I can make is to get a 15 or 20 year mortgage on a $300k home and pay a shitload off on it but $300k houses around here look like tiny wrinkled dicks from the 50s. Who wants that shit?

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What you can afford is a matter of opinion I suppose.

If you're paying $2400+ per month in rent now you should keep in mind that it is very different than a $2400+ mortgage. If your income takes a hit or you have some other unforseen issues you can downsize your living expenses relatively easily when renting, even if that means moving somewhere cheaper. If you have a mortgage for the same amount then you're stuck with it regardless of life events.

Cathan said:

Question: Say I'm paying $2400/month for rent on an apartment near work plus monthly parking fees at my apartment $50-$100... If I can afford that much in rent why can't I go all in on an equivalent mortgage at say $2400/month even if the total cost of the home is more than 5x my annual salary?

I've seen the rule of thumb range from 2-5x annual salary for the reasonable price of a home but why not go higher if my coworkers making the same as me are paying $2400-$2500 in rent for a 2 bedroom apartment?

If 5x my salary is $600k but a $700k home mortgage is $2300/month isn't that still affordable for me? (And consider that $2300/month being all in property taxes etc etc)

The best sense I can make is to get a 15 or 20 year mortgage on a $300k home and pay a shitload off on it but $300k houses around here look like tiny wrinkled dicks from the 50s. Who wants that shit?

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AFAIK, lenders still use 28/36. Mortgage escrow bundle not exceeding 28% of gross income, and total month fixed debts, including, mortgage bundle, not exceeding 36% of income. Then you dial it back if you want to be more conservative (cause you can still wind up borrowing more than you can handle).

So if your salary is 120K, your max mortgage bundle is like $2,800 and your max fixed debt is like $3,600. You should be able to handle a 450K home at 30 years with 5% down no problem. Unless your credit sucks or you've got a huge car or student loan payment.

With rates so low, I don't see the point in 15 or 20 year mortgages, tbh.

Buy that wrinkled dick in a decent area, spend a year or two working on it yourself. Gain skills and value.

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There's somethign to be said for this. Homes can have a lot of expensive surprises--like you can handle the mortgage, no problem, but you suddenly have to do more payments for a new roof or HVAC. Not a bad idea to make your first a place that gives you more margin to learn with.

repost

I appreciate all the feedback. I've been stacking those types of costs in my head to help me make a better informed decision on what I can afford.

I just got off the phone with a realtor a bit ago so we're gonna start shopping...

My credit score is over 800, been that way for years and I only owe about $15k in student loans, $200/month since about 07.

I told her I'm down with fixing up a place if that gets me a significantly better deal. I actually really enjoy fixing things up, building stuff, whatever. 4 years helicopter mechanic in the Marine Corps, grew up working with my dad roofing and I've done various contruction type jobs before I went to college. I loved fixing up my exwife's house when we were married, lol she got all the benefit out of that deal...

I'm a federal employee, super stable career. Even if work did move me they'd have to pay PCS (permanent change of station) costs to sell my house.

I'm sure I'll have more questions, thanks again for the advice.

ver_21 said:

You should be able to handle a 450K home at 30 years with 5% down no problem. Unless your credit sucks or you've got a huge car or student loan payment.

With rates so low, I don't see the point in 15 or 20 year mortgages, tbh.

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Current 30 year rate: 3.156%

Cost of 450k home at term with 5% down, 0.5% PMI = $676,830.96


Current 15 year rate: 2.594%

Cost of 450k home at term with 5% down, 0.5% PMI = $522,384.38

Most Americans are not disciplined or savvy enough to take the monthly savings on a 30 year and invest it to beat the savings of a 15 year at term.

Khane said:

Current 30 year rate: 3.156%

Cost of 450k home at term with 5% down, 0.5% PMI = $676,830.96


Current 15 year rate: 2.594%

Cost of 450k home at term with 5% down, 0.5% PMI = $522,384.38

Most Americans are not disciplined or savvy enough to take the monthly savings on a 30 year and invest it to beat the savings of a 15 year at term.

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You left out the payment amount.

The assuming 1% property taxes the 30 year w/PMI payment is $2,931.37.
The assuming 1% property taxes the 15 year w/PMI payment is $4,017.10.

To most people that extra $1100 a month is not something they can do.