Home buying thread

Noodleface · Mar 5, 2015

Were people in here saying PMI would last the duration of an FHA loan unless you refinanced?

We got some letter from the bank that I only briefly skimmed before leaving the house, but it said something about not worrying about that and they'd still drop it after 20% of the principle was paid.

Is that a thing, or did I read it wrong?

opiate82 · Mar 5, 2015

Noodlemod_sl said:
Were people in here saying PMI would last the duration of an FHA loan unless you refinanced?

We got some letter from the bank that I only briefly skimmed before leaving the house, but it said something about not worrying about that and they'd still drop it after 20% of the principle was paid.

Is that a thing, or did I read it wrong?

Well FHA has changed the rules on MIP multiple times but currently it runs the duration of the loan. But based on quick Googling says if your FHA loan pre dates June 2013 than the MIP goes away at a 78% LTV automatically assuming you've made all your payments.

Also, the thing you got from the bank might basically be saying you can refi out of the MIP once you have 20% equity and that "they would be happy to help with that!"

Noodleface · Mar 5, 2015

opiate82_sl said:
Well FHA has changed the rules on MIP multiple times but currently it runs the duration of the loan. But based on quick Googling says if your FHA loan pre dates June 2013 than the MIP goes away at a 78% LTV automatically assuming you've made all your payments.

Also, the thing you got from the bank might basically be saying you can refi out of the MIP once you have 20% equity and that "they would be happy to help with that!"

That's what I originally thought, but it doesn't mention refinancing with them. I'll have to dig out the letter when I get home.

Loan was May 2014 so the other stuff doesn't apply

Joeboo · Mar 5, 2015

If both a husband and a wife work, I would highly recommend not buying so much house that you couldn't afford it on just 1 of those incomes. Obviously there's some exceptions (Husband is an executive that makes 200K a year, wife works at a day care for $12 an hour), but in any situation where you generally depend on both incomes, never spend so much that getting by on just 1 for a while would ruin you.

We could afford to pay our mortgage and expenses off of just 1 of our salaries if my wife or I lost our job unexpectedly. It wouldn't but fun at all, but it would be doable(with cutting back on some non-necessities) Sure, we could afford a much bigger house, but I don't like living with that risk weighing over my head. I don't want to be sent into a "my world is ending" panic if one of us were to lose our job.

Khane · Mar 5, 2015

joeboo_sl said:
If both a husband and a wife work, I would highly recommend not buying so much house that you couldn't afford it on just 1 of those incomes. Obviously there's some exceptions (Husband is an executive that makes 200K a year, wife works at a day care for $12 an hour), but in any situation where you generally depend on both incomes, never spend so much that getting by on just 1 for a while would ruin you.

We could afford to pay our mortgage and expenses off of just 1 of our salaries if my wife or I lost our job unexpectedly. It wouldn't but fun at all, but it would be doable(with cutting back on some non-necessities) Sure, we could afford a much bigger house, but I don't like living with that risk weighing over my head. I don't want to be sent into a "my world is ending" panic if one of us were to lose our job.

You don't like living with that risk because you're intelligent and rational.

The other thing most people don't consider is that buying more house than you should can negatively effect your ability to advance yourself professionally. When you have no debt hanging over your head it's easy to take new job opportunities or try your hand at owning your own business and if it fails that's OK, you aren't going to be homeless.

I really, really wish I hadn't incurred so much debt when I was younger (it's considered "good debt", but I don't care at this point) because it makes it that much harder to walk away from my very lucrative salary and benefits to do what I really want to and start up my own software consulting firm.

But pretty much all of my friends are stuck with 30yr loans in their "forever" houses and all bought more than they should have and will be slaves to the grind for 30 damn years because of it. Being a slave to the grind for 15 is a lot more palatable to me. Plus you save assloads of money in interest.

Joeboo · Mar 5, 2015

If we don't move, we could have our home paid off by the time we are 49-50ish(didn't buy until our mid 30s). Would be damn nice leading into retirement to have not had a mortgage payment for a decade +. But realistically, we'll probably move again and that plan will go all to hell, lol.

Palum · Mar 5, 2015

Also RE the monthly payment thing... f'in maintenance man... expensive as shit if you aren't very handy. Some houses are worse than boats.

Selix · Mar 6, 2015

Palum_sl said:
Also RE the monthly payment thing... f'in maintenance man... expensive as shit if you aren't very handy. Some houses are worse than boats.

It can be. Part of home ownership is the ability to experiment with doing it yourself for cheaper. If you fuck things up you can still call in a repair man. One of the things I have done is call in a repair man and see what they did. Check it against the invoice then look up the part they replaced and googled a how-to on fixing it. Next time instead of costing me several hundred it will cost me $20. And if I fuck it up I can still pay several hundred or more if I really fuck it up.

Khane · Mar 6, 2015

Selix_sl said:
It can be. Part of home ownership is the ability to experiment with doing it yourself for cheaper. If you fuck things up you can still call in a repair man. One of the things I have done is call in a repair man and see what they did. Check it against the invoice then look up the part they replaced and googled a how-to on fixing it. Next time instead of costing me several hundred it will cost me $20. And if I fuck it up I can still pay several hundred or more if I really fuck it up.

This is especially true for appliances. Any time you have an issue with a washer/dryer/refrigerator/stove/range/microwave etc etc etc most appliance repair services charge you money simply to show up and diagnose the issue. They do it because they know once they tell you what's wrong it's almost always so cheap to fix the issue you'd just tell them to go home you'll do it yourself.

It's still cheaper to have them diagnose, look up the part that needs replacing to see how much it costs and how easy it is to do and then send them home anyway. I had a bad heating element in my first floor stove, wasn't sure how to diagnose the problem properly so paid the $90 for someone to come out and diagnose. He told me what was wrong and quoted me $290 (so an extra $200 on top of the $90 for just coming out). The part was only $13 bucks and it was an easy fix. So I told him no thanks, paid the $90 and did it myself.

Cad · Mar 6, 2015

opiate82_sl said:
I mean, I get what you are saying, there is a lot of ground between 15 years and 30 years in which there are perfectly affordable houses and mortgages.

But he is right in that a lot of people stretch themselves incredibly thin trying to afford the max house they can at 30 years. Especially since a ton of people still advise new home buyers to "buy the max you can afford now, real estate only goes up!" Yeah, my house still isn't worth what I paid for it 5 years ago now. But thankfully I didn't max myself out trying to buy it.

And he is also right that a lot of people with intentions of paying extra towards principle aren't disciplined enough to do so (even if they think they are), so if they can afford the 15 they should do so.

How did you buy in 2010 and not make money on the house at this point? My area real estate has gone up ~30% or so since 2010.

Khane · Mar 6, 2015

Cad_sl said:
How did you buy in 2010 and not make money on the house at this point? My area real estate has gone up ~30% or so since 2010.

Mine hasn't gone up either. Plenty of the country didn't get hit as hard during the downturn and plenty of the country still hasn't really rebounded either.

By the way, what makes you so sure you're house is worth ~30% more now on the market?

Cad · Mar 6, 2015

Khane_sl said:
Mine hasn't gone up either. Plenty of the country didn't get hit as hard during the downturn and plenty of the country still hasn't really rebounded either.

By the way, what makes you so sure you're house is worth ~30% more now on the market?

Did you buy in a regular tract type development? Are there still new houses being built in your area? Any details you can give to help me figure this out? What city do you live in?

Khane · Mar 6, 2015

Cad_sl said:
Did you buy in a regular tract type development? Are there still new houses being built in your area? Any details you can give to help me figure this out? What city do you live in?

Different markets are different man.

Cad · Mar 6, 2015

Khane_sl said:
Different markets are different man.

Well they are and they aren't. Any city, even a small one has desirable areas and not so desirable areas. If you buy a new house in a new development, your house will not appreciate until the builder is done building in the area, because why would someone want a 3 year old house when the builder is still building them new 3 streets over?

If you buy in a built out area, those houses have the possibility for appreciation because demand can outstrip supply. Only in the most ridiculous market can demand outstrip the ability of builders to build houses.

I also like the look at the value of the underlying land vs. the value of the improvement on it... because its the land (location) that is appreciating. The structure built on the land, even the nicest house possible, is a slowly depreciating structure. The location, desirability and supply of land in the area is what determines appreciation.

Anyway...

Khane · Mar 6, 2015

Cad_sl said:
Well they are and they aren't. Any city, even a small one has desirable areas and not so desirable areas. If you buy a new house in a new development, your house will not appreciate until the builder is done building in the area, because why would someone want a 3 year old house when the builder is still building them new 3 streets over?

If you buy in a built out area, those houses have the possibility for appreciation because demand can outstrip supply. Only in the most ridiculous market can demand outstrip the ability of builders to build houses.

I also like the look at the value of the underlying land vs. the value of the improvement on it... because its the land (location) that is appreciating. The structure built on the land, even the nicest house possible, is a slowly depreciating structure. The location, desirability and supply of land in the area is what determines appreciation.

Anyway...

You're saying the same thing I am. Different markets exist even within the same towns/cities. The market in Midtown Manhattan is different than it is in Tribeca or the Upper East Side.

Cad · Mar 6, 2015

Khane_sl said:
You're saying the same thing I am. Different markets exist even within the same towns/cities. The market in Midtown Manhattan is different than it is in Tribeca or the Upper East Side.

But they aren't different in the sense that they all respond to the same factors. So I was asking some details so we could look at those factors for your house, and see whats up. Thats all.

Khane · Mar 6, 2015

I never expect my house to change in value much in the short term. It's a multi family home, it's in an old neighborhood that is both residential and commercial, there is very little new development. But there is a main street re-invigoration project underway and certain investors have been purchasing property in the seedy parts of town and revitalizing them. The north end of my town has become a lot more palatable but that still isn't affecting my home's value.

But then again my friends who live in the same town in single family homes haven't seen any movement on their houses either. Things are very stagnant around here. Not many homes are being put on the market.

But I was asking how you are judging the value of your house now vs its 2010 value

Cad · Mar 6, 2015

Khane_sl said:
But I was asking how you are judging the value of your house now vs its 2010 value

Houses built around the same time as mine in the same sq ft and feature range selling in the last year or two only 2-3 streets away and looking at those sales figures.

koljec_sl · Mar 6, 2015

Khane_sl said:
But I was asking how you are judging the value of your house now vs its 2010 value

How is it that you give mortgage advice with conviction but don't know how to answer these things?

Picasso3 · Mar 6, 2015

I've figured I need about 2 million to buy and renovate a 30,000 sq ft 20s Era warehouse in charleston wv to 16 loft units. is anyone here good for that?

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