There"s nothing wrong with renting. A lot of times its more financially sound than buying. The fact that its making you miserable tells me that you"re a woman. Only women have this devoted attachment to owning a home.
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Home buying thread
- Thread starter Tuco
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There are many times when renting is better then buying like if you are constantly moving around a lot, if you are still in college and don"t know where you will be, if you don"t have a stable income, if you live in an extreme market (new york, california, chicago). But if you are planning on staying in the same location 30+ years and raising a family then buying a house is a really good decision.chu said:
Chaotic one thing I planned for when buying my house was could I afford it if I lost my job and had to get another one. This is not a necessary step but if the job you have now is the proverbial golden egg then if you were to lose it you might be caught in a very bad situation. That said if you are certain about your expected income and job security then getting house for that future expected income may be a wise decision. You may have trouble getting qualified for the house you want before you have started earning that projected income.
Save a little longer than you think you have to. Having some extra cash around for unexpected expenses is never a bad thing. Don"t let yourself get pressured into buying ASAP. Also keep in mind that savings on your account earn interest, whereas a mortgage costs you money. You"ll be better off if you can make a larger downpayment on the house down the road - even if the price of the house will be higher at that point (questionable).
Keep in mind that the housing bubble over the last few years was huge. Prices aren"t suddenly going to jump back up there. Since WW2, real estate appreciated on average 1% above inflation (and just kept up with inflation before WW2). Don"t let people tell you that real estate is different, because there"s a limited amount of "desirable" housing available. It"s not like every other resource is available in unlimited quantities.
Keep in mind that the housing bubble over the last few years was huge. Prices aren"t suddenly going to jump back up there. Since WW2, real estate appreciated on average 1% above inflation (and just kept up with inflation before WW2). Don"t let people tell you that real estate is different, because there"s a limited amount of "desirable" housing available. It"s not like every other resource is available in unlimited quantities.
@Chaotic..
I"m not a homeowner so take this with a grain of salt. If you make 44k/yr right now I would say wait. Even though you"re "Guaranteed" six figures 5 years down the line. It"s too risky. You"re a Police Officer if I remember right, yes? I"m not sure what job security is like for you guys, I would imagine pretty good. But.. it"s also a dangerous job. Most people can goto their jobs everyday and expect pretty much the same shit as yesterday. Police officers (I"d imagine) don"t experience this usually.
Basically, there is too many if"s I think. When there is too many of those I tend to ease up from the idea and rethink it. Especially when it comes to a mortgage, because this is something you"re stuck with for decades+++
Lastly, I make 52k/yr. I am in the market for a house. So therefore I"m trying to estimate what my budget is, just like you. You said 300k is what you"re looking for. I can tell you right now that on 52k/yr.. you cannot afford that. Hell, I"m looking at 100-150k houses because that is what I can comfortably afford on this salary. If you make 44k now, andhopeto be making six figures, I would start off with a cheaper house and later on down the line, when you are making that bigger salary, reassess your situation.
Good luck!
I"m not a homeowner so take this with a grain of salt. If you make 44k/yr right now I would say wait. Even though you"re "Guaranteed" six figures 5 years down the line. It"s too risky. You"re a Police Officer if I remember right, yes? I"m not sure what job security is like for you guys, I would imagine pretty good. But.. it"s also a dangerous job. Most people can goto their jobs everyday and expect pretty much the same shit as yesterday. Police officers (I"d imagine) don"t experience this usually.
Basically, there is too many if"s I think. When there is too many of those I tend to ease up from the idea and rethink it. Especially when it comes to a mortgage, because this is something you"re stuck with for decades+++
Lastly, I make 52k/yr. I am in the market for a house. So therefore I"m trying to estimate what my budget is, just like you. You said 300k is what you"re looking for. I can tell you right now that on 52k/yr.. you cannot afford that. Hell, I"m looking at 100-150k houses because that is what I can comfortably afford on this salary. If you make 44k now, andhopeto be making six figures, I would start off with a cheaper house and later on down the line, when you are making that bigger salary, reassess your situation.
Good luck!
Given the financial realities slowly dawning on most states and municipalities, I"d be a little concerned about future salary. Hell, I am concerned - I work for the federal government and I expect pay freezes, layoffs, and maybe even salary cuts to hit us in the next year or two. Doesn"t matter how strong your union is if the money isn"t there. So definitely don"t buy a house now based on the expectation of future income under a current government salary scale. That holds especially true if you"re somewhere with a lot of fixed benefit pension obligations.
I felt when I bought my house 3yrs ago at age 22 I did a good job it was a foreclosure but the house is only 10yrs old, went through FHA paid about $500 total in fees probably less. No money down on the house (got it for just 60k) 30yr 4.375% fixed APR and, ended getting like $600 back after everything was said and done, and I only pay $510/mth. My job is pretty damn stable to as a Chemotherapy tech, looking to move up that ladder though. Come to northeast Ohio for crazy ass foreclosure finds heh, a buddy of mine who is a police officer in Cleveland recently got a 2story 4bed 2bath 2Car garage house for just 75k
@Chaotic & whoever else interested.
I bought my house November of 2008 for 215k. I kinda got screwed with the first home buyers credit because I still need to pay it back eventually whereas I believe if you got a home now you won"t have to. (not exactly sure if that"s still going on etc.)
Anyway.........
Nearly 2 years later and I"m already refinancing. I got in at 5.875 originally now I"m locked into a refinance for 4.375. That"s huge and unlikely to come around again in our lifetimes. I"m going to save over $160 a month on my mortgage payment.
If you are seriously considering buying, I would jump now. But... Buy within your means.
As mentioned earlier, 300k home is way beyond your means when making 44k a year.
I bought in a new construction development where houses were going up for 250-280k. As I said, I bought mine for 215k brand new. I can see you sounding like most of my neighbors down the road.
At the time they thought a 250k+ home was fine, but very few of them correctly estimated taxes and bills and even fewer put down 20% to avoid PMI insurance.
It all adds up.
I did put down 20% for my home and am avoiding paying the extra $150 a month for PMI.
Your 20k savings is only 10% of the down payment on a 200k home. So make sure to factor that in.
Credit Score also plays a part. I have neighbors that locked in a 6.5% rate buying the same exact time period I did. To qualify for the 4.375 for my refinance I needed a 740+ rating.
Taxes in my county are terrible as well. Damn schools.
Anyway, if you find a good deal, go for it, you might miss out on the great rates if you wait. If anything, try to buy something you could rent out when you"re ready to move on. If you do in fact advance as quickly as you say, you should be able to easily afford a 2nd home and keep the 1st as a rental. Or just sell it if/when the market bounces back.
I bought my house November of 2008 for 215k. I kinda got screwed with the first home buyers credit because I still need to pay it back eventually whereas I believe if you got a home now you won"t have to. (not exactly sure if that"s still going on etc.)
Anyway.........
Nearly 2 years later and I"m already refinancing. I got in at 5.875 originally now I"m locked into a refinance for 4.375. That"s huge and unlikely to come around again in our lifetimes. I"m going to save over $160 a month on my mortgage payment.
If you are seriously considering buying, I would jump now. But... Buy within your means.
As mentioned earlier, 300k home is way beyond your means when making 44k a year.
I bought in a new construction development where houses were going up for 250-280k. As I said, I bought mine for 215k brand new. I can see you sounding like most of my neighbors down the road.
At the time they thought a 250k+ home was fine, but very few of them correctly estimated taxes and bills and even fewer put down 20% to avoid PMI insurance.
It all adds up.
I did put down 20% for my home and am avoiding paying the extra $150 a month for PMI.
Your 20k savings is only 10% of the down payment on a 200k home. So make sure to factor that in.
Credit Score also plays a part. I have neighbors that locked in a 6.5% rate buying the same exact time period I did. To qualify for the 4.375 for my refinance I needed a 740+ rating.
Taxes in my county are terrible as well. Damn schools.
Anyway, if you find a good deal, go for it, you might miss out on the great rates if you wait. If anything, try to buy something you could rent out when you"re ready to move on. If you do in fact advance as quickly as you say, you should be able to easily afford a 2nd home and keep the 1st as a rental. Or just sell it if/when the market bounces back.
Our banker guy called me yesterday asking if we"d looked into trying to get our interest rate lowered, said we"d just need to do some paperwork to rewrite the loan and to give him a call back if we"re 1% higher than the 4.5% he says he could get it down to. Said BofA has a streamined process for getting this stuff done.
We closed last November at 5.65%.
Seems like it could be worth it, going to call and ask questions tomorrow... should we expect some $$ out of pocket to do this or can/will that just be included in the process?
We closed last November at 5.65%.
Seems like it could be worth it, going to call and ask questions tomorrow... should we expect some $$ out of pocket to do this or can/will that just be included in the process?
If you have an FHA or VA, absolutely.meStevo said:
If not, no way, unless they offer a streamline with under 1k closing costs overall.
I"d be very leery of this and before you do anything, get a Good Faith Estimate.
It will cost you cash out of pocket for any refinance for the closing costs.
Laven, where the heck do you live? At that price, are there many drive bys?
I doubt you bought your house in Avon Hills.
Yeah, I"ve got a FHA loan... I think this answers most of my questions, aside from how much it would cost me:
HUD Streamline Your FHA Mortgage
HUD Streamline Your FHA Mortgage
Cutlery
Kill All the White People
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Well, you"re going to have closing costs, because one loan needs to be set up, and another needs to be paid off. I assume that all the standard bullshit is going to need to be done again, so figure out what your closing costs were last time and you can probably use that as a ballpark. They"ll either have you front the cash, or toss the closing costs into the loan.meStevo said:
I get about 3 of those streamline offers in the mail every week too and I just chuck em straight in the trash. My loan is at 5.5%, and honestly, I really don"t think all the bullshit is worth knocking maybe $100 off my loan and having to fork out closing costs again. Mortgage amount is supposed to go down, not up.
LiquidDeath
Magnus Deadlift the Fucktiger
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I get where you are coming from, but it is all about payback period of those closing costs. Who cares if you have new closing costs if you can pay them back in a decent amount of time. If you save $100 a month on your mortgage by refinancing and your closing costs are only $500, after 5 months it was a fucking great idea.TheCutlery said:
I just refinanced a 3 year old mortgage and brought it down from 6.5% to 4.5%. Closing costs are going to be about $3,000, but I"m lowering my payment almost $400 a month. I plan on being in this house for at least 5 more years, so a ~8 month payback period is slick as hell. Additionally, I"m closing with cash instead of rolling it back into the loan, so that further increases the appeal of a refinance.
tl;dr Refinancing has less to do with just your savings per month than it does with payback periods and the amount of time you plan on staying in the house.
Cutlery
Kill All the White People
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Absolutely, 2% is a great reason to refi. I"m just not sure 1% is. And what numbers were your closing costs based off of? I mean, closing costs when I bought my house were $8,000...I"m in no hurry to drop that kinda cash again to save 1% on my interest rate. Toss into the mix how clearly corrupt the mortgage bankers still are, and I"d say if you"ve got a good thing, don"t fuck with it, rather than not reading some fine print somewhere and ending up getting fucked down the line.LiquidDeath said:
LiquidDeath
Magnus Deadlift the Fucktiger
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$8,000 to close? Jesus Christ, what the hell are they charging you for? I have about $5,000 total with closing costs and pre-paids and my current escrow balance makes up all but $3,000 of that. I"m basing my closing costs off of the sheet of paper my mortgage broker gave me that specifically breaks them all down.TheCutlery said:
Cutlery
Kill All the White People
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Well, you"re right, I forgot about the year of homeowners insurance that needed to be bundled in, as well as the up front property tax. All of that is current, so don"t need to foot that again. But still, 1% of my loan amount is almost $3,000, and that doesn"t include all the bullshit fees they tack on after that.
But yeah, all told, needed $8k to close on the original loan. Would be quite a bit less without the 1k year of homeowners insurance and whatever i needed to foot for property taxes (mine are 3500 a year). I dunno, I guess even 1% pays for itself, but since my wife"s a fucking retard and shitcanned her credit with her student loan mess shortly after we got the house, it"s not too much of an option anyway
But yeah, all told, needed $8k to close on the original loan. Would be quite a bit less without the 1k year of homeowners insurance and whatever i needed to foot for property taxes (mine are 3500 a year). I dunno, I guess even 1% pays for itself, but since my wife"s a fucking retard and shitcanned her credit with her student loan mess shortly after we got the house, it"s not too much of an option anyway
So get a rate with no points. If you can drop your rate 0.75% on a 300k loan, you"re looking at recouping $2k in closing costs in about 11 months. If you"re doing no points and paying more than that in actual closing costs (not prepaids), then you need to find another loan officer/broker.
A long time ago I lost a refi on the last step because my Townhome Condo complex is 60% rent 40% owned (when they sell a blaok of 5 townhomes they rehab all 5 first so they are really nice). I still to this day can"t get a refi because of some arbitrary 50% rule. It really pisses me off!
That"s an FHA rule, is it not? Do you have enough equity (20%) to refi into a fannie/freddie loan?
Yep, its conventional (current loan is owned by GMAC) and I still have 20%+. The info I read on the rule say it shouldn"t apply to a primary but every lender uses the rule anyway it seems for non-FHA. Ive had like 4 balk because of it when I try and refi and its really pissing me off. One even stuck me with the fucking appraisal fee when they didn"t balk until the last min so I have pretty much given up on it for now until they sell another 10%. I really would like the 100$ or so I would save every month even after costs with the refi.