Home buying thread

Mkopec1_foh · Aug 24, 2011

TheCutlery said:
What"s the catch on the loan modifier? Another 10 years?

No catch, it was just a straight interest adjustment down to like 1% for a few years and then it will go up to like 3% and max out there for the remainder of the loan. Its damn better than the 6%+ I was paying. We got denied for the Obama making housing affordable plan, they said I made too much money. But we were offered this by the bank so of course we took it. The bank officer told me that we had to be delinquent for 2 mos, and then we would get it. So we took a bit of hit on our credit rating, but it was dammed worth it. I think at the max we will be paying $1500, like I said, down from $1850.

I guess at the time the banks were stressing about too many foreclosures. And im betting they still are.

Gauss_foh · Oct 5, 2011

Saw this on the news awhile back and forgot about it. Some people are squatting in vacant houses in new subdivisions and the banks don"t want to go through the hassle of evicting them and so they aren"t removed. One more reason to move into an established neighborhood?

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Lonin_foh · Oct 19, 2011

So I"m kind of suddenly looking at houses in my area and a week ago I would have never even considered it. Basically, I"ve been looking to rent a place with a friend for the last month. It"s coming down to the wire now (his lease is up at the end of the month) for finding a place that meets all of our requirements and accepts us (I have no rental history).

This whole time my dad has been pushing for me not to rent and instead save up to buy, but I brushed it off since I figured that was way out of reach. For shits and giggles I decided to see what was in my area for <$100k and I found a really nice house at $95k, but it"s a short sale. I"ve been reading a lot about short sales and I"m a bit nervous about how long it could potentially take to close. Nothing else in the area at that price range is really appealing, so it seems a bit out of place too. Apparently it hasn"t even had an offer yet and the price history seems pretty crazy to me:

Code

ATE DAYS AGO EVENT NEW PRICESep 13, 2011 36 days ago Price Reduced: -$30,000 (-24%) $95,000Jul 25, 2011 86 days ago Price Reduced: -$10,000 (-7.41%)$125,000Jun 21, 2011 120 days ago Price Reduced: -$4,000 (-2.88%) $135,000May 13, 2011 159 days ago Price Reduced: -$11,000 (-7.33%)$139,000Apr 13, 2011 189 days ago New on market $150,000So I have a few questions:

1) Do the price drops seem too precipitous? I know with short sales that the listing price can be misleading since the bank may want significantly more than what the seller/agent have it listed for. For what it"s worth, the Zillow estimate of the house is $143,000.

2) Since it"s a short sale, is it still worth it to offer less? I"ve seen some discussion elsewhere that people often end up paying more on a short sale than the initial list price.

3) From what I"ve read and from a brief discussion with a real estate finance guy, it seems like FHA is the way to go. I know it requires 3.5% down, but I"m able to do roughly 10% down. Beyond the lower monthly payment, is there an advantage to putting more that 3.5% down?

4) Finally, how much of a dick am I if split from my friend with a week and a half left on his lease? This is honestly probably my biggest worry right now, I really don"t want to fuck him over.

Izuldan_foh · Oct 19, 2011

Lonin said:
[So I have a few questions:

1) Do the price drops seem too precipitous? I know with short sales that the listing price can be misleading since the bank may want significantly more than what the seller/agent have it listed for. For what it"s worth, the Zillow estimate of the house is $143,000.

2) Since it"s a short sale, is it still worth it to offer less? I"ve seen some discussion elsewhere that people often end up paying more on a short sale than the initial list price.

3) From what I"ve read and from a brief discussion with a real estate finance guy, it seems like FHA is the way to go. I know it requires 3.5% down, but I"m able to do roughly 10% down. Beyond the lower monthly payment, is there an advantage to putting more that 3.5% down?

4) Finally, how much of a dick am I if split from my friend with a week and a half left on his lease? This is honestly probably my biggest worry right now, I really don"t want to fuck him over.

1) That is a little odd, the big drop over 6 months or so.....but you need to look at comps in the same neighborhood. I"m not sure which state you are in, but I can tell you in some parts of California, where I"m at, I wouldn"t even bat an eye at a drop like that. It can mean 1) it was overpriced to begin with, or 2) something"s wrong with the house and no one wants to touch it. Do your due diligence.

2) No, it doesn"t make much sense to offer less, maybe a little, but most of the value has been priced into the home at this point.A short sale is a pain in the ass to close.I can"t emphasize that enough. The big issue is that the home is being sold at a loss, which the bank has to eat, so they don"t necessarily have to agree with the closing price. They are also in no rush to sell the home. What can happen is 1) you put an offer in for $95k, 2) it goes into escrow, 3) MONTHS down the line (because, again, the bank is in no rush to sell the home) the bank decides the amount you offered isn"t enough, even though you and the "home owner" have already signed off on it. So you end up just wasting your time. I think a good estimate on the time from offer to close on a short sale home is about 6 months.

3) I would be really surprised, honestly, if you could get away with putting only 3.5% down. In fact, unless your finances are stellar, I would be suprised if you could get away with less than 20% down. The last thing a bank wants to do is give a loan to another guy who can"t afford the home. Putting down so little shows the world that you really can"t afford the home, and that any potential hit to your income (laid off, whatever), means the home goes back into foreclosure, since you don"t have much in the way of assets. Now, I know you meant FHA and not a bank per se, and I honestly never had to use FHA, but I would still be surprised if you could get a home loan with only 3.5% down. Definitely read the fine print and see what"s required of you to get such a good deal; I don"t think the government is looking to get screwed over by people either.

4) I"m not sure why you think you are being a dick.....is it because you two were planning on renting together? If you actually got a house, couldn"t you just rent a room out to him? Also, with his lease up in less than a month, don"t even think for a second you are going to get a loan and buy a house during that time. Again, you are looking at MONTHS to purchase a short-sale home.

Lonin_foh · Oct 19, 2011

Izuldan said:
1) That is a little odd, the big drop over 6 months or so.....but you need to look at comps in the same neighborhood. I"m not sure which state you are in, but I can tell you in some parts of California, where I"m at, I wouldn"t even bat an eye at a drop like that. It can mean 1) it was overpriced to begin with, or 2) something"s wrong with the house and no one wants to touch it. Do your due diligence.

2) No, it doesn"t make much sense to offer less, maybe a little, but most of the value has been priced into the home at this point.A short sale is a pain in the ass to close.I can"t emphasize that enough. The big issue is that the home is being sold at a loss, which the bank has to eat, so they don"t necessarily have to agree with the closing price. They are also in no rush to sell the home. What can happen is 1) you put an offer in for $95k, 2) it goes into escrow, 3) MONTHS down the line (because, again, the bank is in no rush to sell the home) the bank decides the amount you offered isn"t enough, even though you and the "home owner" have already signed off on it. So you end up just wasting your time. I think a good estimate on the time from offer to close on a short sale home is about 6 months.

3) I would be really surprised, honestly, if you could get away with putting only 3.5% down. In fact, unless your finances are stellar, I would be suprised if you could get away with less than 20% down. The last thing a bank wants to do is give a loan to another guy who can"t afford the home. Putting down so little shows the world that you really can"t afford the home, and that any potential hit to your income (laid off, whatever), means the home goes back into foreclosure, since you don"t have much in the way of assets. Now, I know you meant FHA and not a bank per se, and I honestly never had to use FHA, but I would still be surprised if you could get a home loan with only 3.5% down. Definitely read the fine print and see what"s required of you to get such a good deal; I don"t think the government is looking to get screwed over by people either.

4) I"m not sure why you think you are being a dick.....is it because you two were planning on renting together? If you actually got a house, couldn"t you just rent a room out to him? Also, with his lease up in less than a month, don"t even think for a second you are going to get a loan and buy a house during that time. Again, you are looking at MONTHS to purchase a short-sale home.

Washington state, and thanks for the responses. As for number 4, ya, we we"ve been planning on renting together and if I decide to go the house buying direction instead, his lease ends way too early for him to move in, especially with a short sale. Basically, I"d be saying with 1.5 weeks left on his lease, "oh sorry, you"re on your own now" and he"d have to switch gears and look for a 1 bedroom that will likely be several hundred dollars more expensive than splitting a 2 bedroom with me. He can afford it, and I don"t think he"d have a problem finding a place, even on short notice, but man do I feel like a dick about it.

Also, I forgot to mention in an important point my original post, but my parents would be co-signing on the house.

Cutlery · Oct 20, 2011

Lonin said:
1) Do the price drops seem too precipitous? I know with short sales that the listing price can be misleading since the bank may want significantly more than what the seller/agent have it listed for. For what it"s worth, the Zillow estimate of the house is $143,000.

2) Since it"s a short sale, is it still worth it to offer less? I"ve seen some discussion elsewhere that people often end up paying more on a short sale than the initial list price.

3) From what I"ve read and from a brief discussion with a real estate finance guy, it seems like FHA is the way to go. I know it requires 3.5% down, but I"m able to do roughly 10% down. Beyond the lower monthly payment, is there an advantage to putting more that 3.5% down?

4) Finally, how much of a dick am I if split from my friend with a week and a half left on his lease? This is honestly probably my biggest worry right now, I really don"t want to fuck him over.

1) No. The bank drops the price until they get action on the house. No offers at 150? Lets try 140 then. No dice? Keep dropping it until they see some offers coming in.

2) The bank wasn"t real keen on my lowball attempt. I"d offer the list price. If it doesn"t get any offers at that price, they"ll drop the list. The risk you run is someone else offering the list price too.

3) FHA will require 3.5% of your money in the transaction. If you can put down 10k, that"s fine, but you"ve gotta ask yourself if there"s shit you can do around the house with that extra $6500. I guarantee there is. My mortgage guy told me that putting more down than necessary with these interest rates is kind of a waste, because every $1000 you drop only cuts $6 off your payment. But if you"ve gotta get new carpet or sheetrock or a fridge or something and put it on your credit card, it"s gonna cost you a whole fuckload more than $6.

4) Don"t worry about it. Chances of you hearing back on a foreclosure before your month is up are next to nil. The better question is "How big of a dick am I for splitting on my friend after we signed a lease?" Basically, you"re gonna need somewhere to live for awhile while you"re waiting for the bank to finalize this, and everyone I"ve talked to and including myself (bought a short sale/foreclosure) gets fucked on the timetable.

Lonin_foh · Oct 20, 2011

Looks like I got it worked out with my friend, we"re doing a 6mo lease to give me time to find a house and then he"ll probably move in there as well.

Unfortunately, I got back the specifics on the house I was looking at (the one I referenced above) and it was indeed too good to be true. Apparently it looks nice, but it"s a fucking mess. It"s been completely remodeled non-professionally, so nothing is up to code. Guess I keep looking.

Cutlery · Oct 21, 2011

You"ll find a ton of those if you"re looking at foreclosures specifically. Not necessarily mess in the same way, but a lot of them are complete shitpiles. The upside is that you should have some extra cash to throw at them because of how cheap they are, but it entirely depends on how much of a project you want the house to be. There is also the occasional diamond in the rough (mine) which was listed as "Needs TLC," and I honestly didn"t even want to look at it from that alone. If you"ve been foreclosure shopping, you know that"s code for anything from "No fixtures left" to "Sledgehammer taken to drywall," and it turned out that it was just in need of carpet in the basement and the removal of the garage full of shit they left here. That I can handle.

I bought 2 years ago, at what I thought was going to be pretty close to the bottom, but that"s clearly not the case, so I definitely didn"t get as good of a deal as what you can get now, but I think there"s a tradeoff to be had. Most of the good houses got snapped up with the $8000 homebuyer credit, and the great houses that go on the market right now sell in less than a week, so you"re gonna find a ton of mediocrity out there. Basically expect any house that"s been on the market longer than 2 weeks to be the pinnacle of average. Lotta poor decoration decisions that are gonna need to be corrected, non remodeled and dated fixtures and rooms, furnace and roof aren"t new, etc, etc. If you find a decent house that"s reasonably priced these days, I"d move quick on it and not fuck around with haggling...it might still be a buyers market overall, but if you"re the seller with the fully updated house, stainless steel appliances, new roof, 2 year old furnace, etc, you get to pick and choose the offers you want.

Big Phoenix · Oct 21, 2011

When looking at houses it always makes me go WTF when i see houses that are completely trashed.

meStevo_foh · Oct 24, 2011

So I"m going to ask the stupidest question of the thread probably... I have an FHA Loan through BofA, 5.625%, obviously some savings to be had refinancing if we can pay the upfront costs associated with it, does any of the stuff Obama announced today help me? That"s only for if Freddie/Fannie own my loan, right? Throwing my information at the Fannie and Freddie sites says they do not own my loan, as I suspected but figured I"d throw it out there. I thought they owned/insured damn near everything.

Obama"s Mortgage Refinancing Effort: This Time It"s Different - Daniel Indiviglio - Business - The Atlantic

Unidin_foh · Oct 24, 2011

meStevo said:
So I"m going to ask the stupidest question of the thread probably... I have an FHA Loan through BofA, 5.625%, obviously some savings to be had refinancing if we can pay the upfront costs associated with it, does any of the stuff Obama announced today help me? That"s only for if Freddie/Fannie own my loan, right? Throwing my information at the Fannie and Freddie sites says they do not own my loan, as I suspected but figured I"d throw it out there. I thought they owned/insured damn near everything.

Obama"s Mortgage Refinancing Effort: This Time It"s Different - Daniel Indiviglio - Business - The Atlantic

If you have at least 3.5% equity in your home, you still could refinance without HARP and save some money. But yes you need a freddie/fannie loan to do the HARP program.

Cutlery · Oct 25, 2011

My wife asked my mortgage guy earlier in the year about refinancing, we"re at a 5.5 right now, FHA loan, and he said the problem is that the rules for PMI changed and that went up on all new loans. A good chunk of the money I"d save refinancing would go towards higher PMI, and he basically said it wouldn"t be worth it.

Obviously PMI falls off eventually, and you"ll save money after that point, but if you"re planning on saving $200 a month on your loan or whatever, and you end up paying an extra $150 in PMI, that was clearly not a real good use of your closing cost money.

Cad · Oct 25, 2011

TheCutlery said:
My wife asked my mortgage guy earlier in the year about refinancing, we"re at a 5.5 right now, FHA loan, and he said the problem is that the rules for PMI changed and that went up on all new loans. A good chunk of the money I"d save refinancing would go towards higher PMI, and he basically said it wouldn"t be worth it.

Obviously PMI falls off eventually, and you"ll save money after that point, but if you"re planning on saving $200 a month on your loan or whatever, and you end up paying an extra $150 in PMI, that was clearly not a real good use of your closing cost money.

Note that if you are putting 20% or greater down (as you should be), this won"t be an issue.

Cutlery · Oct 25, 2011

Cad said:
Note that if you are putting 20% or greater down (as you should be), this won"t be an issue.

And almost by definition, people with an FHA loan (which is what we"re talking about) put down 3.5%.

Don"t be a cunt for the sake of being a cunt. We all know you"re better off than everyone else, no reason to shit all over everyone who had to get an FHA to make shit work.

Cad · Oct 25, 2011

TheCutlery said:
And almost by definition, people with an FHA loan (which is what we"re talking about) put down 3.5%.

Don"t be a cunt for the sake of being a cunt. We all know you"re better off than everyone else, no reason to shit all over everyone who had to get an FHA to make shit work.

Pardon my economic responsibility, get back to drowning yourself in debt and interest charges straight away. I"ll try not to interrupt.

Big Phoenix · Oct 25, 2011

How much do you think people will knock off their asking price if you are paying in cash?

Cad · Oct 26, 2011

Phoenix said:
How much do you think people will knock off their asking price if you are paying in cash?

Nothing, it is still cash to them whether it is coming from you or a bank. The only advantage would be that you could close immediately, and that might be worth something to a seller on a timeline. Or, it might be worth nothing.

opiate82_foh · Oct 26, 2011

Phoenix said:
How much do you think people will knock off their asking price if you are paying in cash?

Yeah, you can use the fact you can have a really fast closing to negotiate a little some, but unless the buyer is in a hurry to sell it won"t make a difference to them whether you are paying via cash or a loan.

Eomer · Oct 26, 2011

Phoenix said:
How much do you think people will knock off their asking price if you are paying in cash?

Nothing, really. Someone with a mortgage would still be giving you a bank draft, which is basically cash anyway. And most people selling aren"t looking to move out the next day anyway. If the place is empty it might be worth a month of utilities and/or their financing costs if you take immediate possession.

Wizarddeath_foh · Oct 26, 2011

Cad said:
Note that if you are putting 20% or greater down (as you should be), this won"t be an issue.

I just can"t believe any one in their 20"s is putting down 20% on homes unless they are starter homes.... Most average (stay in for year homes) here are around 250k+ so 20% would be 54k......

Unless your a hermit, no way you would of saved that by like 27..... if you did and went to college, and have your college loans paid off, a car paid off, and a fiancee, I would be surprised.

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