Homeowners

OneofOne · Dec 15, 2012

Orcus our credit union (that my wife's been a member of for 30? years) couldn't do any better than what our mortgage broker could. The bonus being the mortgage broker broke the process down for us FAR better than the CU employee we talked to. Since they couldn't offer us a better rate, we opted for the guy with the personal touch and a cell phone we could call any time of day. At least get out and talk to a few people. Yeah it's time outta your day, but your looking at making a HUGE commitment - worth the time.

Orcus_sl · Dec 15, 2012

OneofOne_sl said:
Orcus our credit union (that my wife's been a member of for 30? years) couldn't do any better than what our mortgage broker could. The bonus being the mortgage broker broke the process down for us FAR better than the CU employee we talked to. Since they couldn't offer us a better rate, we opted for the guy with the personal touch and a cell phone we could call any time of day. At least get out and talk to a few people. Yeah it's time outta your day, but your looking at making a HUGE commitment - worth the time.

Great info thanks. I was under the impression also from her conversations with the woman at the cu that she didn't particularly give a shit or wasn't very informed. Will look for a broker!

Brando · Dec 15, 2012

Moontayle, unless you actually have your final approval and your loan docs are at your closing agent then you aren't done. Hopefully that is the case but if not then don't think it's all over at this point.

As far as Brokers, this is a people business and aside from B of A you will have a good or bad experience depending on the person you end up dealing with and how they set expectations, communicate and generally understand what the fuck they are doing. While it's become harder to get into the business now with the regulations and licensing requirements it still is not that hard and why you see the quality of people vary so wildly. The difference between the broker and the bank is that the broker in theory has more options on where to place your loan and therefore can send your loan to the lender that best fits your criteria. As a matter of fact this is patently false now unless you are getting a jumbo loan as we all feed from the same trough so to say ie. the government. Your brokers compensation is also entirely based on the interest rate that you are given, a higher interest rate is more to them whereas myself working for a direct lender it doesn't matter and I get the same regardless of the rate/program you receive. Both of us though don't make shit until the deal closes so unless your talking about walking into a bank branch and dealing with whatever idiot they have sitting there then the thought the broker is more financially involved is not correct.

Orcus, the only thing you need to be careful of right now is credit unions are being made to lend by their regulators whether they want to or not. A lot of them have never been in the mortgage business before and have no fucking idea what they are doing. In theory it should be a better process since it's a smaller company and they value their members business but don't make any assumptions, shop around and make sure what they are offering is a better deal with the proof being in the pudding when they finally approve you.

Again, as far as sourcing money deposited into your account. If you have funds deposited that aren't from pay checks and you need that money to close or to meet reserve requirements (aside from FHA you will need at least 2 months of your PITI payments in the bank after closing) then the underwriter has no choice but to ask you to source those deposits. Any LO worth their shit is going to review your bank statements with you though at the time of submission and handle this upfront, as well as your credit report for any variances and your pay checks for any deductions for loans and the like.

Convo · Dec 15, 2012

Haast_sl said:
Well, that would make me feel better about the process. How did the paper trail from mortgage lending help catch illicit car trade, though? Were they just finding large chunks of money deposited in peoples accounts and then tracing the source or something?

Large amounts of money were being wired to bank accounts. Doesn't really have to do with mortgages.. Large amounts of money in general that can't be explained. That's why a paper trial is helpful. If 100k shows up out of nowhere it should set alarms off. This was a direct result of tracking funds.http://www.bbc.co.uk/news/world-middle-east-19327919This was going on all over the US. They were basically using our systems against us.

Deathwing · Jan 8, 2013

So when did everyone decide they were ready to buy a house? Basically, I'm having trouble determining if this locale/job is something I want to settle into long term. The location(Ithaca) is such that if the part of my job that I'm worried about(raises) doesn't work out, I can't just job hop to another local company. Or is the market and interest rates such that you don't need the standard 5 years to recoup closing costs and such?

Unrelated side question: I've noticed at least one person mentioning cashing out some 401k to get a down payment on a house. I should have enough saved for 10%. Would cashing out some 401k to get up to 20% be worth the early withdraw penalty?

PatrickStar · Jan 8, 2013

Wife and I bought a newly built condo. We ended up going with MI; the trade off is the lender would pay off all closing costs and fees and 2 years of condo fees. The combined total is around 20k. We negotiated an amount of total MI paid to be less than that with a 3.0% for 2 years and 3.25% the rest of the way. This way in essence we come out a bit ahead in terms of the MI, it let us put less down, and filing jointly we can deduct part of the MI premiums (you must itemized). We plan on paying more into the principle every month so the MI will drop off approximately a year beforehand so we come out a bit more ahead.

As for when you're ready...my job is stable and my wife works for the extra income. We can survive without her working WITH the new mortage without making drastic life changes to conserve money. The rates were good and the property we bought was very good for the price and was in our neighborhood. For example, our rent for our old property would have been more than our principle+interest per month. The only thing we're paying more is the condo fee and MI. Rental and condo insurance is the same. Your property taxes are tax deductible so you get something back. Based on the deal we got, the condo fee is paid for up to 2 years and the MI is manageable considering all we brought to the table was the down payment. For the condo fee, I take the subway to work and the property has a shuttle that is a huge benefit and saves me in $40 a month just in taking the fucking bus to get to the subway and I don't have to walk to the stop and hope the damn bus didn't decide to come 10 minutes early. I get a storage unit that is equivlant in size to the one I had so I saved money on that. Also, my wife and I are not homebodies. We do get out a lot, biking, movies, sporting events, going to town events, etc. We decided on a condo because we preferred the amenities over a yard and things like that. Cutting the grass, shoveling snow, pulling weeds, etc just isn't our thing.

Overall the biggest factor though is...after 30 years of living I wanted my own fucking place. Time to lock in a low rate and build some equity. Time to grow up and move on ya know? I almost bought 4 years ago about 4 months before the housing bubble blew the fuck up. I would have paid an extra 75-100k and a rate around 4.5 back in those days. Best decision I ever made was to hold off and get married.

Orcus_sl · Jan 9, 2013

Deathwing_sl said:
So when did everyone decide they were ready to buy a house? Basically, I'm having trouble determining if this locale/job is something I want to settle into long term. The location(Ithaca) is such that if the part of my job that I'm worried about(raises) doesn't work out, I can't just job hop to another local company. Or is the market and interest rates such that you don't need the standard 5 years to recoup closing costs and such?

Unrelated side question: I've noticed at least one person mentioning cashing out some 401k to get a down payment on a house. I should have enough saved for 10%. Would cashing out some 401k to get up to 20% be worth the early withdraw penalty?

We're in our late 30's and still live like grad students in a dumpy rental, and we're fucking sick of it. We were waiting on her tenure, which she finally got last year. Now that that is out of the way we are looking to buy, and getting impatient lol. That was pretty much the deciding factor for us. Weren't going to buy if her tenure had somehow been rejected. Similar to your situation I guess in that the only option would've been to move. I just do freelance IT work these days for money, I can pack up my operation and go wherever. She's the one with the major career. Now the only worry is if someone offers her a true dream job/better position. Would hate to buy a house and have to move in a couple of years. But that is a good problem to have and we will cross that bridge if we get to it.

OneofOne · Jan 9, 2013

We already knew we were going to stay in this part of the state for the long haul, and had already picked out the area we wanted to buy our home in "some day". This was mainly my wife's decision because she has a very(!) large family, and most of them all live in the area (no relative being more than 1.5 hours away from another). Because we live in the Bay Area, jobs aren't a concern - there are entire countries with less job diversity, and redundancy, than here. We'd been socking money away to buy a house "some day", and at the beginning of '12 looked at the market and said, "shit we can buy a home and pay less in mortgage than we do in rent" and "how long will interest rates stay this low?" and decided that "some day" was here.

Re: the 401k, only you can really know that. Recall you can take out a 10k first time home buyer withdrawal with no penalty (though you'll pay taxes of course). It comes down to penalty + taxes + potential earnings of the money removed vs PMI saved + interest saved. There's also the fact (at least in our area) % down seemed to often trump the $ offered for a property, and that's hard to attach a value to when you really want a property. Speaking in the most general of terms, since I don't know your situation, I would say don't touch your retirement unless you have to, and if you do take out cash, take out the minimum that you need and no more.

Also keep in mind, overpaying by even an extra $100/month on your mortgage to principle can literally cut YEARS off your loan, and save tens of thousands of dollars worth of interest. Just comes down to opportunity cost and what you could otherwise be doing with that cash.

Falstaff · Jan 9, 2013

Deathwing_sl said:
So when did everyone decide they were ready to buy a house? Basically, I'm having trouble determining if this locale/job is something I want to settle into long term. The location(Ithaca) is such that if the part of my job that I'm worried about(raises) doesn't work out, I can't just job hop to another local company. Or is the market and interest rates such that you don't need the standard 5 years to recoup closing costs and such?

Unrelated side question: I've noticed at least one person mentioning cashing out some 401k to get a down payment on a house. I should have enough saved for 10%. Would cashing out some 401k to get up to 20% be worth the early withdraw penalty?

For us it really came down to the fact that we were finally able to save up enough for a sizable down payment (about 15%) and have our mortgage be less, or about the same, as what we pay in rent. We found a house that the couple recently spent about $50,000 in upgrades in the past year but the husband died and the wife is relocating. The suburb we picked is recovering much faster than the rest of Chicagoland, relatively speaking, and it's in an unincorporated area but we get all of the benefits while paying 60% of the property taxes. We are very close to the both of our families and the majority of our extended families.

I have a great credit score so we were able to get the mortgage for basically the rock bottom rate that the bank was offering. It was really the perfect storm of circumstances that caused us to jump when we did. We ended up looking at about six houses but kept on going back to the first one we looked at. Put in an offer the next weekend and they accepted it. As long as nothing goes wrong with the appraisal and inspection we should close in about 6 weeks.

With my wife being pregnant too, this is both the most exciting and most terrifying time in my life.

OneofOne · Jan 9, 2013

Eyashusa_sl said:
With my wife being pregnant too, this is both the most exciting and most terrifying time in my life.

Haha that's pretty awesome =) We got the keys to our new home on a Wednesday (well, our realtor did, we were in the hospital) and our son was born on that Friday. I'd never wish that on anyone, but there are far worse "problems" to have.

SaidBetterThan_sl · Jan 9, 2013

So my fiancee I have a question. How much is the MOST (%) we should put down on the house? Also...can you pay your mortgage a couple months (year?) in advance? It annoyed me so much when I was paying off my car that I couldn't just cut 12 checks on 1/1/xxxx and be done with it.

Cutlery · Jan 9, 2013

SaidBetterThan_sl said:
So my fiancee I have a question. How much is the MOST (%) we should put down on the house? Also...can you pay your mortgage a couple months (year?) in advance? It annoyed me so much when I was paying off my car that I couldn't just cut 12 checks on 1/1/xxxx and be done with it.

If you have that much cash laying around, why are you just not paying cash for things and avoiding the interest altogether?

SaidBetterThan_sl · Jan 9, 2013

Well, I didn't have enough to ever outright pay for my car. I liked the idea of just making the bare minimum payment in advance. They didn't let me do it, but if they did I would have. I'd love to pay my first year of mortgage off the day I get the keys.

Gecko_sl · Jan 10, 2013

Deathwing_sl said:
So when did everyone decide they were ready to buy a house? Basically, I'm having trouble determining if this locale/job is something I want to settle into long term. The location(Ithaca) is such that if the part of my job that I'm worried about(raises) doesn't work out, I can't just job hop to another local company. Or is the market and interest rates such that you don't need the standard 5 years to recoup closing costs and such?

Unrelated side question: I've noticed at least one person mentioning cashing out some 401k to get a down payment on a house. I should have enough saved for 10%. Would cashing out some 401k to get up to 20% be worth the early withdraw penalty?

In reference to your 401k, do not cash it out, get a loan for your mortgage down payment from your provider. It's both tax deductible and there are usually special offers for that.

In my opinion you've answered your own question. There's no plan B if you lose your job, which does not sound stable and/or good. I'd not buy in that situation.

Draegan_sl · Jan 10, 2013

SaidBetterThan_sl said:
So my fiancee I have a question. How much is the MOST (%) we should put down on the house? Also...can you pay your mortgage a couple months (year?) in advance? It annoyed me so much when I was paying off my car that I couldn't just cut 12 checks on 1/1/xxxx and be done with it.

The most? As much as you want. The more you put down the less your payments are. If you're at 20% you can avoid PMI, anything less and you have to pay. If your credit score is good enough there are some PMI payments schemes (like the one I have) is a 4000 one time fee.

The reason to put less down is because money is so cheap now (3-4% on a 30y fixed) that why not keep that cash for home upgrades and other shit? It really depends on your comfort level though.

Also you can pay as many mortgage payments as you want, you can instruct the bank to put a payment down as principal. However you still have to pay once a month unless you can work it out with your bank otherwise. They will probably say no because there are a ton of different things that need to be tied together.

Cutlery · Jan 10, 2013

My mortgage guy told me when I got mine that putting an extra $1000 down would take off something like 6 bucks a month off my payment. He told me (and I believe this is great advice) to put down as little as I felt comfortable doing, because there is ALWAYS going to be shit you need to buy for your house. You need shit you don't even know you need. And if you buy anything that's not in perfect condition, you're gonna need more in not too long after.

You're gonna want to paint, replace flooring, get new appliances, you need shit for yard maintenance, winter maintenance, shit's gonna break pretty regularly, etc etc. All of this is completely true, and entirely unavoidable. I'm much happier that I didn't put down as much as we had saved, and was able to use that on the shit we needed to buy for the house, rather than have a house payment that's $60 less and instead have all the purchases sitting on credit cards at 20% interest

Brando · Jan 10, 2013

Unless you have an interest only loan your payment does not change when you make principle reductions unless you ask the bank to re-amortize your loan. All you are doing is paying it off sooner. One extra mortgage payment a year turns a 30yr loan into a 22yr loan.

Falstaff · Jan 10, 2013

Cutlery_sl said:
My mortgage guy told me when I got mine that putting an extra $1000 down would take off something like 6 bucks a month off my payment. He told me (and I believe this is great advice) to put down as little as I felt comfortable doing, because there is ALWAYS going to be shit you need to buy for your house. You need shit you don't even know you need. And if you buy anything that's not in perfect condition, you're gonna need more in not too long after.

You're gonna want to paint, replace flooring, get new appliances, you need shit for yard maintenance, winter maintenance, shit's gonna break pretty regularly, etc etc. All of this is completely true, and entirely unavoidable. I'm much happier that I didn't put down as much as we had saved, and was able to use that on the shit we needed to buy for the house, rather than have a house payment that's $60 less and instead have all the purchases sitting on credit cards at 20% interest

This is why we are only putting 10% down as opposed to something closer to 15% that we could afford. Sure it would lower our monthly payments a little bit but I don't want to be cash tight for the next few months, especially with a baby coming in July.

Senaiel · Jan 10, 2013

I am currently in process of buying a new home with my fianc? in vegas. While we have secured the house, i am dumbfounded by the large amount of cash buyers in town. It seems if housing is going to boom here as new home builders have been steadily raising their prices at least bi-monthly. Resales are like the wild west...we were looking for a full one story community and found one house. That house went on the market friday and had 7 offers by that evening...2 of which were cash above resale price and 3 of which were site unseen..luckily the new all one story community we found had 4 lots left in this phase. We secured our lot with the floorplan we wanted and still 3 additional buyers tried to snatch it from us later in the same day.

Brando · Jan 10, 2013

The reason for the prevalence of cash buyers is other investments are giving very little return or are highly volatile, so buying property that you can rent for a 10-15% return or more with the market already seeming at the bottom seems a no lose proposition. Of course you can still lose but a lot of my clients are buying as much as they can since they just have cash sitting in the bank making 0%.

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