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Old 11-05-2013, 01:58 PM
 
Location: Living on the Coast in Oxnard CA
15,372 posts, read 25,625,313 times
Reputation: 19654

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Is she ready to buy a home? Her credit is in order? She has the downpayment and the closing costs in the bank? She has 3 months living exspenses in the bank? If she has all that then I would say go for it. Once she becomes a home owner she won't be able to call the Landlord and ask to have things fixed she is on her own. Does she have the money ready for that? Not sure on the age of the home but what if the hot water heater goes out? I had to replace mine the day we got the keys. Lucky me I know how to do that kind of thing.


When we bought our home we had a first time buyers program loan. That meant that we brought 3% of the sale price to the table and got saddled with PMI for the first 5 years and that only comes off if our equity is at least 20% on the 5 year mark. Currently it is well over the 20% mark but I have no idea what it will be at in 2 more years. For our Cal-HFA loan the interest is 3.875% fixed for 30 years which is cheap money if you ask me. Saying all that, I wish we had more in savings when we bought the home.
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Old 11-06-2013, 09:41 AM
 
Location: Southern California
4,350 posts, read 4,946,133 times
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Quote:
Originally Posted by SOON2BNSURPRISE View Post
Currently it is well over the 20% mark but I have no idea what it will be at in 2 more years. For our Cal-HFA loan the interest is 3.875% fixed for 30 years which is cheap money if you ask me. Saying all that, I wish we had more in savings when we bought the home.
Side note off the original topic, can't you just refinance out of the PMI program now or get it re appraised to remove the PMI instead of waiting for 2 more years? If you take your PMI payment multiple by 12 and divide it by your loan amount, what % do you come out with. If it is low then it make sense to keep the PMI , if it is high then it makes sense to reevaluate it. Yes 3.875 is cheap money
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Old 11-06-2013, 12:45 PM
 
Location: Living on the Coast in Oxnard CA
15,372 posts, read 25,625,313 times
Reputation: 19654
Quote:
Originally Posted by thelopez2 View Post
Side note off the original topic, can't you just refinance out of the PMI program now or get it re appraised to remove the PMI instead of waiting for 2 more years? If you take your PMI payment multiple by 12 and divide it by your loan amount, what % do you come out with. If it is low then it make sense to keep the PMI , if it is high then it makes sense to reevaluate it. Yes 3.875 is cheap money
With a Cal HFA loan you are required to keep the PMI for 5 years. Yes we could refinance to another loan but I have been getting offers that are above what we have now. I know all those great rates are out there but for what they tell us we can qualify for it makes more sence to keep going as we are.
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Old 11-06-2013, 03:45 PM
 
Location: Southern California
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Although rates were low at the beginning for the year like 3.3%, you might not have had the appraisals to support the price. Prices and rates both climbed, making it not worth while to refinance. The way I see it , it is going to cost you about 3% to get a new loan with a similar rate as today. With your program do you need to worry about the appraisal value in 5 years or does it automatically fall off. IF you are concerned about the value in the future but you know you have the equity now, you need to calculate to see if the PMI over the next 2 years is going to be greater than 3%. I see too many people saying they think rates will rise and prices will fall.
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Old 11-07-2013, 02:18 PM
 
Location: Living on the Coast in Oxnard CA
15,372 posts, read 25,625,313 times
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We have two options to eliminate PMI at the 5 year mark.

1. We can pay off 20% of what we paid for the home. In our case that would be $62,000. If we do that no appraisal is needed.

2. We can get an appraisal on the home and if it shows that we have at least 20% equity in the home then the PMI will drop off.

Our PMI cost us $216 a month or $2592 a year.
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Old 11-08-2013, 10:36 AM
 
2,287 posts, read 2,497,671 times
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Update. She was pre-qualified yesterday and she invited me to go with them today to see the house. I cant wait. I'm glad she and the realtor hit it off, as I feel that's the 1st battle. She told me the pre was done for FHA. I'm against such a low down, and wanted to figure out a way to avoid PMI, so will talk to the realtor on her options.

To the poster who commented this home isn't in CA.: Boy you got that right! lol That's why this home and price has impressed the heck out of her, she's from the OC. Funny thing, she told her co-workers about it, and one said her cousin used to own it. They had won the lotto and put somewhere close to $500,000 in the home, and of course could no longer afford the house.

Usually I'd be against buying one of the best houses in the neighborhood, as I'm from CA., but its so different here in MO., plus this is planned as their forever home. Comps are going to be tough for it. Realtor said seller has had nothing but lowball offers so far, as it is priced higher than the norm from what I can see. I do worry about it appraising, thankfully its in a really nice area.

Uggg on the leading money info someone posted, I didn't know that. She gets a huge bonus for Christmas, so she'd pay me back then. I wouldn't worry anyhow, but didn't know the rules. I will not break any laws for anyone! Guess she'll have no choice but the small FHA down.

I'll check back in here before I go, so if anyone has any info I could pass on I'd appreciate it. Especially any PMI info that could help them. One great thing, when/if this goes through, I hear wedding bells finally for my 40 year old son. Talk about a gun shy guy! He changed jobs 3 months ago, different field, and that's why they didn't consider him going in on the loan. I gave them this advice, hope I was right. My job today is helping them get a good deal, as she said the payments would be $700 less than her rent in CA., so she'd pay full price in a second. lol tia
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Old 11-08-2013, 10:58 PM
 
Location: Southern California
4,350 posts, read 4,946,133 times
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The is a couple of reasons to use FHA, but otherwise conventional with pmi is cheaper. If this is there dream house I'd do every to keep it.

3.5 down may be an option with with conventional. Don't sweat the pmi , it is just simply the cost of doing business , just like interest. Think of it as a higher interest loan which might not be deductible in the future. Time is running out and 5% down will soon be the minimum for conventional.

With conventional , pmi can be paid by the lender and you'll get a higher interest rate, it can be paid for by th borrower ever month for a certain amount of time, then there is a one time pmi payment you can pay with cash , borrow money to paid for it, or ask the seller to pay for it as part of closing cost.
Each has their pros and cons.

Is this a short sale by any chance? Did she get her prequal from a big bank?

Also it is not called pmi when doing FHA, pmi is for conventional , and it is cheaper than FHA MI.You won't get the low rate with conventional as FHA but you also won't get the high MI payment.
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Old 11-10-2013, 11:03 AM
 
2,287 posts, read 2,497,671 times
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Update: My son and I loved that amazing house, never seen one like it. The finishes were top shelf. The garage with marble floors was like something from the Rich & Famous show. I'm still stunned at the money put in a "regular" home and it showed like a dream. Biggest deck I've ever seen and I didn't want to leave the "zen" room, so peaceful. Future dil seemed to like it, even made arrangements with the realtor to put in an offer the next morning.

On the drive to my other sons to tell them about it, she changed her mind. I knew she liked a more modern lifestyle than son or I, but couldn't believe she actually said she'd rather have a "brand new cheaply made house" than this one. lol I didn't get how this one wasn't modern, so I assume she just wants new. Its a shame she'll have to learn the hard way, and no offense to those who have to have new.

The only thing she said that bugged me was that it bugged her that a co-worker had a relative that owned that house previously. She couldn't explain why it changed her whole outlook, but it did. I'll never understand that one. Oh well, we all want what we want, I just feel bad for my kid who has to watch his more than he dreamed of home go to someone else. Why'd I raise my boys to spoil their women? Thanks to all who helped.
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Old 11-13-2013, 09:25 PM
 
Location: Southern California
4,350 posts, read 4,946,133 times
Reputation: 2129
Quote:
Originally Posted by breeinmo. View Post
Update: My son and I loved that amazing house, never seen one like it. The finishes were top shelf. The garage with marble floors was like something from the Rich & Famous show. I'm still stunned at the money put in a "regular" home and it showed like a dream. Biggest deck I've ever seen and I didn't want to leave the "zen" room, so peaceful. Future dil seemed to like it, even made arrangements with the realtor to put in an offer the next morning.

On the drive to my other sons to tell them about it, she changed her mind. I knew she liked a more modern lifestyle than son or I, but couldn't believe she actually said she'd rather have a "brand new cheaply made house" than this one. lol I didn't get how this one wasn't modern, so I assume she just wants new. Its a shame she'll have to learn the hard way, and no offense to those who have to have new.

The only thing she said that bugged me was that it bugged her that a co-worker had a relative that owned that house previously. She couldn't explain why it changed her whole outlook, but it did. I'll never understand that one. Oh well, we all want what we want, I just feel bad for my kid who has to watch his more than he dreamed of home go to someone else. Why'd I raise my boys to spoil their women? Thanks to all who helped.
Have your DIL ask her friend to get the blessing of her relative that bought the house, that should make it all better. I think she'd rather know it went to a good person then a developer going to tear it up or an investor putting renters inside.
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Old 11-14-2013, 01:39 PM
 
2,287 posts, read 2,497,671 times
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Quote:
Originally Posted by thelopez2 View Post
Have your DIL ask her friend to get the blessing of her relative that bought the house, that should make it all better. I think she'd rather know it went to a good person then a developer going to tear it up or an investor putting renters inside.

That wasn't the problem, it was like she didn't like the idea someone she knew had been in "her" house before her. I told her the co-worker could quit and she'd never see her again, so what did this matter. I really don't understand her thinking. Its moot anyway, house is under contract so someone else got a great deal. I told her it'd sell within a week and it only took two days. Personally, I believe she wants a McMansion. Son wanted this home or a small house on a lot of land, he wants a riding mower. He has a blast on mine. lol
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