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Old 05-02-2015, 07:18 AM
 
Location: Phoenix, AZ > Raleigh, NC
14,301 posts, read 17,505,128 times
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Do yourselves a huge favor and save enough to put 20% down. Don't waste money on PMI!

Also save enough to pay $5K in closing costs and escrows. And still have an emergency fund in the bank.
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Old 05-02-2015, 09:55 AM
 
Location: MID ATLANTIC
7,598 posts, read 17,623,584 times
Reputation: 8083
Quote:
Originally Posted by J24 View Post
Understood. We actually are renting a house (same size as what we'd be looking to buy, 2100ish sq ft), so we won't be shocked by the utility bills - in fact a newer home might even come out less, as the house we are renting is older and poorly insulated. Obviously the maintenance stuff is something we don't have to worry about right now, that's definitely something we'd consider and make sure we had money for.

We are both really good at saving and finances in general, so I'm not too concerned about having money set aside for things like that. Though the down payment will eat our savings, we'll be able to build it back up fairly easily.
If you can't come up with 10% down to be able to do an 80/10/10, there are some really good 1st time homebuyer programs without income limits requiring only 3% down. And, the better your credit, the lower the PMI, unlike FHA , which is one size fits all. You will hear many praise the no PMI option, higher rate in exchange for no PMI - but in many cases, you could be setting yourself up to pay more. And this is why: Right now, I can offer 4.375% (maybe 4.25%) no points, no PMI. On the same 3% down loan, I can offer 3.875% w/ PMI & no points. On the higher rate, that's it, you've got that P & I payment for the life of the loan. On the 3.875%, by law, when you reach 78%, the PMI must be dropped. However, should appreciation kick in, in a big way, you can contact your lender for their requirement to drop PMI earlier.

Most Fannie Mae lenders/servicers will let the PMI drop if you have had the loan for two years, have been on time for the past 12 months, and your home appraises reflecting current equity is at 80%. Of course, you pay for the appraisal from somebody on their list, but usually its well worth it. On an FHA loan, the only way out of PMI (on a new loan - there are some older ones out there where the PMI gets dropped) is to refinance.

I encourage everyone to examine their housing goals further out than the next few years and be realistic as you can. I've met many first time buyers that tell me with a straight face, really believing, telling me they will be in their 2 bedroom condo forever. Some are, most are not. And then there are the couples that meant to leave 10 years ago, but life got in the way. You are making the single largest investment of your life (so far). Sit down with your spouse, where do you see your family size? Don't forget to include pets! (You would never believe how many people alter their moving plans around pets). What's your lifestyle? Are you okay budgeting for the grocery bill? Could you survive on one pay check? How fast could you get your hands on $5000? 10,000? How far is your commute? What would dropping off or picking up a child do to your routine? What about 2 kids? Relatives.....how much further away will they be? If further, will you need a guest room? Know ahead of time what you must have, and then what you are willing to give up. Know your list and know your spouse's. And don't let either of you settle on your top "must have's." (And trust me, all reason goes out the window when you see a great wet bar and game room.....or media room.....or workshop.....whatever....giving up on your musts will cost in the long run.....). Now, that's not to say you can't adjust your lists, but do it when there's not a house in the picture.

I don't mean to take away the spontaneous enthusiasm when buying a home, but a little forethought will save you a lot of expense. And be sure to give your financing as much thought as you did when selecting your home. Don't just go with the flow because you didnt want to upset your agent, but do ask who they recommend and decide for yourself. You will know you found the right loan officer when they ask you, "where do you want your payment to be."

Lol....another caffeine tangent...waaaaay more than you asked.....which was how much income for 300K? It depends. (On taxes, rate, type of income, credit score) . But 75K with limited debt will typically support a 300K mortgage.
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Old 05-02-2015, 11:41 AM
 
Location: Bloomington IN
5,867 posts, read 7,089,766 times
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Since you won't be buying for another year, start saving the extra $500/month you think you would be comfortable paying. e.g. current rent + saving= potential comfortable mortgage or $1500 + $500=$2000 That will give you time to figure out if you are comfortable at that level.

While it won't get you all the way to 20% down, it will be closer.
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Old 05-02-2015, 05:39 PM
 
626 posts, read 444,700 times
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Our personal rule of thumb is that the mortage + escrows has to be no more than 25% of our NET pay. Then we have plenty for cars, savings, etc. our last house started at 55% of our net and then we got some raises so after ten years it was more like 35% of our net. It was really hard to save during those early years but we lived in a high COL area and thats what it took to get a house.

ETA that I would be comfortable with an 80/10/10 ( we did this in Boston, it only makes sense in an area that is appreciating in value rapidly, if someone did an 80/10/10 where we live now they might not have enough equity to get out from under the ballon payment in ten years.)

I'd say $120k reliable consistent gross income for a $290k loan.
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Old 05-04-2015, 09:21 AM
J24 J24 started this thread
 
Location: Portland, OR
448 posts, read 654,804 times
Reputation: 892
Quote:
Originally Posted by Jkgourmet View Post
Do yourselves a huge favor and save enough to put 20% down. Don't waste money on PMI!

Also save enough to pay $5K in closing costs and escrows. And still have an emergency fund in the bank.
I think if we waited and saved until we had $60k in the bank, we wouldn't be buying until like 2022 or later. Unless we win the lottery, that's not going to happen.

Quote:
Originally Posted by SmartMoney View Post
If you can't come up with 10% down to be able to do an 80/10/10, there are some really good 1st time homebuyer programs without income limits requiring only 3% down. And, the better your credit, the lower the PMI, unlike FHA , which is one size fits all. You will hear many praise the no PMI option, higher rate in exchange for no PMI - but in many cases, you could be setting yourself up to pay more. And this is why: Right now, I can offer 4.375% (maybe 4.25%) no points, no PMI. On the same 3% down loan, I can offer 3.875% w/ PMI & no points. On the higher rate, that's it, you've got that P & I payment for the life of the loan. On the 3.875%, by law, when you reach 78%, the PMI must be dropped. However, should appreciation kick in, in a big way, you can contact your lender for their requirement to drop PMI earlier.

Most Fannie Mae lenders/servicers will let the PMI drop if you have had the loan for two years, have been on time for the past 12 months, and your home appraises reflecting current equity is at 80%. Of course, you pay for the appraisal from somebody on their list, but usually its well worth it. On an FHA loan, the only way out of PMI (on a new loan - there are some older ones out there where the PMI gets dropped) is to refinance.

I encourage everyone to examine their housing goals further out than the next few years and be realistic as you can. I've met many first time buyers that tell me with a straight face, really believing, telling me they will be in their 2 bedroom condo forever. Some are, most are not. And then there are the couples that meant to leave 10 years ago, but life got in the way. You are making the single largest investment of your life (so far). Sit down with your spouse, where do you see your family size? Don't forget to include pets! (You would never believe how many people alter their moving plans around pets). What's your lifestyle? Are you okay budgeting for the grocery bill? Could you survive on one pay check? How fast could you get your hands on $5000? 10,000? How far is your commute? What would dropping off or picking up a child do to your routine? What about 2 kids? Relatives.....how much further away will they be? If further, will you need a guest room? Know ahead of time what you must have, and then what you are willing to give up. Know your list and know your spouse's. And don't let either of you settle on your top "must have's." (And trust me, all reason goes out the window when you see a great wet bar and game room.....or media room.....or workshop.....whatever....giving up on your musts will cost in the long run.....). Now, that's not to say you can't adjust your lists, but do it when there's not a house in the picture.

I don't mean to take away the spontaneous enthusiasm when buying a home, but a little forethought will save you a lot of expense. And be sure to give your financing as much thought as you did when selecting your home. Don't just go with the flow because you didnt want to upset your agent, but do ask who they recommend and decide for yourself. You will know you found the right loan officer when they ask you, "where do you want your payment to be."

Lol....another caffeine tangent...waaaaay more than you asked.....which was how much income for 300K? It depends. (On taxes, rate, type of income, credit score) . But 75K with limited debt will typically support a 300K mortgage.
I appreciate the caffeine tangent! Very helpful!

I'm not sure if we will be able to come up with the 10% within the next year, but we might. We've already got roughly $10 in savings and another $5k in 401k that we'd feel comfortable using... and we only plan on saving throughout the next year. Though even with that, I don't think we'd be able to reach that 10% point without saving longer.

We both have good credit (both in the high 700's) and no debt aside from my fiancee's car like I mentioned earlier.
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Old 05-04-2015, 10:37 AM
 
7,672 posts, read 9,330,192 times
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If your wife makes commission/bonus etc generally a 2 years worth of tax returns showing the commission/bonus etc is needed to be counted as income. I ran into this with my husband's income last year. It might be different for you, but check into that if it's been less than 2 years receiving commission.
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Old 05-04-2015, 10:54 AM
J24 J24 started this thread
 
Location: Portland, OR
448 posts, read 654,804 times
Reputation: 892
Quote:
Originally Posted by momtothree View Post
If your wife makes commission/bonus etc generally a 2 years worth of tax returns showing the commission/bonus etc is needed to be counted as income. I ran into this with my husband's income last year. It might be different for you, but check into that if it's been less than 2 years receiving commission.
I think there is a good chance of that. I know it's that way with tipped wages too. If we do run into that, however, we'll just have to stick with our base salaries, which will still be around $85-95k by this time next year.
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Old 05-04-2015, 11:09 AM
 
7,672 posts, read 9,330,192 times
Reputation: 7902
Quote:
Originally Posted by J24 View Post
I think there is a good chance of that. I know it's that way with tipped wages too. If we do run into that, however, we'll just have to stick with our base salaries, which will still be around $85-95k by this time next year.

Luckily we had a really good deal so we didn't need the bonus to be counted as income to qualify. Just wanted to give you a heads up do you don't get a surprise when you are ready to buy. Good luck!
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