Feeling like 2006... (rent, new house, buying)

[ihatedcu]

Timing the market is a foolish game. Buy when your financially ready.

Tip for would be first time house hunter.
1. Save at least 25% before you think of buying a house.
2. Never over buy - don't over buy by increasing your down payment.
3. Put the lowest down you can.
Fannie home ready 3%, Freddie home possible 3%, fha 3.5%, quicken loan 1%.
4. Summit your offer with your liquid asset. Seller will only accept offers from a strong buyer, who's loan will not get denied. Show the seller that you have cash to cover the appraisal difference.
5. Apply for MCC. Only work with lender that do mortgage tax credit ($2000 tax credit every year is no joke).
6. Sell your home will cost 8-10%. Factor it in.
7. Apply for home owners exemption.
8. You and your spouse can withdrawal $10,000 each from your traditional IRA without penalty for home purchase.
9. Live in the house for at least 10 years.
10. Never time the market.
11. NEVER DO A CASH OUT REFI. You lose the non recourse status.

Example
Home price: $500,000
You need to save: $125,000
Down pay: $15,000 (use IRA money)
Closing cost: $5000 (use IRA money)
Total monthly payment: $3196/month (budget this amount)
Put $60,000 in a five year CD or rewards checking account that pays 3% interest.
Put $60,000 in a index fund (vanguard total stock market).
$5000 cover supplemental tax and moving expenses.
Total monthly payment: $3196
Pay upfront pmi -$303
Use MCC and adjust your w2 -$166
New monthly payment is $2727
The $467/month difference will cover utility and maintenance.

[CA4Now]

Originally Posted by ihatedcu

Sure, find another job quickly like 1990, 1997, 2008. By your logic, we shouldn't have any foreclosures. I sure the 5% down wants to keep his home just as just as the 20% guy.

Right. You're advocating people walking away from their home when they're under water, when it looks as if they could never afford the home in the first place.

[Electrician4you]

Originally Posted by ihatedcu

Have you sold lately? I just sold my house that received 11 offers. Except for the all cash offer, most of them had very little reserve after down.

How do you know?

I just sold some property. I had no insight into the buyer other than the approval letter and the account for the down and the good faith deposit


I bought recently. The only thing the seller knew is that I had 20% down in a account a good faith check and a approval letter.. I did not disclose any of my other accounts or finances to them. He did not get to see my retirement, rental income, other rentals or their values etc. As a seller you only have a snapshot glimpse at a buyers finances. My lender had a broad picture of my finances. But the seller doesn't get to look at that.
The seller had NO other indication other than a letter stating I was approved for the amount I offered and the statement.

The 20% was allocated specifically to the down because I wanted to avoid PMI. This by no means means I gotta scrounge. There is no way I'm paying PMI for the life of the loan. My housing is low for the next 30 years. Granted I pay more to principal because I'm not into paying 30 years but if some months I want to pay less I can.

Btw no CD pays 3% right now that I can see. Maybe some local bank somewhere. But nationally I don't see it.

You can take that PMI you would pay and invest that or pay to principal. Not everyone who is buying is going in with no reserves.

[expatCA]

Originally Posted by ihatedcu

If house prices drop 20% and he loses his job, the guy with 20% down has zero equality and will go into foreclosure. The bank will repo his home, asap. The 20% guy we call them suckers.

The 5% guy will have negative equality but $75,000 in the bank. The bank will sit until prices come back up because once the bank repos his home, they are responsible for tax and other bills. The 5% we call them squatters.

Ah but if the 5% down guy has no $75,000.00 in the bank he is a loser too and has paid a lot more each each month for the monthly mortgage and Mortgage Insurance and has ........ nothing. I call them stupid.

[ihatedcu]

Originally Posted by expatCA

Ah but if the 5% down guy has no $75,000.00 in the bank he is a loser too and has paid a lot more each each month for the monthly mortgage and Mortgage Insurance and has ........ nothing. I call them stupid.

No shoot Sherlock. Only a fool would buy a house without at least 25% cash on hand. Renting always comes out ahead because a house is general a poor investment.

[Joewy]

Originally Posted by ihatedcu

No shoot Sherlock. Only a fool would buy a house without at least 25% cash on hand. Renting always comes out ahead because a house is general a poor investment.

I moved around alot and bought houses in most every place I lived. I never sold anything. Just rented them out after I left. Ended up with many houses. They are worth much more then I ever made working after all these years.

[ihatedcu]

Originally Posted by Electrician4you

How do you know?

I just sold some property. I had no insight into the buyer other than the approval letter and the account for the down and the good faith deposit


I bought recently. The only thing the seller knew is that I had 20% down in a account a good faith check and a approval letter.. I did not disclose any of my other accounts or finances to them. He did not get to see my retirement, rental income, other rentals or their values etc. As a seller you only have a snapshot glimpse at a buyers finances. My lender had a broad picture of my finances. But the seller doesn't get to look at that.
The seller had NO other indication other than a letter stating I was approved for the amount I offered and the statement.

The 20% was allocated specifically to the down because I wanted to avoid PMI. This by no means means I gotta scrounge. There is no way I'm paying PMI for the life of the loan. My housing is low for the next 30 years. Granted I pay more to principal because I'm not into paying 30 years but if some months I want to pay less I can.

Btw no CD pays 3% right now that I can see. Maybe some local bank somewhere. But nationally I don't see it.

You can take that PMI you would pay and invest that or pay to principal. Not everyone who is buying is going in with no reserves.

Fannie and Freddie don't have lifetime pmi. Of course it's foreign news to landlords like you.

[Electrician4you]

Originally Posted by ihatedcu

Fannie and Freddie don't have lifetime pmi. Of course it's foreign news to landlords like you.

Yeah but they still have PMI until you hit 78% ltv champ. And I don't want to pay it. At all. Not when I have money allocated to a purchase specifically so I don't pay PMI. And not everyone gets a Fanny/Freddy loan. And not everyone is scrounging struggling to buy a house like you seem to think they are

And you still haven't answered how you know the buyers finances. The truth is you have no idea and you're assuming. Do you think I told the seller that I qualified up to x dollar loan amount when I put a bid? Do you think I didn't move money out of that account allocated to home purchase to the EXACT required 20% down amount on the bids I made to be proportionate to the bid amount? I'm not going to show the seller anymore than I have to.

[CA4Now]

Originally Posted by ihatedcu

a house is general a poor investment.

You must not have ever lived in California for the past few decades.

[Lallo]

So we just got outbid on a home today. Blessing in disguise? Maybe, maybe not. We loved the home but weren't willing to pay 20k more than any other home on the block. House received 7 offers. Oh well, on to the next. Keep a level head and in the end, one must decide when buying makes sense for them. Don't let emotions get in the way of your peace of mind and your bank acct.