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Can you explain about the impounding of property taxes? I'm not sure what that means.
HUGz! Jules
Home owners have to pay property tax twice a year, in California anyway. There are 2 ways to do this. One way is to just pay it on your own every 6 months. When the trust deed (Mortgage) is paid off you will need to do this anyway. Another way is to have an impound account set up with your lendor. Instead of paying only the interest and principal you would also be sending 1/12 of your yearly property tax bill with your mortgage payment. When the property tax is due the lendor will send the county the tax money.
For me, FHA with 5% down would have added over $600 month to the payment. Money down the drain. A big motivation for going conventional was to avoid MI - especially the mandatory prepaid and 5+ years of montly MI required for FHA.
Home owners have to pay property tax twice a year, in California anyway. There are 2 ways to do this. One way is to just pay it on your own every 6 months. When the trust deed (Mortgage) is paid off you will need to do this anyway. Another way is to have an impound account set up with your lendor. Instead of paying only the interest and principal you would also be sending 1/12 of your yearly property tax bill with your mortgage payment. When the property tax is due the lendor will send the county the tax money.
We have always had our property taxes included in with our mortgage payment. I have just never heard it called impounded.
NekkidFish, if I remember correctly, you're trying to buy in the SF Bay Area. For me, I would never go FHA unless I have to because it's such a competitive market that I would have to way overbid in order to beat out the competition.
Let's say a house is asking $500k and it receives multiple bids (if it's a good house it'll receive multiple bids), say you bid the highest at $560k and let's say the next best is a conventional loan buyer at $540k. You know what a good seller's agent will do? He/she will contact the conventional loan buyer's agent and say, "Hey, if your client up the offer $20k you can have the house." Since it's only $20k, the buyer likely will meet it and you lose the house even though you bid the highest. And if that buyer turns it down the seller's agent will go to the next solid buyer on the list and say, "Hey, if you up the offer to $560k..."
So you basically have to bid with a price that is so far ahead of the competition that they all gag and walk away. Say you bid $600k and the next highest is $540k, that could scare away the competition. But then you're now overpaying by $40k.
Yes, I have both won and lost bids because of the above scenario. I have also been in multiple bids where there were more than one round of bidding - there was a house asking $650k and after submitting our bid, the seller countered $750k and said they've countered all buyers with the same. Our agent was alert and say we should go over the counter to beat out the competition - we submitted $760k. We didn't get it. It sold for over $800k.
Tips: when you go see an open house, ask the listing agent what criteria they're using - they usually will tell you straight up if the seller is looking for the highest offer, the best offer (not necessary the highest), if they take all the offers and decide right then and there the best one to accept or if they will counter back (another round of bidding).
This plus the the PMI cost means I would not go FHA if I can help it.
P.S. REO usually is where the seller (bank) takes the highest offer and don't care if it's all cash or FHA. If you go FHA, I think REO is your best shot.
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
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Quote:
Originally Posted by 399083453
Its just a figure of speech. A joke.
It's not a figure of speech, they are referred to as "Impound" accounts, not impounded. The money is collected in advance and later used to pay the taxes and homeowners insurance.
another option if you haven't got 20%, but you don't want to be locked into an FHA or a conventional where you are paying PMI until you're at 20% equity or so (who knows which way the house prices will go even if you are paying down principal) is to pay a 10% downpayment with a conventional loan and a single up-front PMI payment. With up-front PMI you'll often break even after 24 months of mortgage payments. Better than the 5 yr FHA requirement.
Of course you can only do it if you have a few thousand lying around, but it may work for you, say, if you've only saved 12 or 13% of the downpayment.
I'd put down the 20% if you can. Not only will you generally get a lower interest rate...
...but you'll have a MUCH lower monthly mortgage payment than would be possible with 3-5% down. You knew that, right? Also, if you're really that concerned that residential real estate prices in six years will be lower than they are now, you should probably continue to rent.
And I completely disagree with the poster who thinks that walking away from one's property because it's lost its original value is even an option.
another option if you haven't got 20%, but you don't want to be locked into an FHA or a conventional where you are paying PMI until you're at 20% equity or so (who knows which way the house prices will go even if you are paying down principal) is to pay a 10% downpayment with a conventional loan and a single up-front PMI payment. With up-front PMI you'll often break even after 24 months of mortgage payments. Better than the 5 yr FHA requirement.
Of course you can only do it if you have a few thousand lying around, but it may work for you, say, if you've only saved 12 or 13% of the downpayment.
Interesting!
I really appreciate all of the posts. Lots to think about!
HUGz! Jules
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