Real Estate Question - Buying a house (Houston: renting, loans)

[NewYorkiforniainHouston]

OP, my suggestion is that you take advantage of one of the free first time homebuyer seminars located in your area. Yes, the 8 hour class (usually held on Saturdays) is a PITA when you think about it, but the information provided has been valuable. Being armed with the facts (and myths) of home ownership can greatly help in making up your own mind......utilizing your own unique circumstances.

[Ghost Town]

Originally Posted by greenhippo

Sucks I don't have a large cash deposit at the moment. Those calculators show I could easily afford a $270,000 home at the moment.

That means you can probably still afford 150K house at the moment. Don't forget about crazy real estate taxes (Texas has 3rd highest property tax rates in the country): with 270K house you will have to pay much higher tax ($650/month) comparable to your current rent amount.

[WTL63]

Originally Posted by cheryjohns

Do yourself a favor and shoot for the summer instead.

#1) It will give you more time to save for a 5% down - like elnina said - better rates, etc. If you do that 3.5% down - that's FHA - and you will pay their version of PMI, FOR THE ENTIRE LIFE OF THE LOAN. The entire life of the loan. The. Entire. Life. Of. The. Loan.

#2) You will avoid the buying season, when prices are at their highest - which are February through June.

but summer is also when families are buying so that their kids can start right on time for fall school year. it should be right after summer.

[xiabelle]

We closed on our house in July. We took an FHA loan because we wanted to keep more cash liquid. We could have done the 20% but liked the slightly more favorable interest rates we got with FHA. Once we're at the right level of equity, we'll look into refinancing, assuming the interest rates are reasonable. Closing costs were another 8K or so, on top of the down payment. We spent almost 700 on the inspection, plus 2K in earnest money.

All in, the mortgage + PMI + escrow payments on our house (just shy of 175K) are around 1400/month. We qualified for at least 300K, but were absolutely not comfortable with a mortgage that was that high. My realtor had to talk me into even looking at houses closer to 200K, we were lucky to find a great house well under budget. We paid electricity and water at the old apartment, but not gas. We do our own lawn.

I think it's smarter to look at what you're comfortable paying for housing and see what that translates into in terms of mortgage. we were able to go up in price because we were going to have a child entering school, so were saving several hundred a month by no longer paying for daycare.

Originally Posted by WTL63

but summer is also when families are buying so that their kids can start right on time for fall school year. it should be right after summer.

Also, yes, this. We bought in the summer for school purposes. It was hectic, houses went off the market VERY quickly. We didn't get to look at a lot because of that.

[cheryjohns]

There is a big drop-off from April to June. People are forgetting the 30-45 (now 45 on loans) period while houses are under contract and waiting to close. June and July are noticeably quieter.

Going FHA for even a .25% difference on a $150K loan is going to save you an additional $24 a month. Paying about $120 a month on MIP, for doing that FHA, just doesn't work to save $24.

[huma281]

I thought the $5k I paid on closing costs was a lot, but after hearing $8k up to $12k for a home that's around the ballpark of what I paid, that's insane. I shopped a few companies before I found one I was comfortable with. I think the builders lender wanted roughly $8-$9k, but were willing to offer me a $1k discount.

Shouldn't there be some kind of regulation to stop people from getting gouged on closing costs?

[bghouston]

Here is my 2 cents, target your first home to be as close to a dream home, 400-500K these days can check most items on a dream home list. Then, work it backwards and start saving up like crazy. When you are done saving 20% and some more, stretch and buy the best house you can. No point of buying a starter home and then growing out of it in 2 years and wishing for another bigger home, significant costs with selling, relocating and buying and I consider it quite a waste of time and resources esp, if moving within the same city.

Only caveat - follow the above advice if you are young and expect a steady flow of income that will increase annually at a good rate and you are confident that Houston will be a solid base for your occupation and you are ready to settle down.

Good luck !

[greenhippo]

Originally Posted by elnina

You can't "put up" $4-5K on a $270K house! And that's not "obviously near the 3.5% threshold". You will need about $12K for closing costs on that house alone. Then another $10K for down payment.
I suggest to hold your horses, and start saving some money...



With 3.5% down ($10,000K!), you can't even dream about paying around $900/mo for a $270K house. You will likely pay twice that amount.

......I feel like I'm insulting myself by even responding to this embarrassment of a post.

1. the downpayment that I currently have is not what I could have in the future when the buying process actually takes place

2. the second post referring to what the mortgage calculator says I can afford was posted AFTER someone gave me a link to the calculator. It really should go without saying that those two posts are not mutually exclusive. Yet you decided to group them together in one response? God help you.

[greenhippo]

Originally Posted by bghouston

Here is my 2 cents, target your first home to be as close to a dream home, 400-500K these days can check most items on a dream home list. Then, work it backwards and start saving up like crazy. When you are done saving 20% and some more, stretch and buy the best house you can. No point of buying a starter home and then growing out of it in 2 years and wishing for another bigger home, significant costs with selling, relocating and buying and I consider it quite a waste of time and resources esp, if moving within the same city.

Only caveat - follow the above advice if you are young and expect a steady flow of income that will increase annually at a good rate and you are confident that Houston will be a solid base for your occupation and you are ready to settle down.

Good luck !

Thank you, that was the debate I was having. My income allows for for $1400-1600 mortgage payment while staying under 35% of my monthly gross income. I've been saving up about $1500 a month right now and will most likely try to buy a dream home and not the starter home I keep looking at. I certainly don't want to grow out of my home in a manner of a few years .

[greenhippo]

Originally Posted by houstonfan

I'm conservative in this dept. My rule of thumb is you shouldn't buy a house unless you can come up with the 20% down yourself and comfortably make the monthlies. (This doesn't apply to buying rental properties, etc where renters are going to pay your payments.) Remember that your current job may not be with you in the long run, gotta save for a rainy day and live within your means. Many may think this is too conservative but I 've seen too many people foreclose.
Your question about tax really depends on your financial situation. You may not be able to have any advantages, or on the other hand if you itemize, you can also deduct the interest portion of the mortgage payments, but if you're in the lower tax brackets, the actual dollar amount you save on tax is miniscule.

Thank you. I'm at the time where I have to kick myself for not going at this sooner. All these years of renting really hits home knowing I could be investing in myself instead of paying some company I don't even know.