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What do you think will happen in the 3 years it will take to save for a downpayment and pay off your student loans? Will interest rates increase, will prices drop, will there be inflation and the monthly cost of a new home will go up? No one knows.
Could you buy today with PMI? If you could buy today with PMI does it make sense over renting. The small difference in rate isn't going to make much difference consider you are able to save about $1500 to $2000 a month today. If you could buy sooner and take advantage of tax breaks would it help you to pay down your student loans faster?
Do you need to put 20% down to get the payment within your budget, because in 2-3 years, you don't know what rates will be and you might be way off in your forecasting.
I'd buy into a good neighborhood as soon as possible if the monthly payment is anywhere near renting even if I have to take PMI. PMI like interest is lost money but interest you get a little rebate back, but no one know how they might change tax rules in the future. PMI wasn't deductible, then they made it deductible, in the future it is not suppose to be deductible.
If you haven't done it already, create a housing budget, don't go by, what is the biggest loan I can get.
> First off there is ZERO reason for any seller give ANY consideration to what size down payment ANY buyer that is using normal financing will have -- frankly decent listing agents will help their sellers understand this.
I don't think I agree with this. A significant downpayment indicates a financially sound buyer very likely to be approved for a mortgage. 20% is significant; 5% is not.
The buyer would see the approximate size of the downpayment in your mortgage contingency.
Makes sense.....So the difference between 20-25% should offer the same security in MOST cases. Especially if the offer is written as 25% then securing the lending at 80% as advised by a previous poster.
I appreciate the insight as this can be a scary area to deal with due to lack of experience.
Makes sense.....So the difference between 20-25% should offer the same security in MOST cases. Especially if the offer is written as 25% then securing the lending at 80% as advised by a previous poster.
I appreciate the insight as this can be a scary area to deal with due to lack of experience.
Your offer needs to match the loan application, if put in an offer for 25% down, the lender will require both parties to agree to an amendment to 20%.
Sellers either wan to close or want more money. If they choose more money the appraisal might not come and the deal falls apart. If they take an ofter with a lower price with a larger down payment, they might be leaving money on the table. Each seller is different, some sellers don't have pressure to sell and move, some are dependent on selling their home to buy another.
Last edited by thelopez2; 01-20-2014 at 12:14 PM..
Escrow prepares an amendment updating the final numbers and for the most part, sellers want a timely transaction completion regardless of what type of financing the buyer's choose. I've had clients write all cash offers (with proof of funds) but ultimately finance the property and those that have increased their down payment.
You mentioned making principal only payments in the future. Not all mortgage documents allow for making pop, some require additional moneys to be a "back-end" payment. When we bought our house 3 years ago, I made absolutely certain mine allowed for pop, changed banks once because the first bank only allowed back-end. We hit a stroke of luck in the middle with unexpected overtime and socked it into the house. We now have cut 6 years off the life of the mortgage (an additional 3 years with the pop).
You mentioned making principal only payments in the future. Not all mortgage documents allow for making pop, some require additional moneys to be a "back-end" payment. When we bought our house 3 years ago, I made absolutely certain mine allowed for pop, changed banks once because the first bank only allowed back-end. We hit a stroke of luck in the middle with unexpected overtime and socked it into the house. We now have cut 6 years off the life of the mortgage (an additional 3 years with the pop).
I haven't heard of a conventional mortgage not allowing principal only payment, that is pretty crazy. What and how does a "back-end" payment work?
I've made multiple offers, never mentioned what % down I was going to pay. I did however include a copy of the pre-approval letter from my lender saying that I was approved for financing up to a number much higher than the amount of my offer.
I'm not clear on why the seller needs to know anything other than that you have financing lined up?
I haven't heard of a conventional mortgage not allowing principal only payment, that is pretty crazy. What and how does a "back-end" payment work?
I think she means any additional principal payments are applied to the end of the mortgage amortization schedule. If your payment is $1000 and one month you pay $1750, you can't say next month I'll only pay $250.00 and call it even. They will have taken $750.00 off the last scheduled payment.
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