Tips for First Time Home Buyers

• dlazz

  gerb131;1456428 wrote:I live in a dominion aka domino. They suck built in 2000

  
  I don't know anything about the quality of them, just that they're everywhere in this area. Also, it's been 13 years, so they might have changed
• LJ

  

  I've owned a Dominion for about 7 years, lived in it for 4. It was built in 2007. The build quality in it is fine, some of the finishes suck. They also now charge for everything, instead of getting a standard package for everything.
• dlazz

  mildredbeard;1461969 wrote:Firstly you must check the prices of comparable home in the area where you want to buy home,estimate what you can afford,determine your total monthly housing cost, including taxes and homeowners insurance,and most important take a reputable real estate agent who knows and work in your area.
  
  Click Here for more information.

  
  No u
• gut

  HitsRus;1456478 wrote:Good advice here. Look at your first house as a stepping stone to your second. If you can't put at least 10% down you are probably buying too big.

  I think the economics of today are cause for review of that "advice". The payment is what matters, and it should be something you can comfortably afford (rule of thumb is 25% of gross pay, max) - and that advice applies any time, including what the max rate an ARM could float to. I would take advantage of the absurdly low interest rates and lock-in on a 30-yr fixed.
  
  Of course, that is probably moot because it is very difficult to get a loan today without 20% down.
  
  Otherwise, from my perspective if you had to save up another 5 years or more to get the bigger downpayment you are losing big on the higher interest rates (i.e. this is likely a net cost as opposed to net "savings"). In a normal environment I would 100% agree with you, but the cost of owning is going to increase significantly in the coming years.
  
  I'll just add that the housing meltdown SHOULD have been merely a paper loss if people could afford the payments (and job losses always hurt, and housing took a hit in 2001, as well, with many people relying on dual incomes for their payment). Even if you sold at a loss, you were buying a similarly "cheap" house, which makes it a wash unless you downsize or exit he homeowner market. The problem was lack of mobility if you lost a job and were underwater, but in most cases if people had been responsible the payment should not have been an issue.
• Benny The Jet

  

  Depending how handy and hard you want to work, but we bought a sheriff sale home. Got it for $34k, fixed it up and up and put in 14k in it. We just got it appraised for $98k. We'll live in it until we have another kid and make a nice profit and sell it. It was A LOT of work and thankfully my father helped out with a lot.
• WebFire

  gut;1462188 wrote:I think the economics of today are cause for review of that "advice". The payment is what matters, and it should be something you can comfortably afford (rule of thumb is 25% of gross pay, max) - and that advice applies any time, including what the max rate an ARM could float to. I would take advantage of the absurdly low interest rates and lock-in on a 30-yr fixed.
  
  Of course, that is probably moot because it is very difficult to get a loan today without 20% down.
  
  Otherwise, from my perspective if you had to save up another 5 years or more to get the bigger downpayment you are losing big on the higher interest rates (i.e. this is likely a net cost as opposed to net "savings"). In a normal environment I would 100% agree with you, but the cost of owning is going to increase significantly in the coming years.
  
  I'll just add that the housing meltdown SHOULD have been merely a paper loss if people could afford the payments (and job losses always hurt, and housing took a hit in 2001, as well, with many people relying on dual incomes for their payment). Even if you sold at a loss, you were buying a similarly "cheap" house, which makes it a wash unless you downsize or exit he homeowner market. The problem was lack of mobility if you lost a job and were underwater, but in most cases if people had been responsible the payment should not have been an issue.

  5/3 is doing 5% down conventional loans. USDA and FHA both have up to 100% financing.
• gut

  WebFire;1462215 wrote:5/3 is doing 5% down conventional loans. USDA and FHA both have up to 100% financing.

  Allegedly. Going directly thru FHA is probably a much better bet. I'm hearing it's really tough to get a conventional bank loan with less than 20% - although I'm sure the amount of the loan and the payment % of your gross is a big factor.
  
  I guess the one caveat I didn't address was PMI. The effective rate on that can be pretty ridiculous, but if I'm looking at being in a home for 15-20 years or more I wouldn't handcuff myself over 20% down given where rates are. 5-7yr horizon there isn't any real savings since you're going to do an ARM, and then the PMI and higher rate would be more prudent to avoid with 20% down.
• WebFire

  gut;1462219 wrote:Allegedly. Going directly thru FHA is probably a much better bet. I'm hearing it's really tough to get a conventional bank loan with less than 20% - although I'm sure the amount of the loan and the payment % of your gross is a big factor.
  
  I guess the one caveat I didn't address was PMI. The effective rate on that can be pretty ridiculous, but if I'm looking at being in a home for 15-20 years or more I wouldn't handcuff myself over 20% down given where rates are. 5-7yr horizon there isn't any real savings since you're going to do an ARM, and then the PMI and higher rate would be more prudent to avoid with 20% down.

  I'm getting ready to buy. They are doing 5% conventional. I am doing USDA. I am not putting 20% down and the PMI is lower than conventional.
• WebFire

  Was looking at building also. Just a year ago, you couldn't get a construction loan for less than 20% down. Now we are seeing 5% again. Can't wait for the next bubble to burst!
• gut

  WebFire;1462221 wrote:I'm getting ready to buy. They are doing 5% conventional. I am doing USDA. I am not putting 20% down and the PMI is lower than conventional.

  Yeah, admittedly my perception is anecdotal (and a bit dated).
  
  But if you look at the total PMI you would pay vs. the additional principal, it's an effective rate of like 6-7%. To me that's up in the range of a decent return you're paying yourself by getting the 20% down.
  
  Like I said, it's a complicated ROI. You might not have 20% down for what you'd like to buy, and rates where they are you could be better off locking in the 30-yr rate as opposed to "upgrading" in 5 years. Math only works for at least a 10-15 year horizon, though.
• gut

  WebFire;1462225 wrote:Was looking at building also. Just a year ago, you couldn't get a construction loan for less than 20% down. Now we are seeing 5% again. Can't wait for the next bubble to burst!

  A lot of homes are still arguably undervalued vs. where they should be if you went back to, say 1998, and adjusted for inflation. Hard to say, though, if buying used is better value than building new. I tend to think it is because plenty of homes are still selling below replacement/build cost.
  
  It's the markets, particularly fixed income, that are going to have one ugly correction when rates start rising.
• LJ

  

  USDA has some really strict maximum income requirements.
  
  FHA now requires PMI for the life of the loan.
  
  Your best bet is to get a non conforming portfolio loan with a local or even regional bank. Since its non conforming, the bank can write whatever loan terms they want. Our house is 0 down no PMI 3.75% non conforming portfolio loan with Huntington.
• gut

  LJ;1462233 wrote:Our house is 0 down no PMI 3.75% non conforming portfolio loan with Huntington.

  You got those terms on a 30-yr fixed?
• LJ

  

  gut;1462238 wrote:You got those terms on a 30-yr fixed?

  
  Yep. You just gotta shop hard. Advertised rates were around 3.5 at the time so we are a quarter higher than we would have been conventional, but with 0 down and no PMI it was totally worth a quarter point. We could have bought the rate down, but I wanted cash in my pocket.
• gut

  LJ;1462241 wrote:Yep. You just gotta shop hard. Advertised rates were around 3.5 at the time so we are a quarter higher than we would have been conventional, but with 0 down and no PMI it was totally worth a quarter point. We could have bought the rate down, but I wanted cash in my pocket.

  Wow, you did really, really well. 1-1.25pts on a 5/1 ARM would have been too much for me to stomach, but if for a longer horizon that's a great deal for you. 25bps to put 0 down is a no-brainer.
• WebFire

  LJ;1462233 wrote:USDA has some really strict maximum income requirements.

  I don't own a McDonald's so I'm good.
• Sonofanump

  I have to immagine that building a house is still 20%+ more expensive than buying per SF.
• Manhattan Buckeye

  WebFire;1462225 wrote:Was looking at building also. Just a year ago, you couldn't get a construction loan for less than 20% down. Now we are seeing 5% again. Can't wait for the next bubble to burst!

  The issue is going to be when all of the foreclosed homes being tied up will go back to market - this might be a regional issue but a buddy of ours lived in Las Vegas and says the real estate market there is completely conditioned due to all of the defaults and the feds intervention and preventing them to go to market.
  
  Again, it might be focused regionally, but nationally if all of these bank-owned homes suddenly go to market, the inventory will increase considerably.