House Buying Thread

[robbiestoupe]

Dishing out all that info made me very nervous. If anybody intercepted any of my emails to the mortgage broker, I could have had my identity stolen pretty easily. I had to get the IRS to certify my past two years' of returns because my wife had a job that didn't take out taxes (thus it fell under self-employment).

[PFiDC]

In the process of buying a place near Robinson. Very minor stuff found during the first home inspection, but we still need to have somebody from the VA side look at the place. Just finished filling out the formal mortgage app.

Since I don't have to worry about divorcing couples (sorry PFinDC), what else should be left in this process?

No worries. Closed yesterday!

[tifosi77]

I had a conventional, but I know for FHA they won't approve the loan with chipping paint or a missing front banister.

Our first home was an FHA mortgage. The previous occupant of the newly built house was leasing, and the developer who was building several houses on the same plan on that block went bankrupt and the bank foreclosed. Instead of ponying up a down payment, the lessee decided to vandalize the property. Tore down about 50 linear feet of crown molding (but left it in the house, so we just had to reattach it); stole the range, fridge and microwave; stole all the plumbing fixtures from the kitchen and two bathrooms; removed a 4'x5' mirror in the master bath (but, again, left it in the house so all we had to do was reattach it); and unseated the jetted tub and tried to remove it without first disconnecting the plumbing, cracking the shell of the tub. All told, we had to go close to $6k out of pocket fixing those things during escrow before FHA would clear the loan.

I'm not certain, but I think if we had been going with a conventional loan we could have deferred those repairs and gotten the warranty company to fix them after closing for like a $20 co-pay, or whatever it's called.

[tifosi77]

In the process of buying a place near Robinson. Very minor stuff found during the first home inspection, but we still need to have somebody from the VA side look at the place. Just finished filling out the formal mortgage app.

Since I don't have to worry about divorcing couples (sorry PFinDC), what else should be left in this process?

No worries. Closed yesterday!

That's good news. If you're buying a house from a divorcing or divorced couple, that's usually a good thing; they want to speed things up and be done with each other toot suite, and they'll often agree to pay for certain improvements just to move things along. But a couple that up and decides they're done with each other the day before scheduled closing? Sheesh.

[PFiDC]

In the process of buying a place near Robinson. Very minor stuff found during the first home inspection, but we still need to have somebody from the VA side look at the place. Just finished filling out the formal mortgage app.

Since I don't have to worry about divorcing couples (sorry PFinDC), what else should be left in this process?

No worries. Closed yesterday!

That's good news. If you're buying a house from a divorcing or divorced couple, that's usually a good thing; they want to speed things up and be done with each other toot suite, and they'll often agree to pay for certain improvements just to move things along. But a couple that up and decides they're done with each other the day before scheduled closing? Sheesh.

I got a new roof, radon mitigation system, and a cleared chimney flue

[mac5155]

My realtor brought up 80/20 loans and thought I might be a good fit for one. I have a pretty good understanding of the pros, but what are the cons?

[Troy Loney]

My realtor brought up 80/20 loans and thought I might be a good fit for one. I have a pretty good understanding of the pros, but what are the cons?

Higher loan payments?

[mac5155]

I guess I obviously knew that one. I should clarify, she didn't specifically say it was an 80/20. But said there is a program that offers loans with 0 down and no PMI for specific areas. It sounded like a USDA loan.

[Miami Vice]

Id guess an 80/20 is what I know as a piggy back loan

You get 2 mortgages, one for 80% of the value, and one for whatever amount you still need after your down payment. That way you get out of PMI, but you are going to have a higher interest payment on the 2nd mortgage.

I considered that as a way to put less down, but after the hellish nightmare that was dealing with 1 mortgage broker I'd rather live under the Liberty Bridge over passes than have to deal with 2 lenders simultaneously.

[mac5155]

lol. It sounded like this one was the same lender. She was calling the mortgage broker to ask today. I have a nice down payment, so maybe I'd to an 80-10-10 (with 10% down) as a way to get out of PMI.

[robbiestoupe]

I have an excel spreadsheet if you want it mac. I weighed all the options including closing costs, cash needed, etc. It really made it easy to decide on the type of loan I wanted. I was hellbent on not having PMI, so I was initially hoping for 20% down. But having the extra cash in hand made it better for me to do a 90-10 and pay PMI on the extra 10. I'm hoping in a few years I will be able to get rid of the PMI if the house appreciates.

tldr, look into the closing costs as well. The mortgage may look sweeter, but the amount to close may be vastly different.

[PFiDC]

I hate PMI. Without it my payment is under 1K a month. At least it goes away after something like 20% equity.

[mac5155]

My realtor wants me to "keep my cash" which I get is a good thing, but throwing money away on interest isn't a better alternative at least to me.

[NTP66]

Another drawback to piggyback loans is that it might be difficult to refinance in the future. On top of that, I'm fairly certain that the second loan is usually a variable rate (similar to my wife's condo before we met); I don't think that's ever a good thing.

When we bought our house, we went with a conventional loan and put 5% down, but just refinanced last year for a better rate and no PMI (paid for points, but the return was worth it), and paying the same amount will pay off the house 10 years sooner. We did that through Discover Loans, FWIW, and I was very pleased with the process.

[MrKennethTKangaroo]

My realtor wants me to "keep my cash" which I get is a good thing, but throwing money away on interest isn't a better alternative at least to me.

Keep your cash doesn't make sense.

A higher loan amount means you are paying more interest
A higher loan amount means you are paying more per month

F both of those.

[robbiestoupe]

It makes sense if you want some of that cash to spend on other things: furniture, tools, etc.

You may pay higher interest up front, but you could always pay off extra principle in the future which is what I plan to do. Once the PMI is gone, I'm rolling that dough right into the principle.

[iamjs]

I guess I obviously knew that one. I should clarify, she didn't specifically say it was an 80/20. But said there is a program that offers loans with 0 down and no PMI for specific areas. It sounded like a USDA loan.

my VA home loan was like that.

Got the seller to cover closing, and I'm still coming out 7k under list and about 13k for what similar places listed for.

[malkintent]

@iamjs, was the VA inspection pretty in-line with what usually goes down with FHA? We just did a ton of post-inspection work for a kid that was selling FHA and was part of the wounded warrior project. We did the project for cost (mostly because it was work with a new realtor and they are our bread and butter, but also cause the kid was nice and didn't have a lot of cash), but i felt a lot of the work that needed done was arbitrary bs that even a run-of-the-mill FHA inspection wouldn't make a stink about, but didn't seem to care about obvious plumbing and electrical things I would normally include in a to-sell estimate. We had a ton of paint over caulk work where the caulking was more unsightly (read: black from dirt) than failing sealant.

I got the feeling that the dude didn't know what the **** he was doing more than anything. The inspection listed certain things like "structural failings: joists needed to be sistered at areas of wdi", but myself and a termite guy found no such issues. We even called the guy and he was pretty ambiguous about which joists needed the supplemental support. Me thinks he didn't feel like crawling under the structure to actually do his job.

Just a weird process.

[PFiDC]

We had friends that bought on a VA loan and they had a horrific time with the inspection. They also were required to have flood insurance even though they live nowhere near water.

[tifosi77]

My realtor brought up 80/20 loans and thought I might be a good fit for one. I have a pretty good understanding of the pros, but what are the cons?

Typically, the combined cost of an 80/20 loan is less than a single loan of >80% of the property value with PMI. So you do generally keep more of your monthly take home, even if the interest on the 20 loan is higher. Basically, the only cash you need to buy a house are the closing costs.

Another benefit is that mortgage interest is tax deductible, but mortgage insurance is not. So by eliminating PMI, you're effectively increasing the value of the interest deduction, instead of simply offsetting the insurance spend.

The big downside is taking on one of those loans before a market collapse. If you're early in the mortgage and the market tanks, you're going underwater much more quickly, because you have so little equity in the property. (100% financing)

These loans are best for young people who have sort of just started their careers and haven't had the chance to stock up tens of thousands of dollars in savings, and for people who have the necessary wealth to fund a down payment, but is locked up in investments that they do not wish to liquidate.

[tifosi77]

We had friends that bought on a VA loan and they had a horrific time with the inspection. They also were required to have flood insurance even though they live nowhere near water.

Flood insurance can be more about topography than geography. Was the property in a rain runoff area, like at the bottom of a hill?

[dodint]

We had friends that bought on a VA loan and they had a horrific time with the inspection. They also were required to have flood insurance even though they live nowhere near water.

My VA loan for the home we're in now was awesome. Inspection was a non-issue. No PMI, no downpayment.

Like boss, yes.

[mac5155]

These loans are best for young people who have sort of just started their careers and haven't had the chance to stock up tens of thousands of dollars in savings, and for people who have the necessary wealth to fund a down payment, but is locked up in investments that they do not wish to liquidate.

Which kind of fits my bill to a T. I have ~$30k invested, $15k down payment, and able to afford a larger payment.

[iamjs]

not really related but somewhat since it involves part of the house buying process.

I basically told my apartment management that I would be closing between 12/7 and 12/14 (official date is the latter, but they're trying to get it moved up.) I told them that my plan had me moving out on the 15th, with having the place empty, cleaned, and keys turned over. It's a small place and I already have a living room full of crates. As I'm sitting right now, I'm probably about 40% packed.

No deal, says the management group. They say that as of 1/1/15 all tenants require a 60 day notice instead of the previous 45 day notice. Aside from my monthly check, I don't recall signing anything for them since 2011, which would have been my original tenant agreement. At the risk of me pissing them off and them deciding to screw me over on my deposit, is it worth going to battle over this?

[tifosi77]

Yes, they are likely doing this to withhold your deposit in the first place.

One party cannot unilaterally amend an agreement. They can't make material changes to your lease terms without you at least acknowledging in writing your receipt and acceptance of that change. I mean, PA may be different, but that's a pretty standard tenet of contract law. Check the terms of your lease agreement; often times the mechanism for amending/updating the lease will be spelled out directly, especially if you're talking about a large, professional renting company. (i.e. not renting some ninny's spare bedroom)