Home Buying & Real Estate Thread

[dontbelikethat]

@dontbelikethat Just to let you know that discover FICO score is not used in mortgage lending. My mortgage score is 30 points lower than my credit card score.

Is that because different lenders for different things (credit card, automotive, mortgage,etc.) use different versions/editions of the FICO and there's a specific score for mortgage, credit cards,etc. specifically? Or is it just different companies uses different models?

That latter was my understanding going through this thread and some others, but it was a while ago so my memory is a little hazy...

http://ficoforums.myfico.com/t5/Und...Editions-versions-and-variations/td-p/1197617

For ex. Discover Card FICO uses the TU 08 model, then from what what I remember, I think I saw somewhere that a company like Nissan uses like the Experian 04 model for their automotive financing. So the difference in bureau's & models each bureau uses can cause the variation in scores?

 

[monstar]

If you are buying in California (Bay Area) I would suggest waiting 6 to 8 years. Just simple economics. Even tech workers are finally starting to relocate because of the insane prices. Don't be the clown that bought at the very top of the cycle (unless it is for a family home you plan to live in for 12+ years).

Question for you what makes you say 6-8? The market began recovery in 2012. Doesnt the cycle usually go every 7 years?

Ive been told to wait as well for another 3-4 years. Its just hard to see that bc some pretty drastic things would have to take place to really drive the market down

this is startup heaven and home to some of the most valuable tech orgs in the world and a hotbed for jobs. Aside from companies relocating i dont see what can drive this market back down

 

[capital sb]

@monstar  I see exactly where @ModernDarwin  is coming from tech wise. I was contacted by Google for a position out there , and I straight up told them if they don't have any positions in the DC area I'm not interested...but on the other hand I have a few classmates that accepted jobs out in Cali, so there are still a lot of people that want to be out in that area no matter the cost.

It really is a toss up though. I definitely don't think we have reached out peak just in a 3 year span, who knows how long it will be until the next correction.

 

[crcballer55]

http://dsnews.com/news/05-26-2015/a...dex-shows-mortgage-loans-are-becoming-riskier
[h1]Agency First-Time Buyer Index Shows Mortgage Loans Are Becoming Riskier[/h1]
The April 2015 First-Time Buyer Mortgage Risk Index (FBMRI) for Agency loans increased by nearly a full percentage point year-over-year up to 15.28 percent, indicating that those mortgage loans are moving deeper into the high-risk category, according to data released this week by the American Enterprise Institute (AEI)'s International Center on Housing Risk.

Risk layering is largely responsible for the increase in risk on mortgage loans taken out by first-time buyers, according to AEI. Seventy percent of first-time mortgage buyers in April 2015 had a combined LTV ratio of 95 percent or more and 97 percent of them had a 30-year term. Without substantial home price appreciation, the low down payment and slow amortization makes it likely that these first-time buyers will have very little equity in their homes for many years.

Also contributing to the higher risk among first-time buyers is that approximately one-fifth of them fit the traditional definition of subprime mortgages (a FICO score below 660) and about one-fourth of them had total debt-to-income ratios higher than 43 percent, which is the limit defined by the Qualified Mortgage rule, according to AEI.

"The first-time buyer MRI hit a series high of 15.28 percent in April, moving deeper into the high-risk loan category," said Edward Pinto, co-director of the American Enterprise Institute’s (AEI’s) International Center on Housing Risk. "This growing leverage puts the housing market at risk given interest rates are at historically low levels and American households are facing increasingly sharp swings in income and expenses."

The Agency index for first-time buyers in April (15.28 percent) was 6 and a half percentage points higher than the index for repeat buyers, according to AEI. Repeat mortgage buyers are often less risky because of a smaller share of repeat buyers have a FICO score below 660 and a much smaller share have a combined LTV ratio of above 95 percent.

The First-Time Buyer Mortgage Share Index (FBMSI) increased by 1.1 percentage points year-over-year in April, up to 57.9 percent, which indicated that first-time buyers accounted for 57.9 percent of primary owner-occupied home purchase mortgages with a government guarantee. The combined share of first-time buyers for both government-guaranteed and private sector mortgages also rose in April by full percentage point up to 52.2 percent, according to AEI. Both the combined index and the first-time buyer share index showed little change in the last two years outside of seasonal trends, which was contrary to the findings of the annual National Association of Realtors (NAR) survey issued in November that showed a sharp decline in first-time home buyer share during the same period.

"A recent Urban Institute study of first-time buyers confirms the results we have been reporting for some time," said Stephen Oliner, co-director of AEI’s International Center on Housing Risk. "These results are contrary to the drop in the first-time buyer share shown by the NAR measure."

The overall number of primary owner-occupied purchase mortgages that sent to first-time buyers (the Agency FTB loan count) increased year-over-year for the six-month period from November 2014 to April 2015 by 8 and a half percent up to 577,000. The number was reported at 532,000 for the same six-month period a year earlier.

To see the full April 2015 report from the AEI International Center on Housing Risk, click here.

 

[crcballer55]

http://downpaymentresource.com/

Came across this in an article for Realtors this morning and thought you guys might be interested. It's supposedly a site that shows what down payment assistance programs are available since there are over 1200 throughout the country.

 

[moderndarwin]

Question for you what makes you say 6-8? The market began recovery in 2012. Doesnt the cycle usually go every 7 years?

Ive been told to wait as well for another 3-4 years. Its just hard to see that bc some pretty drastic things would have to take place to really drive the market down

this is startup heaven and home to some of the most valuable tech orgs in the world and a hotbed for jobs. Aside from companies relocating i dont see what can drive this market back down

The basic principles of economics are growth, peak, contract, trough. For investments as large as housing I'd prefer to be purchasing in the contract/trough area as opposed to the growth peak area. However, over the long run it should still slope upwards (unless California has some natural disasters or something to change our trajectory).

Our California housing market of recent is steep gains and sharp drop offs. For me, moreso than usual, I'd really be wary about purchasing now because it is an all out perfect storm right now (so prices should be high/increasing). If you are going to buy and sell in the next 3 to 4 years you should be okay (in my opinion). However, to me, if you want to maximize profit I'd wait until prices and # of houses sold start to take a dip and you could squeeze a lot of extra profit out. In the long run prices should (unless California breaks in half from earthquakes) should increase, but my main interest is in maximizing my return.

Just based on a gut feeling and having a pulse on the reality of work in the Bay Area it makes me feel that eventually interest rates will raise and people will not want to spend as crazy amount of money on houses. The market is being pumped high right now because of all the tech wealth. How long will it last is just a guess - but my guess is that in 6 to 8 years there will be a big drop (for a small period of time (3 to 4 years) and that is when I'd want to buy. It could be a mix of interest rates rising, tech people wanting to move to So. Cal. Texas, etc.

Also, it is the nature of economics that "something" will happen. We can't continue trending upwards. There will another recession at some point and that will drives housing prices down. Any bubble being burst will have that effect. As we are all connected globally the recessions should theoretically be less volatile, but should still occur regardless.

Small edit: I'd look into places that are being "gentrified" like Oakland as the best investment value if I were to buy today. Gentrified areas = better schools = always high house prices.

As the graph shows (SF), there was only about 100k increase if you look at 1987 vs. 2012. In my opinion, there HAS to be a down cycle and if you can save 100k+ on buying it makes sense to wait until it cycles downward.

Lastly, I always have a different mentality about real estate than other investments. The amount of effort involved makes me want a much higher rate of return potential (unless it is for a place for my family to live and not viewed as an investment). Stability for a family >>> money in that regard.

 

[capital sb]

@ModernDarwin  where do you invest at? I have the same mindset as you when it comes to purchasing real estate investments and my personal home. I purchased my home in a pre-gentrified area. To me it makes 0 sense to buy in a gentrified area that used to be considered the hood less than 5 years ago.

My thinking is to buy in area with the most potential to become gentrified. For the DMV people....If trinidad, H street (which is now pushing down Minnesota) , and SE can be gentrified anything can that is within 15 minutes of DC IMO. The investors that were smart enough to invest in these undesirable area are making a killing. Gotta be forward thinking now to take advantage of gentrification.

 

[moderndarwin]

No funds right now - just learning as I've been in school (just finished my Masters) the past few years and am taking the CPA test currently. I'll start work in January and will finally have monies to play the game.

I'm actually still not sure. I am just establishing a strategy and learning about the different ways to invest. My sister has three houses though (1 in the Bay Area in 2008, 2 in Seattle) so I learned a decent amount helping her out back then. The amount of effort involved in purchasing, repairs, renting, etc etc is ridiculous to me though. She wants to retire before 45 (and has a husbands/kid etc) and have them just live off rental income though so I guess it makes sense.

There is a thread on NT that has helped me a bit to learn about my options. I assume that I'll primarily invest in stocks though. Likely, will contribute the max for 401k + Roth IRA for the safety funds and for the rest of my discretionary savings get down with stocks with a diversified set of riskiness

 

[fontaine]

Rill uhstaet...

 

[monstar]

The basic principles of economics are growth, peak, contract, trough. For investments as large as housing I'd prefer to be purchasing in the contract/trough area as opposed to the growth peak area. However, over the long run it should still slope upwards (unless California has some natural disasters or something to change our trajectory).

Our California housing market of recent is steep gains and sharp drop offs. For me, moreso than usual, I'd really be wary about purchasing now because it is an all out perfect storm right now (so prices should be high/increasing). If you are going to buy and sell in the next 3 to 4 years you should be okay (in my opinion). However, to me, if you want to maximize profit I'd wait until prices and # of houses sold start to take a dip and you could squeeze a lot of extra profit out. In the long run prices should (unless California breaks in half from earthquakes) should increase, but my main interest is in maximizing my return.

Just based on a gut feeling and having a pulse on the reality of work in the Bay Area it makes me feel that eventually interest rates will raise and people will not want to spend as crazy amount of money on houses. The market is being pumped high right now because of all the tech wealth. How long will it last is just a guess - but my guess is that in 6 to 8 years there will be a big drop (for a small period of time (3 to 4 years) and that is when I'd want to buy. It could be a mix of interest rates rising, tech people wanting to move to So. Cal. Texas, etc.

Also, it is the nature of economics that "something" will happen. We can't continue trending upwards. There will another recession at some point and that will drives housing prices down. Any bubble being burst will have that effect. As we are all connected globally the recessions should theoretically be less volatile, but should still occur regardless.

Small edit: I'd look into places that are being "gentrified" like Oakland as the best investment value if I were to buy today. Gentrified areas = better schools = always high house prices.

As the graph shows (SF), there was only about 100k increase if you look at 1987 vs. 2012. In my opinion, there HAS to be a down cycle and if you can save 100k+ on buying it makes sense to wait until it cycles downward.

Lastly, I always have a different mentality about real estate than other investments. The amount of effort involved makes me want a much higher rate of return potential (unless it is for a place for my family to live and not viewed as an investment). Stability for a family >>> money in that regard.

First off Thanks for sharing your opinion and insight. Always appreciated and really why i love this thread

You and crc take my reps for that knowledge.

i was thinking of looking at oakland but a lot of the gentrification is strategic. Alpt of the areas younwould want have already started going through it. I jis have a hard time seeing the east like real deep east going through that as the city changes so much. Schools in oakland havent improved that much even as they move to a charter school model like phili did.

But jus my 2 cents

 

[fontaine]

That chart cannot be accurate

 

[moderndarwin]

This chart may be better

 

[dam itz lou]

Gentrification is a b****. We just found out through the realtor that the landlord is selling the property for 2.5M. It's two commercial garages, one with an apt on top of it. We live in the house with a live in basement behind one of the garages. He's been holding off repairs forever. He raised our rent a couple of months ago. I'm sure he had no intention of making any repairs. The other realtor told my GF's mom he was just selling the one garage with the apartment on top of it. Dude doesn't even have the balls to tell us he's selling himself and still hasn't. From what the realtor told me, investors are looking to knock it down and build a building with 10+ apartments.

I know I could of payed for the repairs and deducted it from the rent but decided to deal with it. I was thinking of suing him for a portion of the rent for every month I've lived here. Do I have a shot ?

 

[crcballer55]

Habitability repairs? Do you have any formal requests in writing? Where do you live?

 

[ace rawstein]

Are there any programs that could be used besides FHA loans for first time home buyers?

The house limit in Houston texas is 326k with FHA. We want to buy in the city and the lowest we have come across is 350k.

We have fairly young credit but according to our Fico scores we will be able to qualify for a mortgage. But when it comes to the down payment, that is were things get confusing for me.

I used that down payment resource link that was posted above and after entering our info it stated that 0 programs were available.

I am more than likely just going to have to come up with a down payment on my own because of my income? 10% on a 350k house is unrealistic to me if i am trying to purchase sooner than later..

 

[crcballer55]

Are there any programs that could be used besides FHA loans for first time home buyers?

The house limit in Houston texas is 326k with FHA. We want to buy in the city and the lowest we have come across is 350k.

We have fairly young credit but according to our Fico scores we will be able to qualify for a mortgage. But when it comes to the down payment, that is were things get confusing for me.

I used that down payment resource link that was posted above and after entering our info it stated that 0 programs were available.

I am more than likely just going to have to come up with a down payment on my own because of my income? 10% on a 350k house is unrealistic to me if i am trying to purchase sooner than later.

.

Contact a couple lenders. They'll know any available programs. You can also receive something like $10k/yr towards a down payment as a gift. (don't quote me on that though).

Like others have said earlier though. Don't be in a huge hurry to buy just because you want to. It's one of the biggest material responsibilities there is. If you don't have adequate resources it can turn out to be a disaster.

Try living as frugally as possible and saving a few hundred a month towards your goal.

 

[capital sb]

Are there any programs that could be used besides FHA loans for first time home buyers?

The house limit in Houston texas is 326k with FHA. We want to buy in the city and the lowest we have come across is 350k.

We have fairly young credit but according to our Fico scores we will be able to qualify for a mortgage. But when it comes to the down payment, that is were things get confusing for me.

I used that down payment resource link that was posted above and after entering our info it stated that 0 programs were available.

I am more than likely just going to have to come up with a down payment on my own because of my income? 10% on a 350k house is unrealistic to me if i am trying to purchase sooner than later.

.

There are conventional loans with as little as 3.5% down. You can look into those, don't let people fool you into thinking you need 20% down to buy a house or you are not ready.

Especially with a lot of people receiving gift money as deposits, that's the part they don't mention.

 

[pdino]

Are there any programs that could be used besides FHA loans for first time home buyers?

The house limit in Houston texas is 326k with FHA. We want to buy in the city and the lowest we have come across is 350k.

We have fairly young credit but according to our Fico scores we will be able to qualify for a mortgage. But when it comes to the down payment, that is were things get confusing for me.

I used that down payment resource link that was posted above and after entering our info it stated that 0 programs were available.

I am more than likely just going to have to come up with a down payment on my own because of my income? 10% on a 350k house is unrealistic to me if i am trying to purchase sooner than later.

.

Depending on your income there are several down payment assistance programs for every state, county, and usually city. Simply google "down payment assistance" for the areas you are targeting. Find a good eligible lender, and go from there.

Here are the 2 programs I found for Texas from State website(they depend on income and county): https://www.tdhca.state.tx.us/homeownership/fthb/down-payment-assistance.htm
[h2]My First Texas Home – TMP 79 DPA PLUS[/h2]
1. TDHCA is pleased to kick off the New Year and 2015  with the announcement of an additional down payment assistance option.   Effective Tuesday January 6th,  mortgage loans originated under the TMP-79 program will provide the borrower with a 30-year fixed interest rate mortgage loan and assistance, at the option of the homebuyer, in an amount equal to  5% of the mortgage loan or $8,000.  The new $8,000  down payment assistance option is being made available for those borrowers purchasing lower priced homes that need additional financial assistance in order to make homeownership a reality. To learn more about the program and eligibility requirements, select the Buyers tab  or contact one of our participating lenders. To see all rate and assistance options available, visit the Available Funds  page.

2.My First Texas Home (TMP 79)

My First Texas Home’s "Taxable Mortgage Program" (TMP-79) offers more competitive fixed interest and annual percentage rates while providing down payment and closing cost assistance of 5 percent of the mortgage loan.

These are either grants and do not have to be paid back, or a "silent" second mortgage that doesn't kick in until the first one is through.

Check here for the County/City you want for additional programs: http://portal.hud.gov/hudportal/HUD?src=/states/texas/homeownership/buyingprgms

 

[ace rawstein]

Thanks for all the feedback! I will def look into the conventional loans further.

I am going to have to revisit those texas programs that were posted because I believe i previously have viewed their sites and saw how it was mostly tied to income and home sales listing.

My wife and I make around 115k combined so it seems that disqualifies us from most of those type of programs.

Buying a home is a huge financial responsibility that I wanted to hold off on but I am turning 30 at the end of the year and churning out money to apartments is no longer that wise to me, especially when mortgages are similarly priced when it comes to monthly payments.

 

[dam itz lou]

So my GF & I are going to go visit a Century 21 tomorrow. I just saw theyre the listing agency for one of the properties we're interested in. Would this create a conflict of interest ?

 

[crcballer55]

So my GF & I are going to go visit a Century 21 tomorrow. I just saw theyre the listing agency for one of the properties we're interested in. Would this create a conflict of interest ?

Agents represent both sides all the time. However, their fiduciary duty is to the seller first and foremost.

Regarding buying with your GF. Do you guys have a plan written out for what happens with the house should something happen between you two?

 

[dam itz lou]

Agents represent both sides all the time. However, their fiduciary duty is to the seller first and foremost.

Regarding buying with your GF. Do you guys have a plan written out for what happens with the house should something happen between you two?

No. We've been together almost 9 years but I guess it's definitely something I have to take into account. I'd guess we'd have to get a lawyer involved ?

Did mortgage rates rise recently ?

 

[crcballer55]

 

Agents represent both sides all the time. However, their fiduciary duty is to the seller first and foremost.

Regarding buying with your GF. Do you guys have a plan written out for what happens with the house should something happen between you two?

No. We've been together almost 9 years but I guess it's definitely something I have to take into account. I'd guess we'd have to get a lawyer involved ?

Did mortgage rates rise recently ?

Yes, or just go to the courthouse and make it official. Chances are if you've been together that long, most states will include you under marriage laws anyways if you've been combining households that long.

Yes, rates have been going up for about 6 weeks now. They bottomed out about a year ago and are only expected to go up. The Fed is talking about raising interest rates at their fall meeting.

 

[crcballer55]

http://www.inman.com/2015/03/30/com...a-new-roadblock-to-closing-a-deal-on-a-house/

Come August, there will be a new roadblock to closing a deal on a house

New integrated disclosure forms will throw a wrench in the homebuying works

There’s a shift coming that’s about to wreak havoc at the closing table for agents and clients alike.

On Aug. 1, 2015, the new TRID (TILA-RESPA Integrated Disclosure) forms replace the HUD-1 Settlement and Good Faith Estimate. The Consumer Financial Protection Bureau’s mission is to rebuild the mortgage banking landscape so that the industry will avoid the type of conditions that led to the Great Recession. The CFPB replaces the Department of Housing and Urban Development for oversight because HUD did not provide specific consumer protection.

Everyone agrees that increasing consumer protection is a desirable goal. Nevertheless, the unforeseen ripple effects from these changes could seriously disrupt how the closing process is conducted.

A recent Inman article  outlined one of the most serious issues that will result from the new changes handed down by the CFPB: The new rules will require a new three-day waiting period when there are any changes in the TRID forms. The recommendation is to allow an extra 15 days to close your transactions. In other words, 30-day contracts will now require 45 days, and 60-day contracts will require 75 days.

Everyone in the industry is super stoked about this....

 

[hoosierdaddy317]

 
http://www.inman.com/2015/03/30/com...a-new-roadblock-to-closing-a-deal-on-a-house/

Come August, there will be a new roadblock to closing a deal on a house

New integrated disclosure forms will throw a wrench in the homebuying works

There’s a shift coming that’s about to wreak havoc at the closing table for agents and clients alike.

On Aug. 1, 2015, the new TRID (TILA-RESPA Integrated Disclosure) forms replace the HUD-1 Settlement and Good Faith Estimate. The Consumer Financial Protection Bureau’s mission is to rebuild the mortgage banking landscape so that the industry will avoid the type of conditions that led to the Great Recession. The CFPB replaces the Department of Housing and Urban Development for oversight because HUD did not provide specific consumer protection.

Everyone agrees that increasing consumer protection is a desirable goal. Nevertheless, the unforeseen ripple effects from these changes could seriously disrupt how the closing process is conducted.

A recent Inman article  outlined one of the most serious issues that will result from the new changes handed down by the CFPB: The new rules will require a new three-day waiting period when there are any changes in the TRID forms. The recommendation is to allow an extra 15 days to close your transactions. In other words, 30-day contracts will now require 45 days, and 60-day contracts will require 75 days.

Everyone in the industry is super stoked about this....

Good move by the CFPB somewhat improves the efficiency. 15 day wait sucks but protects the consumer at the end of the day to ensure theyre not getting dicked over.