Home Buying & Real Estate Thread

[SneakerProSr.]

My boss quit March 23rd I took his job and the people who have been replacing me have been incompetent.

I'm getting married July 17 the closing date on my house is July 31 and my kid is due September 19.

I wouldn't wish this on anyone

 

[crcballer55]

My boss quit March 23rd I took his job and the people who have been replacing me have been incompetent.

I'm getting married July 17 the closing date on my house is July 31 and my kid is due September 19.

I wouldn't wish this on anyone

 

[crcballer55]

 

 If you're on a 5 year plan to buy, first, get debt free. It sucks having a mortgage while still having other outstanding debt. Second, get an emergency fund. As with debt, it will suck the life out of you when an emergency happens and you have to rack up debt to fix it. Plan ahead, because 80% of people will have a major financial setback within any 10 year period. Third, rent as cheap of an apartment/home as you can comfortably live in with the goal of buying a home. Lastly, set aside as much as possible for your down payment in a good mutual fund (or 3) with good long term track records.  Historically the stock market has averaged a 10% return annually throughout its history so you should out pace housing in that case since the housing market as a whole returns something like 5-7% annually.

thanks for the info.

I suppose buying a Silverado isn't the smartest idea.

Gonna sit down one of these days and really look at my finances. Gonna start putting into my pension as well in January so that's gonna hit me a bit.

Ya, agreed. New cars kill personal finances worse than almost anything.

 

[tvobach]

I heard about some thing where when you buy a house, you don't pay mortgage for the first two months...I think it's a bunch of bs...is this true?

 

[crcballer55]

 
I heard about some thing where when you buy a house, you don't pay mortgage for the first two months...I think it's a bunch of bs...is this true?

Any time you buy or refinance, you don't have to pay anything the first month you're in there. But any time someone advertises "pay nothing for the first xx months" it's just a trick to tack on additional interest to the backend of the payment.

 

[SneakerProSr.]

Idk if I'm ever buying a new car the rest of my life.

 

[capital sb]

I heard about some thing where when you buy a house, you don't pay mortgage for the first two months...I think it's a bunch of bs...is this true?

I believe you are talking about the "grace" period when you first get a mortgage if you would call it that. I close mid September and my first payment won't be due until November. This would be the 2 months "free".

 

[SneakerProSr.]

Your first mortgage payment is due the first month after you close.

So if you close August 5th your first payment ain't due until October 1.

If you close August 31st that payment is still due October 1

 

[capital sb]

That's not how my friends mortgage was he closed after October 15th , I think he said October 18th last year and his first payment was December 1st.

"After closing, your first mortgage payment comes due one full month after the last day of the month in which your mortgage closed. Using the April example again, if you close April 15 or April 29, your first mortgage payment is due on June 1."
https://www.lendingtree.com/mortgage/best-time-of-the-month-to-close-article

 

[slicknick951]

If i recal correct from my talking with the banker.

In your downpayment/closing costs that first month is worked in there somewhere thats why you dont pay till the next month

 

[sneaksoy]

If i recal correct from my talking with the banker.

In your downpayment/closing costs that first month is worked in there somewhere thats why you dont pay till the next month

This is true. I closed on June 1st and part of my closing costs included an interim rent charge which essentially was just the interest rate of my loan x30 days (with my first mortgage payment due July 1). I think my true "first payment" was due August 1 to US Bank because my loan originator sold the loan to USB but I had to pay one monthly payment to my local bank (the originator).

Sorry if that doesn't make sense, kind've a weird thing to explain through type lol.

 

[crcballer55]

Most of you guys in here have been pretty smart and taken out a fixed rate loan. But for anyone on the fence... PLEASE stay away from everything on this list.

http://www.fool.com/investing/gener...-comeback-should.aspx?source=eogyholnk0000001

While applying for a mortgage recently, I was rather surprised at some of the loan options I was offered. Banks are now offering interest-only mortgages, balloon loans, and stated-income loans, and that's just what I found in my brief shopping experience. And while I wound up going with a traditional fixed-rate mortgage, the resurgent availability of these loan products definitely caught my attention. To give you an updated picture of today's mortgage market, here's a rundown of the types of loans that were widespread in the mid-2000s, whether they're available today, and whether we should be concerned about a repeat of the crash.

Which mortgage types are making a comeback?
Here are some of the exotic mortgage loans that were common before the financial crisis, and whether they exist today.

1. Interest-only mortgages: Essentially, these loans require borrowers to pay only the interest for a certain number of years, while the principal stays constant. After the interest-only period is up, the monthly payments will rise and the principal balance will start to be paid down.

These mortgages are definitely making a comeback. Generally, an interest-only mortgage starts with a relatively low interest rate that begins to adjust after a set period. Once the principal repayment starts to kick in, typically in 10 years, the monthly payments drastically increase. In many cases they double or more.

2. Negative amortization loans: These are similar to an interest-only loan, except the payments aren't even enough to cover the interest. So instead of being paid off over time, the principal balance grows as a result of accumulation of unpaid interest. For example, with a negative amortization loan, you could buy a $250,000 house, make your mortgage payments as agreed for several years, and then end up owing $300,000. It's easy to understand how many borrowers got themselves into trouble with this kind of mortgage. Thankfully, these are virtually extinct today.

3. Balloon mortgages: A balloon mortgage amortizes over a standard 30-year period, and the payments do chip away at the principal balance over time. However, after a set amount of time (seven years is common), the entire remaining balance is due. These loans come with lower interest rates than standard mortgages, but they have tremendous risk related to the borrower's ability to refinance or sell the home.

Balloon mortgages can be found today and are typically used by buyers who plan to stay in their homes for just a few years, to keep the monthly payments as low as possible.

4. "No-doc" and "Low-doc" loans: In the run-up to the financial crisis, there were several types of "limited documentation" loans. Most famously, there were the NINJA loans -- No Income, No Job or Assets -- which required nothing but a credit score. Then there were loans that required only asset verification but no income documentation. And finally, there were "stated income" loans, which still required asset and credit verification but took the borrower's word when it came to income.

There are stated income loans around today, used principally by self-employed borrowers. Every lender I could find requires a 20% down payment, and you can bet the lender will take a closer look at your bank statements and other asset verification.

5. Cash-out refinancing and home-equity loans: These never really went away, but banks' standards are much higher today, both in terms of credit and the percentage of the home's value borrowers can take out. Today, most of these loans and lines of credit require a loan-to-value of no more than 80% including the new loan, whereas before the crisis it wasn't uncommon to see home-equity loans or cash-out refinancing loans made for 110% of a home's value, or more.

6. Option ARM: These were perhaps the most dangerous type of loan made before the financial crisis. Essentially, the borrower could choose how much to pay each month on the loan for the first two or three years, even if it didn't cover the interest. During 2005 and 2006, approximately 10% of all new mortgages were option ARMs, and many borrowers found themselves owing hundreds of thousands of dollars more than their homes were worth once the market collapsed and the "teaser" period ended. Fortunately, these are a thing of the past.

7. Subprime loans: This is a broad term that refers to any loan made to borrowers that don't meet traditional, or "prime" credit standards. Subprime borrowers still have options today, like FHA mortgages, but lenders take a closer look at the qualifications than they used to.

Still, subprime loans represent a large percentage of potential homebuyers, so we definitely need responsible subprime lending. As long as subprime loans are made to borrowers who have the ability to pay them back, there's nothing inherently wrong with them, despite the negative image associated with the word "subprime."

 

[capital sb]

Was approved for my loan today super excited about that. Just have to rate lock then wait for closing 

@crcballer55  I heard about those no doc/ low doc loans on a few BP podcast seems like a lot of investors took advantage of these before the crash.

 

[pdino]

How long after you started escrow until you got your loan approved. Im in my first week of escrow, seems like rates are steadily climbing

 

[capital sb]

@Pdino  I submitted my loan app on 5/28 technically I was approved on 7/2, but they sent it to me this morning due to the holiday.

Yeah I'm not sure when I am going to lock, I am waiting for another quick drop, but if that doesn't happen I guess I will lock by next Monday. 

Edit: Rate locked at 3.75% and couldn't go conventional, would have cost me an additional 10K-15K out of pocket at closing.

With the FHA loan I will getting back 3K at closing.

I might just refi with Navy Federal who knows....it would take about 6.5 years to recoup the cost for conventional.

By then I could possibly be renting this home, and purchasing another.

 

[akuratl02]

I was recently in here requesting advice about renovations and renting homes out, but now we decided to sell the family house.

Is it true that we can avoid capital gains by placing the house in the name of the trust? I would strictly be reinvesting the funds and not utilizing it for consumption. Premium price would be $725K but we'll likely settle for $650K.

I want to get into real estate ... I am located in NYC, but would like to start flipping properties. Can anybody advise books I can read, or maybe how they started .. Initial investment? The good, the bad ... Is this a sellers market?

I am totally new, but willing to listen. Thanks!

 

[socalkid]

I was recently in here requesting advice about renovations and renting homes out, but now we decided to sell the family house.

Is it true that we can avoid capital gains by placing the house in the name of the trust? I would strictly be reinvesting the funds and not utilizing it for consumption. Premium price would be $725K but we'll likely settle for $650K.

I want to get into real estate ... I am located in NYC, but would like to start flipping properties. Can anybody advise books I can read, or maybe how they started .. Initial investment? The good, the bad ... Is this a sellers market?

I am totally new, but willing to listen. Thanks!

If you are reinvesting your proceeds you can do a 1031 tax deferred exchange. As long as the property was not a primary residence. it has to be a investment property/ business.
You must buy a similar property of equal or greater value.

To start you can browse through the biggerpockets website/forum. They provide great info for people starting out in RE Investing

Its a sellers Market
inventory is low = prices going up which benefit the sellers.

 

[capital sb]

Just like SoCalKid said visit Bigger Pockets website. Listen to the podcast, read the blog, and get active on the forums. All the information you need is there.

 

[dathbgboy]

Any advice for somebody who wants to own within the next 5 years but has a lot of debt and little finances? Wife and I want to buy within the next 5 years but I have student loans out the wazoo, even defaulted on some. Daycare expenses, car payments, etc. Only brining in about $60k combined Help me get right bruhs.

 

[NewWave90]

I would get out of debt before you buy, in return you'll have the money you were spending on debt to build up some funds. Since you've defaulted you'll have to clean up your credit as well depending on how much debt you have 60k per year its possible.

 

[dathbgboy]

I would get out of debt before you buy, in return you'll have the money you were spending on debt to build up some funds. Since you've defaulted you'll have to clean up your credit as well depending on how much debt you have 60k per year its possible.

I hope so. My wife is looking to go to PA school so that should help (they avg $85k/yr) not to mention I'm building my project management and web dev portfolio.

I plan on calling up Navient/Sallie Mae when I have the finances and negotiating w/ em. I'm smarter about debt and finance now so I won't get trapped into paying a crazy amount of money in interest fueling a loan w/ "imaginary" money.

I see all you cats younger than me, my age, and some older than me flourishing in the real estate realm and I aint tryna get left behind Glad to see our generation being smart about the things that put GenX in a bind.

 

[NewWave90]

It is good, but difficult in this debt fueled system you should be good, but so you know federal insured loans are not negotiable only the late payment fees and other fees they charge

 

[dathbgboy]

It is good, but difficult in this debt fueled system you should be good, but so you know federal insured loans are not negotiable only the late payment fees and other fees they charge

Oh, I know that. Uncle Sam doesn't negotiate w/ student loan recipients I'm not even really concerned w/ them because I consolidated already and have that situated, it's my private loans that I'm concerned w/. I know I can negotiate w/ them.

 

[crcballer55]

Any advice for somebody who wants to own within the next 5 years but has a lot of debt and little finances? Wife and I want to buy within the next 5 years but I have student loans out the wazoo, even defaulted on some. Daycare expenses, car payments, etc. Only brining in about $60k combined

Help me get right bruhs.

Get out of debt, drop the car note and downgrade the car for a while until you clean up the mess. If you can, work an extra side job for a couple hours a week until you get the debts paid off. An emergency fund is CRUCIAL when buying a house too. Things will always break and going back into debt is the last thing you want to do in those types of situations. I bought before we had a dedicated EF and still had debt and it was stressful when I lost my job 5 months after moving in.

 

[akuratl02]

If you are reinvesting your proceeds you can do a 1031 tax deferred exchange. As long as the property was not a primary residence. it has to be a investment property/ business.
You must buy a similar property of equal or greater value.

To start you can browse through the biggerpockets website/forum. They provide great info for people starting out in RE Investing

Its a sellers Market
inventory is low = prices going up which benefit the sellers.

Much appreciated and repped. I have to look into the 1031 deferred method, because 50% of the sale will surely sit in our securities portfolio, just for the purpose of making sure gramps is good. I'll likely have $200K to work with for starters ...

I will browse through biggerpockets website .... Can't wait to start doing HW and brainstorming with people like yourself.

Thank you!