Home Buying & Real Estate Thread

[capital sb]

what are the options for someone who wants to buy property but does not want to pay interest?

is it cash deal all up front or are there any other ways to do it?

Cash only purchase. From what I have learned interest is apart of the business, I haven't heard of anyway around it beside buying cash.

Even seller financing will have interest. Maybe @crcballer55  can provide more information.

 

[Fozz]

 
@SneakerPro  same here man close to 20K in equity already 

.

@Fozzy Badfeet  imo 20% down is a thing of the past for first time home buyers in a lot of markets (350K-700K starter homes) UNLESS your being gifted most of the 20% which I know a lot of people are. They like to leave this fact out lol.

Go FHA 3.5% down and even some Convention loans are as low as 3.5% down, but most require at least 5% down.

FHA- Government backed sub prime loan you pay a Premium Mortgage Insurance (PMI) for the life of the loan (.85% of the total loan per month).

Conventional - Standard prime loan you pay Mortgage Insurance (MI) until your Loan to Value (LTV) hits 78% , the MI depends on your credit score.

Be aware that your mortgage scores are much lower than your credit and auto scores. My mortgage scores were 30 points lower than my credit card scores.

You can purchase your mortgage FICO scores at myFico.com when you are close to buying. $20 per bureau or $60 for all 3, best to get all 3 because you need to know your middle score.

Awesome. Thanks for the info...I read thought that it isn't good to go with a FHA because of the PMI payments? But I guess it depends on the homeowner?

 

[capital sb]

 
Awesome. Thanks for the info...I read thought that it isn't good to go with a FHA because of the PMI payments? But I guess it depends on the homeowner?

All FHA loans have PMI payments no matter what your credit is. Your interest rate is the same no matter what your credit is ( min of >640) .

For Conventional loans your interest rate and MI depends on your credit 750+ guarantees best rates.

Unless you plan on refinancing from FHA to Conventional within 6 months after closing you will probably end up with a wash monthly payment wise because interest rates are going up.  Honestly as of right now it is best to go Conventional, because the MI is cheaper and it drops off once you hit 78% LTV.

FHA max seller closing assistance is 6%. Conventional max seller closing assistance 3%.

I needed the down payment & seller closing assistance so I had to go FHA. I am still trying to figure out if I will refi to Conventional within 6 months after closing. If it is greater than $200/mo difference I might do it.

 

[crcballer55]

 

what are the options for someone who wants to buy property but does not want to pay interest?

is it cash deal all up front or are there any other ways to do it?

Cash only purchase. From what I have learned interest is apart of the business, I haven't heard of anyway around it beside buying cash.

Even seller financing will have interest. Maybe @crcballer55  can provide more information.

Yes. Cash is your only option unless someone wants to just give you a home. Unless you're in the military and have a good story then your chances are pretty much zero.

Even owner financing will have interest. Think about it. Why would someone take the risk on you by loaning their money and not earning anything on it?

Why are you against paying interest?

 

[bigpat630]

So if you put 5% down, you avoid PMI? First time buyer possibly. Got a new job and was going to rent but my real estate buddy said I should consider buying. Rent amount is the same as mortgage probably.

 

[copped]

Yes. Cash is your only option unless someone wants to just give you a home. Unless you're in the military and have a good story then your chances are pretty much zero.

Even owner financing will have interest. Think about it. Why would someone take the risk on you by loaning their money and not earning anything on it?

Why are you against paying interest?

personal belief against interest, giving or taking...

 

[anaturalwonder]

@BigPat630

You're more likely going to pay that PMI. Usually, if a borrower is unable to put at least 20% down, lenders will look at the loan as a riskier investment and will require a PMI payment.

By the way, I just finished my real estate courses, and I'm taking my exam to become a Sales Agent here in California on Friday. I'd love to share my knowledge that I've learned within the past year of my real estate education, so please feel free to shoot away and ask any questions!

Wish me luck NT!

 

[capital sb]

So if you put 5% down, you avoid PMI? First time buyer possibly. Got a new job and was going to rent but my real estate buddy said I should consider buying. Rent amount is the same as mortgage probably.

No. You put 5% down on a conventional loan. You will pay MI until your Loan to Value( LTV) reaches 78%, for example:

Purchase home for 100K

Put down 5%           (5K)

                            --------

LTV 95%                 95K

When you continue to pay the mortgage you pay down the loan to value to 78%, and if you factor in equity then get the house reappraised  (won't use this in the example). 

So once you hit 78K out of the 100K your LTV is 78%. You contact your lender and ask for the MI to be removed from your mortgage. I believe this process takes a few months.

Once the MI is removed your payment will now be about $100-$250 cheaper depending on cost of the MI.

If you just put down the 20% in full you will not ever have MI. Unless you can secure a loan that doesn't have MI no matter what the DP is.

Navy Federal and NASA federal offer these type of 5% down loans with no MI.

 

[pdino]

Fha has pmi, you can purchase with only 3.5 percent down though. You can refinance after 6 months, but you take whatever the new mortgage rates are. Interest is 100 percent tax deductible, that's why they are great tax shelters..

 

[bigpat630]

Thanks fellas. So much info, kinda overwhelming.

 

[Fozz]

Thanks fellas. So much info, kinda overwhelming.

It is. I'm on the same boat as you brosef.

 

[bigpat630]

Maybe I can get some feedback from the vets in here. My friend says I can do/afford it. Here is a quick snapshot.

Make 55k annually.
Credit score is 739.
Have 10k saved for down.
No debt except student loan.

My friend says I should look for a small condo in the 150-175 k range. Doable? He broke down the numbers and I think I can afford the monthly payment.

 

[NewWave90]

Let's say your parents give you $25k for a downpayment is that gonna be subject to a gift tax?

anything over 13k is subject to gift tax per individual

 

[dathbgboy]

Maybe I can get some feedback from the vets in here. My friend says I can do/afford it. Here is a quick snapshot.

Make 55k annually.
Credit score is 739.
Have 10k saved for down.
No debt except student loan.

My friend says I should look for a small condo in the 150-175 k range. Doable? He broke down the numbers and I think I can afford the monthly payment.

Any car payments? u can use Excel to play around w/ payments using the pmt formula to see what you're comfortable w/ and the interest rates (which is tough since u really don't know) U also have to take into account condo fees, taxes, etc. Another thing, always think about if you lose your job, would it be something hard to keep up w/

 

[NewWave90]

Maybe I can get some feedback from the vets in here. My friend says I can do/afford it. Here is a quick snapshot.

Make 55k annually.
Credit score is 739.
Have 10k saved for down.
No debt except student loan.

My friend says I should look for a small condo in the 150-175 k range. Doable? He broke down the numbers and I think I can afford the monthly payment.

30 year mortgage or 15 year

 

[bigpat630]

Any car payments? u can use Excel to play around w/ payments using the pmt formula to see what you're comfortable w/ and the interest rates (which is tough since u really don't know) U also have to take into account condo fees, taxes, etc. Another thing, always think about if you lose your job, would it be something hard to keep up w/

Car is paid off. I work for LA County, job is pretty secure.

 

[capital sb]

So you make 55K annually 4,583/ mo before taxes. How much are your student loans per month? Do you have any credit card debt? If so your minimum payment will be factored. These amounts will be factored into your debt to income (DTI) ratio .

To qualify for a conventional loan your max DTI (debt + mortgage payment / monthly income ) is 43% - 45%, so your max debt per month + mortgage payment  is around $1970 - $2062.

In the 150K-175K range your mortgage (P&I, MI, taxes, and insurance) will be between $1100 - $1300. Mortgage lender wise you will be approved, but are you comfortable with those prices?

I think the general rule is you don't want your rent/mortgage to be more than 30% of your monthly income.

I used the Zillow mortgage calculator 150K and 175K home at 5% interest (future rates). Play around with it.

http://www.zillow.com/mortgage-calculator/

 

[anaturalwonder]

So if you put 5% down, you avoid PMI? First time buyer possibly. Got a new job and was going to rent but my real estate buddy said I should consider buying. Rent amount is the same as mortgage probably.

 
So you make 55K annually 4,583/ mo before taxes. How much are your student loans per month? Do you have any credit card debt? If so your minimum payment will be factored. These amounts will be factored into your debt to income (DTI) ratio .

To qualify for a conventional loan your max DTI (debt + mortgage payment / monthly income ) is 43% - 45%, so your max debt per month + mortgage payment  is around $1970 - $2062.

In the 150K-175K range your mortgage (P&I, MI, taxes, and insurance) will be between $1100 - $1300. Mortgage lender wise you will be approved, but are you comfortable with those prices?

I think the general rule is you don't want your rent/mortgage to be more than 30% of your monthly income.

I used the Zillow mortgage calculator 150K and 175K home at 5% interest (future rates). Play around with it.

http://www.zillow.com/mortgage-calculator/

Great info!

 

[bigpat630]

So you make 55K annually 4,583/ mo before taxes. How much are your student loans per month? Do you have any credit card debt? If so your minimum payment will be factored. These amounts will be factored into your debt to income (DTI) ratio .

To qualify for a conventional loan your max DTI (debt + mortgage payment / monthly income ) is 43% - 45%, so your max debt per month + mortgage payment  is around $1970 - $2062.

In the 150K-175K range your mortgage (P&I, MI, taxes, and insurance) will be between $1100 - $1300. Mortgage lender wise you will be approved, but are you comfortable with those prices?
I think the general rule is you don't want your rent/mortgage to be more than 30% of your monthly income.

I used the Zillow mortgage calculator 150K and 175K home at 5% interest (future rates). Play around with it.
http://www.zillow.com/mortgage-calculator/

Credit card debt will be gone in the next month or so. Been staying at my parents house to pay it down. Student loan payment is $350 monthly. $14k total. $1300 I can do. My gf would move in with me and she would assist in the payment, so that's extra.

 

[da r entertainment]

Let's say your parents give you $25k for a downpayment is that gonna be subject to a gift tax?

Gift tax? Never heard of that, but for the loan processing they would just need to write a gift letter and say it is a gift and no expectation of repayment.
Also they need to be able to show where the money came from 401k, savings, etc.

I thought anything over $10K is subject to being taxed. I could be wrong though.

 

[capital sb]

1. 
   The Internal Revenue Service announced the 2015  estate and gift tax limits today, and the federal estate tax  exemption rises to $5.43 million per person, and the annual gift  exclusion amount stays at $14,000.Oct 30, 2014

Crazy can't even give a gift without it being taxed.

 

[crcballer55]

Maybe I can get some feedback from the vets in here. My friend says I can do/afford it. Here is a quick snapshot.

Make 55k annually.
Credit score is 739.
Have 10k saved for down.
No debt except student loan.

My friend says I should look for a small condo in the 150-175 k range. Doable? He broke down the numbers and I think I can afford the monthly payment.

What part of LA are you in that you can get a $175k condo? Seems pretty cheap to me.

Do you have an emergency fund after the $10K too?

 

[dathbgboy]

Let's say your parents give you $25k for a downpayment is that gonna be subject to a gift tax?

Gift tax? Never heard of that, but for the loan processing they would just need to write a gift letter and say it is a gift and no expectation of repayment.
Also they need to be able to show where the money came from 401k, savings, etc.

I thought anything over $10K is subject to being taxed. I could be wrong though.

Gift tax is $14k.

 

[bigpat630]

What part of LA are you in that you can get a $175k condo? Seems pretty cheap to me.


Do you have an emergency fund after the $10K too?

I work in LA but the places he's been looking at are in the San Fernando valley area.

After the 10k, nope. I need to save for that also. What's a good fallback amount?

 

[dathbgboy]

1. 
   
   The Internal Revenue Service announced the 2015 estate and gift tax limits today, and the federal estate tax exemption rises to $5.43 million per person, and the annual gift exclusion amount stays at $14,000.Oct 30, 2014
   
   
   
   

Crazy can't even give a gift without it being taxed.

Which is ironic since this country went to war w/ Great Britain for being taxed too much.