how much should i save before even THINKING about homes?

[thapeopleschamp]

WOW,i need to drop my standards....
but at least i'll know what to save up when i DO find one...
i figure,when i DO buy a house...
IM GONNA LIVE THERE FOREVER... FOREVER EVER,FOREVER EVER....

and im far from balling... ive just been laid off and had alot of time to watch HGTV....

i wish we had a "home and home repairs" thread...

i know ALOT of you goons watch DESIGN STAR and other HGTV shows... lol

 

[wawaweewa]

20% + at least 2 years worth of mortgage payments.

 

[lazyj10]

First time home buyer....I wouldn't put 10% down, unless required. Look for a FHA.

Also, negotiate closing cost to be paid for by the seller....

Learn the property taxes in your state/county.

The down payment check is one of the worst-best moments of your life. Obviously great because you're on the way home ownership (mortgage interest deductionFTW) however, bad because no matter what, seeing those funds drawn on your account hurt.

Be realistic on how long you plan on staying in a place, that should help dictate your loan and down payment.

 

[wawaweewa]

Originally Posted by LazyJ10

First time home buyer....I wouldn't put 10% down, unless required. Look for a FHA.

Also, negotiate closing cost to be paid for by the seller....

Learn the property taxes in your state/county.

The down payment check is one of the worst-best moments of your life. Obviously great because you're on the way home ownership (mortgage interest deduction FTW) however, bad because no matter what, seeing those funds drawn on your account hurt.

Be realistic on how long you plan on staying in a place, that should help dictate your loan and down payment.

Yeh. Good point.

If you don't plan on eventually owning the property and home outright then no need to shell out for a down payment.
Although, I'd think it'd be virtually impossible to find a 0 down payment home loan these days.

 

[lawdog1]

I would agree that your goal should be to have 20% saved, plus some extra. That's not the way I did it though. I only put down 10%. The housing prices onthe Westside of Los Angeles were just too high for me and wife to come up with 20%. Rather than PMI, we have two mortgages on the house. Its not too badbecause at the time we bought, the interest rates were pretty favorable. Also, as someone mentioned, the interest on both mortgages is tax deductible. Still,in an ideal world, I would have put down 20%.

I would stress what other have said about not rushing into a home purchase. It is a lot of work. If you have an older home like I do, there is always somethingto fix or some improvement you want to make, so the costs of home ownership definitely don't end with your mortgage. You want to make sure that you have anice cushion between your monthly income and your monthly expenses even after you buy your home.

 

[nationaltruckerdave]

Originally Posted by Freshsince1982

Aim for 20%

 

[lazyj10]

What's PMI amount to as a percentage of your mortgage?

I forget what BS BofA mortgage I had (no fees or something) they hide the PMI in it. It doesn't amount to much.

I'm pretty sure in CA, they're unsecured loans...though I don't agree w. walking away on a ethical basis...it's a choice a person may need tomake.

I put down a bit under 10% in 2007. Luckily it was a short sale, so the equity I had had somewhat more of a realistic chance of being recouped.

If life allows me, I'd love to keep the place and eventually turn it into a rental since it's near mass transit and the neighborhood is adding thiswhole "village" type concept given the surrounding apartments and condominiums (and adding retail) are all very walkable.

My word of advice is, if you go into anything with a HOA read their latest financial statements carefully and ask a LOT of questions, especially if there arethings you're not sure about.

 

[boilermaker x]

0% down home mortgages are a historical artifact.
2-3% down means you're going FHA and there are restrictions on what you can buy and extra requirements.
10% is required (in my area anyway) before most mainstream lending institutions will even talk to you.
20+% means you have few restrictions in the property and you do not have to purchase additional mortgage insurance (i.e. PMI), which will add abotu 10% to yourmonthly mortgage payment.


Monthly breakdown on hypothetical $250K house in central Ohio (20% down, 30 year fixed mortgage, 5.5%):

$1278 Mortgage (PMI, if needed would add about $125/month)
$65 Home owner's insurance
$400 Property taxes (HIGHLY variable)
$200 Utilities
$1943/month (neighborhood association fees can be an additional $10-50/month)

These are the monthly expenses. Property taxes always go up. Things break. You might want to change things (paint, carpet, etc.). And keep in mind thatgetting a loan can be quite a hurdle depending on your income, debt, and credit.

 

[heliumclinton]

any insight on buying a house just to rent it out?

I live by myself in a apt and I don't see myself with wife and kids for atleast 8+yrs so I'm thinking about becoming a landlord

 

[lazyj10]

Originally Posted by Boilermaker X

0% down home mortgages are a historical artifact.
2-3% down means you're going FHA and there are restrictions on what you can buy and extra requirements.
10% is required (in my area anyway) before most mainstream lending institutions will even talk to you.
20+% means you have few restrictions in the property and you do not have to purchase additional mortgage insurance (i.e. PMI), which will add abotu 10% to your monthly mortgage payment.


Monthly breakdown on hypothetical $250K house in central Ohio (20% down, 30 year fixed mortgage, 5.5%):

$1278 Mortgage (PMI, if needed would add about $125/month)
$65 Home owner's insurance
$400 Property taxes (HIGHLY variable)
$200 Utilities
$1943/month (neighborhood association fees can be an additional $10-50/month)

These are the monthly expenses. Property taxes always go up. Things break. You might want to change things (paint, carpet, etc.). And keep in mind that getting a loan can be quite a hurdle depending on your income, debt, and credit.

How often are you assessed or subject to assessment in Ohio for property taxes?

 

[lazyj10]

Originally Posted by heLiumcLinton

any insight on buying a house just to rent it out?

I live by myself in a apt and I don't see myself with wife and kids for atleast 8+yrs so I'm thinking about becoming a landlord

Different tax ramifications especially if it's not your primary residence. You'd have to cost it out to see if you'd expect a return to cover yourinvestment and that rental payments would be covered (let alone consistently). I'd also suggest paying money to a lawyer (or whatever) to have real leasesdrawn up...doing this under the table can prove to be a larger pain in the $#% than being a landlord already is.

 

[boilermaker x]

LazyJ10 wrote:

---

How often are you assessed or subject to assessment in Ohio for property taxes?

It varies by county but, practically speaking, every 1-3 years. However, my understanding is that it's at the whim and fancy of the countyauditor. I know that Delaware County completely stopped doing property tax assessments last year because everything was assessing substantially lower anderoding tax revenue. They flat out refused any appeals and the only places getting assessments were new builds.

Edit: I may have misunderstood your question. Property taxes are due twice annually (January and June), though they are collected monthy as part of themortgage and paid in arrears on your behalf by the lending institution.

LazyJ10 wrote:

---

The down payment check is one of the worst-best moments of your life. Obviously great because you're on the way home ownership (mortgage interest deduction FTW) however, bad because no matter what, seeing those funds drawn on your account hurt.

Also, and I'm sorry to say this, friend, but I really, really hate when people say that. Why is it a win? Sure, you get a tax deduction (nota tax credit) on mortgage interest, but you're still paying the interest on a huge loan. Why not "Making a large down payment FTW"? Or mortgageinterest deduction for the consolation?

I'm not trying to get into the nuances of individuals' situations, but it makes me sad when people see paying mortgage interest as a selling point.

 

[mytmouse76]

What about a condo?

 

[lazyj10]

Originally Posted by Boilermaker X

LazyJ10 wrote:

---

How often are you assessed or subject to assessment in Ohio for property taxes?

It varies by county but, practically speaking, every 1-3 years. However, my understanding is that it's at the whim and fancy of the county auditor. I know that Delaware County completely stopped doing property tax assessments last year because everything was assessing substantially lower and eroding tax revenue. They flat out refused any appeals and the only places getting assessments were new builds.

LazyJ10 wrote:

---

The down payment check is one of the worst-best moments of your life. Obviously great because you're on the way home ownership (mortgage interest deduction FTW) however, bad because no matter what, seeing those funds drawn on your account hurt.

Also, and I'm sorry to say this, friend, but I really, really hate when people say that. Why is it a win? Sure, you get a tax deduction (not a tax credit) on mortgage interest, but you're still paying the interest on a huge loan. Why not "Making a large down payment FTW"? Or mortgage interest deduction for the consolation?

I'm not trying to get into the nuances of individuals' situations, but it makes me sad when people see paying mortgage interest as a selling point.


Because mortgage interest is a sunk cost, but at least has a positive factor. The postive factor being that you lower the amount you owe to thefederal government and therefore have a little more money per paycheck (if you adjust your with holdings accordingly). If you do a calculation of a rentversus buy, you get absolutely nothing from renting....if people are buying a place soley for their income tax return, that's a problem. I'd rather beon my way to home ownership with an asset that will eventually appreciate then renting and having a monthly outlay w/ nothing to show for it...then payingtaxes on my full income, on top of everything.

That's what I mean.

My federal effective rate was 7% last year. If I was just a renter, it would have been much higher. My mortgage is near the cost of rentals in the area.

 

[D Fly]

Thankfully for me I don't really have to worry about a mortgage for the house I'm getting across the street...but there's still other expense Igotta worry about like getting renovations, etc done.

 

[boilermaker x]

I may have bristled prematurely at your statement. I've heard more than one person list it as one of the motivating factors for buying a house, even inspite of other economic options that are available to them (i.e. more up front -> smaller mortgage -> smaller monthlies vs. less up front -> biggerloan -> larger interest deduction), and it always seems to me that these individuals were more or less repeating what the sales person said to them. Sure,you deduct the interest and that's a consolation...but it's hardly a selling point.


Extreme example just to illustrate:
$250K house, your AGI is $100K.

Scenario #1
You pay for the house in full. You are taxed on the full $100K (~22% for 200.
You pay $0 for a mortgage and you pay $22K in federal income tax.
Total cost: $22K

Scenario #2
You put $0 down for the house and finance all of it. As a result you'll pay about $10K in mortgage interest, so your AGI becomes $90K (lowering yourselfto 21.3% for 200.
You pay $1420/month for a mortgage ($17K/year) and you pay $19K in federal income.
Total cost: $36K

Granted, it's a continuum, but deducting mortgage interest does not make up for the interest you're paying.

 

[lazyj10]

I see what you're saying, Boiler.

Everyone's situation is different. I wasn't solely motivated in moving out of my parents crib just for the mortgage deduction.

By buying my place (I wish I was a cash buyer...) though it allowed me to enter the itemized deduction arena. To me, that's a lot better of a place to bethan the standard deductions, especially as a single filer.

I put down as much as I could (I think it amounted to ~7% at the time) and was pre approved for up to $330k. I didn't even pass $300k because I found sucha great place and was much more comfortable. The down payment still hurt because I had no debt and was basically banking all my paychecks for a year. It'sgreat to be able to afford a place but writing the check still hurts. Even if you were a cash buyer, having that money leave your hand hurts...that's all Iwas saying. As a consolation, something occurs w/ your mortgage interest that typical rental expense does not. That's what I was basically getting at.

Obviously the best circumstance in all of this would be to live w/ your folks as long as you can (assuming you can tolerate and respect each other). Lower thanmarket rents and bank rolling your money.

 

[38816]

Originally Posted by Dirtylicious

Originally Posted by cguy610

It's hard for most people to put down 20% for their first home. For the OP to put down 20%, they would need to have nearly $100K in cash.
346,000 x 20% = $69,200
+ Closing costs = $10,000-15,000
+ Some emergency cash for a safety net = $15,000 (at least)

= $94,200-$99,200

back when my parent's bought their house...they had to have 45% of the purchase price.

lol, which is why the housing market didn't crash then...

lol, inflation due to easy lines of credit is to blame, imo

college wouldnt be 80k a year if there was noone eager to loan it to you...lol

 

[smedroc]

@these figures......

ima find me a nice piece of grass and live in a teepee

on a serious note though...anybody ever thought of building there own %%$@ from scratch?? Dunno how it works in the US but I see it a lot where i live. Peoplebuying small pieces of land off the council, then throwin up yards to sell on.

 

[lazyj10]

The land value in CA is what costs the most....then the permits on top of that. People in the nice "hills" near me charging $500k just for the land +permits.

 

[smedroc]

guess you gotta live in the middle of no where for that to work