If you’re at all able to swing it, I’d buy anything you could afford at the moment. If you’re there at least 5 years, you’re going to at least make somewhat of a profit, providing you don’t trash the place. The catch of that is, it’s a good idea to be able to save, at the very least, 50 bucks a months for repairs and such, since you’ll no longer have a landlord to cover that stuff. Also, what are the options at all of getting out of your car payment, if that’s feasible at all?
Trailrash,
I do not care for ARMs, in my opinion they are a scam. I don’t agree with the concept on purchasing a house and trying to speculate economic trends in relation to current and forecasted interest rates, it just doesn’t appear to be smart for my money.
Yes you are right about the mortage calculators, it would pay off on paper but when it comes to my finances I would rather wait the year and pay the higher percentage rate then have to refinance the FMV of my house now. That is what I am being offered, fair market value as of today, not my original purchase price which is less than FMV now. After the prepayment penalties are no longer valid I would have paid the 20% section of my 2nd mortage down to nearily nothing, and have the 80 percent paid to about 85% of the original loan value.
Now with these paid down, I can get a refinance for the amount owed, which will be @ 70% of the initial purchase price, and only finance it for 15 years at a lower rate. I win, I’m not spending any more money and I’m not over extended on a loan for twice the value of the house.
In my situation, the house I purchased has already increased in value @ 27K, and I can have it paid off in 16 more years instead of 30.
Doing it like this with a refi after the prepayment penalty clause is up, my payments will increase, 27.00 per month, but I have knocked 13 years off the mortage.
BTW, My Mom is a mortage broker, she has hinted me in on all the fancy details that will make this work. I bought a 180K dollar house with nothing down and only pay a little over 800.00 a month. This is on a 80/20 loan for 30/15. In one year I can refinance both loans at a lower rate, into a single 15 yr conventional
loan and come out ahead in 5 years when I decide to sell and make a good profit.
Bullpup
[quote]bullpup wrote:
Trailrash,
I do not care for ARMs, in my opinion they are a scam. I don’t agree with the concept on purchasing a house and trying to speculate economic trends in relation to current and forecasted interest rates, it just doesn’t appear to be smart for my money.
Yes you are right about the mortage calculators, it would pay off on paper but when it comes to my finances I would rather wait the year and pay the higher percentage rate then have to refinance the FMV of my house now. That is what I am being offered, fair market value as of today, not my original purchase price which is less than FMV now. After the prepayment penalties are no longer valid I would have paid the 20% section of my 2nd mortage down to nearily nothing, and have the 80 percent paid to about 85% of the original loan value.
Now with these paid down, I can get a refinance for the amount owed, which will be @ 70% of the initial purchase price, and only finance it for 15 years at a lower rate. I win, I’m not spending any more money and I’m not over extended on a loan for twice the value of the house.
In my situation, the house I purchased has already increased in value @ 27K, and I can have it paid off in 16 more years instead of 30.
Doing it like this with a refi after the prepayment penalty clause is up, my payments will increase, 27.00 per month, but I have knocked 13 years off the mortage.
BTW, My Mom is a mortage broker, she has hinted me in on all the fancy details that will make this work. I bought a 180K dollar house with nothing down and only pay a little over 800.00 a month. This is on a 80/20 loan for 30/15. In one year I can refinance both loans at a lower rate, into a single 15 yr conventional
loan and come out ahead in 5 years when I decide to sell and make a good profit.
Bullpup[/quote]
Makes sense considering all of the details but a 4.5% is not feasible and to say that you will get the 4.5% in year isn’t a correct statement.
As for the ARM we can agree to disagree.
TR
By the way. I’m the guy your Mom gets her money from to fund her loans. I know the ins and outs myself.
Bullpup, you mean I can save money paying taxes on my own? THe lender may be charging me for this (CitiMortgage) ?
And by insurance you mean mortage insurance, or regular house insurance?
Let me know!
[quote]bullpup wrote:
Also take into consideration insurance and taxes.
I pay my insurance and property taxes on my own instead of using an escrow account. If not my monthly payment just for taxes and insurance would be almost the equivelant of my mortages.
[/quote]
[quote]Sonny S wrote:
Bullpup, you mean I can save money paying taxes on my own? THe lender may be charging me for this (CitiMortgage) ?
And by insurance you mean mortage insurance, or regular house insurance?
Let me know!
bullpup wrote:
Also take into consideration insurance and taxes.
I pay my insurance and property taxes on my own instead of using an escrow account. If not my monthly payment just for taxes and insurance would be almost the equivelant of my mortages.
[/quote]
He doesn’t have Mortgage Insurance because he has an 80/20. Lenders do not charge you to pay your taxes and Insurance however most Conforming Lenders will require you to escrow or they will hit your rate if you choose to waive an escrow account.
Some people do not like to escrow because their logic is to keep the money in their own bank account and collect as much interest as possible instwad of letting their bank collect interest on their money. What they fail to forget or do not realise is that they are paying 12.5-25 bps higher in rate to do this.
At this point I would suggest you keep renting your current place. Your wife is in school and if she intends to work you will have additional income to pay off debts and get a house. Regarding moving closer to work, you family support system is valuable, don’t undervalue it (will really help if your wife works). Moving closer to a city will cost you more and you probably won’t be in as good of a neighborhood.
Take some time to make yourself more marketable for a better job. If you do think you need to buy now, with a bad credit score you will be the target of many groups out to hose you. Get your act together first then buy the house. Good Luck.
On the taxes and insurance you won’t really save you any money persay but it allows you the flexibility to manage your money.
For instance, my tax bills, property, school, and county tax bills are all due the first week in January. The bills do not all come at one time, I normally get one in October, one in Nov. and one in Dec. I pay each one as I get it, instead of paying a certain amount every month additional to my mortage payments. This way here if I have an emergency or something I know I will have the money in my account instead of an escrow account, that I cannot or do not have access to.
Also on my insurance I pay for it all at one time per year, my insurance runs about 1600 per year,automatically when my check is deposited in my account I deduct 150.00 from each check when I make my entries in my checking account register. I do not even show this amount of money as being deposited, It’s there I just don’t have any visual reminders of it so I will not be tempted to spend it.
It has worked good for me so far. I haven’t had any major emergencies where I needed it but I like the piece of mind. Also, a standard savings account will offer you some where in the neighbor hood of 2.7-3.5% interest on a savings account, you are earning more by having it in your account then by having some one lese do it for you.
Bullpup
[quote]lostinthought wrote:
If you’re at all able to swing it, I’d buy anything you could afford at the moment. If you’re there at least 5 years, you’re going to at least make somewhat of a profit, providing you don’t trash the place. The catch of that is, it’s a good idea to be able to save, at the very least, 50 bucks a months for repairs and such, since you’ll no longer have a landlord to cover that stuff. Also, what are the options at all of getting out of your car payment, if that’s feasible at all? [/quote]
That’s something I worry about, that I’m just tossing my money away by not owning my own place. Right now I don’t think I could afford to buy anything that would be worth selling though.
I haven’t heard of the “combo” loan before, I’ll have to ask around about it. Also, I’ve talked to some sellers who take care of the financing on their own - but then I have to worry about buying into a house with problems I won’t know anything about until it’s too late.
As for my car, it’s really cheap considering that I bought it brand new. My payments aren’t killing me at less than $270/month, and plus there’s the fact that I’ve been driving the hell out of it, I’d be losing scads to try to trade it in now for something older.
I’ve found a couple of places for rent that are big enough for all of us, closer to work, and only a couple hundred bucks more a month.
I might be able to free up some money by taking more deductions on my taxes - I have a huge (not in the objective sense, but to me) return coming this year, around $6000. It seems to me that if I quit loaning that money to the government for free, and spread it out it comes out to about an extra $500/month. If I can get my paws on even half that, it might cover my extra rent.
And if that doesn’t work, I guess I can get a “weekend job”. An extra 20 hours a week may destroy me physically and mentally, but at least I’ll be able to pay my bills, yay!