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Any mortgage broker - types in the house?
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  (#1)
singin sweet home alabama
 
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Any mortgage broker - types in the house? - May 30, 2007, 12:31 PM

Yeah, so I have some home buying / finance questions. Smart financial planner types also welcome.


Expert + me <-- not expert = talky ()


I have figured out that I still don't understand the rules of this game.


"No race has ever been won in the first corner, but plenty have been lost there."

Last edited by DvlsAdvc8; May 30, 2007 at 12:48 PM..
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  (#2)
singin sweet home alabama
 
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May 30, 2007, 07:34 PM

Ugh, nobody knows nothin' about money eh?


"No race has ever been won in the first corner, but plenty have been lost there."
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  (#3)
Posting Nothing Relevant
 
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May 30, 2007, 07:42 PM

im in the same boat... so anyone who hits him up... hit me up too... yea.
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  (#4)
singin sweet home alabama
 
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May 30, 2007, 07:54 PM

Yeah, see, the way I figure it - my household income is pretty damn good. Such that I don't expect it to dramatically change in the next 5-10 years other than bumps here and there with raises and maybe a job change or two (and same for my wife).

Now, given the prices houses (HOUSE! NOT townhouse, not condo - but those are expensive too) are going for even with this real estate lull going on - I'm going to have to save for nearly a decade. At this point, I'm thinking of putting my family in a cardboard box and selling all my expensive stuff (truck, bike, etc), cutting my expenses down to absolute minimum and just sitting miserable for 4-5 years... just so I can have a downpayment that *might* get me in a decent house.

I wanna know what strategy all these normal folks I see with houses used to get where they are... cuz I must be missing something.

Where all the smart people at?


"No race has ever been won in the first corner, but plenty have been lost there."

Last edited by DvlsAdvc8; May 30, 2007 at 07:57 PM..
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  (#5)
Suddenly Superstitious!!!
 
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May 30, 2007, 08:14 PM

Buy small, move every 7 or so years. You are at your lowest disposable income level currently. Over the years your pay should go up, the house value should go up, and you should be able to move further out to where the houses are more affordable. It all adds up.

Also...have you thought about the tax 'relief' from mortgage interest?

Also...do NOT let a realtor get you to overbuy and be house rich and cash poor. Set a comfortable limit, set an upper limit, and then look around. It also helps if you know what you can afford in a mortgage.

And yeah....right now is an excellent time to buy. You will do very well over the next 5 years. Heck..there are a ton of foreclosures on the market in many areas.


I want my baby back, baby back, baby back....Chileeeeee's bay back...
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  (#6)
old fat and slow
 
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May 30, 2007, 08:19 PM

get in touch with suls, rob suling. he did our refi and has helped some other people on here as well.


MissS:no now!!!

bambam nope you said i have a few hours

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  (#7)
singin sweet home alabama
 
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May 30, 2007, 08:32 PM

So Mud, if a 300k or so mortgage is what you could comfortably afford - you'd do that and stay put for 7 years?

If I cut all my expenses down to absolute minimum (like my wife and I had back in college), even with daycare I can save about 25-30k a year. 4 years gives me 100k+interest, plus the 20k I already have saved up. That would give me in the neighborhood of a 130k downpayment, but I can't imagine my household income dramatically increasing... maybe 2-6% per year(?) unless I or my wife change positions/jobs. When I factor all this stuff in the myriad mortgage calculators in webland, I find that I should be able to afford a 546k property with that downpayment and increased income, which seems to be where a bunch of the houses that my wife wants seem to hover around.

So... buy a condo and be unhappy with it for 7 years, and deal with selling it before I can buy a house... or be equally miserable for 4 years and then buy a house (note that renting a "condo" aka apartment is significantly cheaper than the 300k mortgage to buy a condo). Seems in option 2, I would at least be spending less time in a place I didn't want to be... and be in a house sooner.


What would you do? Anyone is welcome to chime in.


"No race has ever been won in the first corner, but plenty have been lost there."

Last edited by DvlsAdvc8; May 30, 2007 at 08:36 PM..
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  (#8)
Eddie would go ...
 
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May 30, 2007, 09:37 PM

Talk to member LUNACHRIS - she may be able to help

(plus she has a realy cool jacket..)


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  (#9)
Retired to most ...
 
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May 31, 2007, 07:19 AM

I have several thoughts on this but not enough time to type it al out before work. I will catch up with you tonight if you hit the spot Dvls.


God Speed Jeff! You'll never be forgotten.

BOOSTZX3 : in all seriousness head injuries ain't no joke. I've had around 10 concussions and now I ride a Buell Don't let it happen to you!
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  (#10)
Suddenly Superstitious!!!
 
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May 31, 2007, 08:02 AM

With 20K down now, plus a first time buyer's program, plus help from the builder/owner (Try to get all closing costs covered), you could probably afford to get a decent townhome....maybe not even far out from beltway. Try that for 5 years....it's certainly beter than a condo. It should apprciate over that time. The tax break on mortgages should make it about as expensive as an appartment.

Killing yourself for 4 years sounds great....but by then I would expect the general housing market in this area to have rebounded....meaning the prices should have increased enough to possibly offset what you have saved. (A real downer huh?)

Look for a foreclosure, builder with low sales, etc. It really is a great market to be a buyer in the DC area right now. That won't last long due to the job market though.


I want my baby back, baby back, baby back....Chileeeeee's bay back...
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May 31, 2007, 08:07 AM

Check with Flylan as well. He did the mortgage on our house, and knows his stuff. Like MudDawg said, don't forget about the mortgage interest deduction. You may think that a $2,000/month rent is cheaper than a $3,000/month mortgage, but it may not be, depending on your tax situation. Combine that with potential for appreciation and you may want to re-think renting for 4 years.
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  (#12)
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May 31, 2007, 08:39 AM

Quote:
Originally Posted by rddy
Check with Flylan as well. He did the mortgage on our house, and knows his stuff. Like MudDawg said, don't forget about the mortgage interest deduction. You may think that a $2,000/month rent is cheaper than a $3,000/month mortgage, but it may not be, depending on your tax situation. Combine that with potential for appreciation and you may want to re-think renting for 4 years.
Absolutely
Remember - you get to write off your mortgage interest - so that means when you 1st get the house - you get a nice chuck back from uncle sam....

Even if you sell the place for what you paid for it (market is slow, but not dead so this isn't a big risk right now - least in this area).. You will have been able to write off the interest for a few years - and you will get your money out of it (minus realtor fees)..

A buddy of mine sold his condo for a few bux less than what he bought it for (in it for 18 months - he sold to get married).. While he took a loss... He got 1 years of interest writeoff on his taxes (few grand back) and when you added up what he paid vs what he got back - the total value in the hole was something like only 3-4 grand - which means he really was paying some thing less than $300 bux to live in a nice place for those 18 months - try to find that kind of rent anywhere and you are lucky....

If you are good with money and want to be frugalish... You can get into a place on a ARM - Adjustable Rate Mortage... One of the most common is what's known (or was anyway ) as a 5/1 ARM.. Which means it adjusts for 5 years and no more than 1% a year. Basically, it means you can get a loan for a lower interest rate - like 4% (if the market is at like 7%) and it "can" adjust upwards 1 % per year (it usually does, but not always). The 1st year is 4%, 2nd is 5% .... 5th is 8% etc... WHile the last year is more than the current rate - if you average the loan % rate - it's still less than the 30 year fixed rate for those 5 years... The write off's for you interest rate usually pay for the any adjustements in interest rates.. You can usually sell it in 5 years for a profit (and yer monthly cost are LOTS less than renting) - and depending upon the market - prices usually go UP - you can refinance midway (any time after a year) and convert it to a fixed MTG for a standard rate for usually less monthly costs than you have been paying as you have equity and prices have gone up...

I have a guy is good at explaining it all - I have been outta the mtg biz for awhile... However, don't be lulled into having no life to have a big down payment to get a nice place to live... If you are careful and manage yourself - you can get in a place now - you will be broke intially - but you will have a nice place - and can enjoy life... etc...

PM me for the guys info - if you want it.....

Jason


-Jason
DAMN Rider DAMN Rider

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  (#13)
Like a clown car on fire
 
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May 31, 2007, 08:52 AM

In this area, it's unlikely you can save at a fast enough rate to keep up with increasing house prices (outside of the current housing slump, which will probably start picking up by fall). There will always be demand for DC area housing due to all the federal & contractor jobs, so the market is not as easily volatile.

So what is likely to happen is that the house you can afford now will be the house you can afford by saving for 4 years due to appreciation. It happened to me a few years ago, where what me and wife were saving was being outpaced by rising prices. I bit the bullet and bought an overpriced condo in a good location. I plan to stay there for about 5 years then hopefully move onto somewhere larger, assuming my place appreciates.

That seems to me like the best way to move up in this area, make a profit off one property and roll it into a larger one. You just gotta start small, watch the market and be patient. Try looking at past trends inthe areas you're interested in and compare the rising prices with what you could be saving, and extrapolate a bit. It's never fun to find out that you've been saving like a madman for years only to afford the same level of property.

As for the down payment, you can always do a higher interest "piggyback loan" for up to 15% of the price of the house, making you only have to put down as little as 5%, but you really, REALLY need to understand the loan terms and make sure you can pay it down the line. This may be an option if you make a decent, steady income, but haven't been able to save too much for a downpayment.


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  (#14)
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May 31, 2007, 11:29 AM

Here are two good articles that discuss why renting isn't as bad as everyone always seems to think it is.


http://articles.moneycentral.msn.com...oBuyAHome.aspx


http://articles.moneycentral.msn.com...GetRicher.aspx



Your plan of saving for 4-5 years to have a nice downpayment isn't as bad an idea as people are leading you to believe. That will be instant equity in your new house, you will not have to worry about buying selling condo/TH now that you do not want, and you won't have to worry about refinancing costs if you get into a ARM or riskier loan to afford what you want now.

If you rent and are smart with you savings and invest it properly, you'd probably be better off than buying something like a condo/TH now and waiting for the market to finish correcting itself in this area and having properties begin appreciating at a normal rate. Not to mention there will be no hassle of having to sell it later.

This area is definitely a bit different with all the gov't and gov't contracting jobs. But with employees and jobs becoming more mobile, that doesn't mean they will HAVE to live/work in this area. DC is still a volitile market right now, just maybe not as much as say Detroit.

But as always...consult a professional that is open to discuss all avenues with your decision. Not just someone looking to stuff you into the best mortgage they can come up with.
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May 31, 2007, 12:35 PM

I can't get to the first article, but that second article is retarded. It assumes, first of all, that a buyer had put 100% of his 300k into buying a 300k house, and ignores the fact that the extra $900 per month will reduce his so-called $21,000 annual return to less than 11,000. By putting 20% down, a buyers out of pocket costs including incidentals will approximate, and probably be less than, rent (after taxes) for comparable homes. As a result, a buyer would forgo (7% return on the 60,000 down payment in exchange for appreciation in the home. At a beginning value of $300,000, a buyer would only need a 1.4% appreciation on the home annually to break even. The higher the tax bracket, the better the numbers work.

Given that he is looking for a house (note a townhouse or condo), renting for ever doesn't sound as if it would be too appealing for him. Jumping into the stock market for 4-5 years doesn't sound like a great idea, either.

I'm not up on the financing options available, and I prefer to stick to conventional stuff. But there are options out there.
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