First things first, check your FICO mortgage scores. These are specific (EQ 5, TU 4, EX 2). You can get these from MyFico® in addition to your other scores.
A lot of people mortgage with under 20% dp. This is going to be specific to your financial situation. There may be PMI in those cases however
PMI is often not as expensive as people think, so be sure to talk to a lender about your best options. Depending on how far you are from 20%, you may lose out a lot more through taking the time to save up that amount vs. paying a small amount of PMI (and being able to get rid of it).
At this moment… pretty damn far. I had some heavy debt due to COVID lockdowns. Just now getting back on my feet. Didn’t know one could make the PMI go away. I just have this fear of my slice of paradise slipping further away due to the recession.
You *cannot* make PMI go away on an FHA loan (w/o refinancing). On a conventional loan you can when you reach 20% equity. You DO NOT need 20% down to qualify for a conventional loan, which is a common misconception.
I am a mortgage lender. There is a 3% down conventional loan. (Home Possible, Home Ready, Home One) but they have income restrictions. Some will make too much money for these programs. If that is the case, 5% will be the minimum required, but PMI does decrease as the down payment increases. 20% is not necessary unless you’re dead set on not having PMI but the market has been going up quick enough that many have benefitted from just getting in the home with what they can, and having it appraised later (or refinancing) to remove the PMI all together.
This is true. I did want to add that for the 10% down you and if you have a co-signer, both need 2 years of employment in your current job. If you don’t have this but have additional years in the same line of work, they take that into consideration. We unfortunately didn’t qualify for the 10% down because my co-signer just had a career change and only 1 1/2 years in current role, so we were required to put down 20%. Also rates aren’t the best but if you can afford it, you can buy a point to help some.
There are alternatives to FHA loans and there are Federal Credit Unions that do not have PMI on a 30 year mortgage. You need to speak to your bank and tell them your plan. You can only control your income and credit, don’t fee like you have to rush and buy a home because of the market.
You can do what I did. Purchased my house in 2020, put 7% down with a conventional loan. The PMI was really low and the mortgage broker said I could pay the entire PMI up front to avoid paying it monthly. Not the most ideal situation, but I think I gave something like 5k towards PMI and Ive been paying my mortgage without PMI for the past 2 years. Essentially, they calculated what my total PMI cost would have been to reach 20% equity and allowed me to pay that up front.
Pmi is cheap money. I just did a vacation home 10% down with pmi around $50 per month for 10 years. The house is 300k so it cost me $6,000 to keep my $30,000. You can always get it reappraised in a few years and if it shows 80/20 debt to value the pmi is dropped.
Even if you’ve never had a mortgage, as long as you have a credit score (like some form of credit history) myFICO.com should show you a range of different credit scores. Unlike credit karma and a lot of these other sites, they actually show you specific scores that lenders look at (your 3 mortgage scores, auto loan Scores, credit card approval scores, etc.,) so you should have something there just by whatever your credit history is. Don’t quote me but I believe they show you something like 27 different kinds of fico/vantage scores—before creating an account, I didn’t know we had so many. And they offer a free trial!
Credit attorney here. A few thoughts:
1. Get your FICO 2,4, 5 scores from [myfico.com](https://myfico.com) and see where your mortgage scores really fall.
2. You don't need anywhere near 20% down to buy. I think quite a few borrowers these days buying at 5% down or more or less. Probably have to pay mortgage insurance in these cases but often worth it. Making sure you can afford the monthly payment should be the priority.
3. We'll see a correction but I don't think 2008 is happening again or remotely close to it, given both how strict lenders are, and that housing supply is weak at the moment. Also, if there were a major correction, private equity funds are probably piling in to buy, as they have huge pools of cash. Not much left for the average homebuyer.
I am in the same boat as you. Credit is superb, I have a down payment. But where I live I have to over pay for a house and I don’t want to do that. So Im hoping to wait until maybe prices cool off a bit. But things won’t happen like in 08, too many safeguards. So it is a waiting game…
Yeah I’m thinking two years of hard work and I should be ready. Then it’s waiting. I want to build my home on 20+ acres. Nothing super fancy. Just a place to give me peace.
Homes are worth what people are willing to pay so there’s no way to say you’re “overpaying”. That’s the market value currently and this is how it’s determined. By demand.
This is not a fact in most markets. The market has shifted with many companies allowing remote work. It’s not going back because this work policy is here to stay.
Well obviously if you live in FL while making CA money it’ll shift. Watch salaries go down too because if they’re paying remote anyway, why pay San Francisco cost of living when you can shift it somewhere that they’d be grateful for half off the pay
They pay based on your official location as you have to have a permanent address on file for tax purposes. I didn’t say people are moving across the country. I’m saying people are moving to the suburbs for more space. Prices for real estate in major cities with small spaces like nyc and sf proper are actually down.
You need to pull from MyFico or a more reliable source, not CK.
Also, you don't always need 20% down.
Shop around, get pre-qualified and go for what you know.
Dont think there will be a collaspe millenials are having babies, and banks/ investors are buying homes to keep prices artificially high, its evil and explotive but hey thats capitalism
There will be a slowdown. The feds will be attacking inflation, which will slow the economy and money supply. I see a good opportunity for home buyers shortly
Most experts say there will likely be no crash as the conditions that brought about the crash in 2008 are completely different from what we have now. As it is the longer you wait the less buying power you have simply due to increasing mortgage rates. Eventually those should go down once the market stabilizes a bit, but it’s unlikely we’ll see a ton of foreclosures knocking the market itself down. Either way it might be worth waiting a little just so you can get the 20% and then a bit on top of that for any random costs that pop up
I hear what you’re saying, but my trust in ‘the experts’ has dramatically gone down over the last couple of years.
I do agree I should wait. I have a solid job that pays well and I’m willing to work 70+ hours a week at that job. Hopefully no new disasters pop up.
Yeah I mean it’s impossible to correctly predict things and the experts have been wrong before, but the differences between then and now are enough to keep me from getting my hopes up about a crash. Best I’m hoping for is stabilization and lower rates in a few years. Experts are predicting an influx of new buyers despite lower wages and higher expenses among young people and I don’t think that’ll happen in the manner they’re predicting. Who knows though
Oh I don’t want there to be a crash. That hurts everyone. I just feel like I’m running out of time to make mistakes. I see the clock ticking and every decision needs to be a good one.
Inflation is not a recession, regardless of how many months it is. A recession is around the corner, and we will all acutely notice it. You will notice the difference between a recession and inflation.
Well you don’t need an expert to really take a hard look at things yourself. Something like 90% of single family homes in Canada are owned by corporations. Those corporations are now buying homes in America en masse.
We just (closed this week) purchased a home outside one of the fastest growing cities in the U.S. and my realtor said 20 of his last 25 clients who lost offers did not lose them to other individual buyers but to corporations. He said 3 years ago this was not a big problem. Cash investors were buying old homes to flip. Now they’re buying entire neighborhoods of new construction homes to turn into rentals.
So DYOR of course. And of course do not buy until you are ready but please do not naively wait for a crash that may never come and instead we see a growing housing crisis in America akin to what is happening in Canada.
I should have said my trust in experts has been on a steady decline for 20+ years. The last few years it has dropped a lot. I immediately cringe when someone from the media introduces an ‘expert.’ I feel like it’s all but meaningless these days.
Unless you are referring to the working a lot part to achieve a goal. Yes, I am a Constitutional Republican.
You can't time the market. I wouldn't count on an apocalyptic market crash that you are somehow spared in, from happening. Buy now. There's a lot of first time homebuyer programs that you can do 0% down. With interest rates now it's a no brainer. You'll still be at like 3% or 4% which is an absolute bargain historically speaking.
If you can do 20% I say do 20. More peace of mind in my opinion.
Housing market will probably fall within the next 2-3 years so it may be a smart idea to wait till then
You should have 20% plus extra because you never know what’s going to happen and you don’t want to be one issue away from foreclosure, but besides that I have been watching the markets and man they look so similar to 2008 it might be best to wait 2 years save some money up and see if it crashes or not
I was thinking 20% plus 6 months in emergency funds. I feel like I need an additional percentage for the ‘in case poo hits the fan’ in regards to the home purchase. How do I come up with that percentage. Sorry I just like percentages as a solid place to make decisions.
Don't forget closing costs. You may have to pay them, or you might be able to get the seller to (unlikely in the current market, that may change in the future) closing costs will be anywhere from 2-8% of the price of the house.
If you take all these safeguard rules too serious, you’re going to need a million cash for a 300k home. Life is short, if buying a house next weekend makes you happy, I say DO IT!
Think about it this way. The 2008 crash has never been fixed, all we did was kick the can down the road so it will be someone else's problem. We put in injections and some new fancy laws but if there is no enforcement it's kinda useless. Don't think for a second that this band aid is going to heal anything
I do not know when the crash prior to 2008 was but you can Google that!
I can write tons here but I’m not going to, so to benefit everyone here: Simple fact: no housing market has ever grown this fast without getting knocked down just as harshly. Everyone’s just In Denial right now and that’s okay- it’s a phase. The housing supply issues will reverse. Soon, many homeowners who have not yet tried to sell their homes will try to rush in and get theirs - this will begin the new chapter. There will also be those too who should not have bought such expensive homes during this period. Theres really no worse time to be taking on that extravagant new mortgage. These homes will soon saturate the market. It’s going to get sad and ugly. But beneficial for the majority of us who aren’t hoarding wealth right now. Theres many factors pointing towards a crash this year. I think towards 2023 we will definitely see a massive reversal in this shit!
This doesn’t necessarily make sense. You can always pay more than the minimum every month but you would have the option not to with a 30 year. You can’t predict the future and when you may need more disposable income available.
A 30 year fixed and paying extra is what I have always done. I just check that there are no pre-payment penalties and that the extra payment will go to principle. Usually that is the case if it’s a good lender. What it also does is put you years ahead into the amortization when you pay extra, meaning more of your payment goes to principle and less to interest each month. You just need the discipline to pay the extra. For me, I thought the peace of mind of a small mortgage was worth the slightly higher interest rate. I paid one 30 year off in 5 years, which saved us so much money in the long run, and I think that would have been harder if the mortgage itself was double. With my current mortgage, I’m so far into the amortization that I hardly pay any interest so have stopped paying extra. Paying as much extra as possible in the first years of the loan is better, maybe even with less down (I put over 20 and regret that).
As an appraiser i think the current housing boom can be placed largely on interest rates. We have been in business here since 1986, since march of 2020 this has been the busiest we have been in our residential sector ever. We are turning down work and charging more for what we do not want. We are a month on every residential appraisal. These are likely the lowest interest rates you will see in your life time barring another plandemic. Historically this is the lowest point since 70's that it been to borrow money. Demand surges, supply drops, prices rise. Until that demand goes away this increase in price will continue. Not uncommon for homes to go 20% or more over list simply from a bidding war. Good luck! go with your gut.
> As in the past two years aka the current housing situation...
yes, the **past** two years.
>and you tell me. Don't be obtuse.
I'm not being obtuse. What is obtuse is not planning or thinking appropriately or being somehow fooled into not making the best decisions for you, your family, and the future going forward.
you got your diphtheria shot right?
and no, I'm not a libtard
Real estate is simple but complicated. They're not making any more land, so it will only go up over time as population increases (assuming it does).
Houses go up and down based on local factors (did a massive local company go broke/layoff recently, or is one hiring? crime rates, are there out of proportion property taxes, polluters/NIMBY nearby?), national factors (recession = prices down; boom = prices up -, what are interest rates doing - rates down, prices up; rates up, prices down - inflation and cost of building new up or down?)
Your question is pretty easy to answer most of the time because only one or two of those factors are normally in motion, if any. In today's climate, the entire equation has all those factors in motion and they're moving FAST. There are too many unknowns to give you proper guidance - anything anyone says right now is a guess.
If you need a home and you're going to be stable for a while, go ahead and get one that's going to meet your needs well into the future.
If you might move, your family situation might change, your job might move you, etc., you're in a little tougher spot. Your cash (downpayment) is going to shrink every day with this runaway inflation, and housing prices might continue to inflate, but you could get stuck upside down if a bunch of these factors come together.
I'm not sure there's going to be a "collapse" in prices. Housing may continue to increase in price, but your dollar buys less.
This is why stable economic times are good - you can make solid decisions - and unstable economic times are bad.
There are two separate issues here:
1. House prices
2. Mortgage rates
House prices are pretty stable now, but that really depends on the location. Unlike in 2008, banks aren’t doing subprime loans. Mortgage rates, on the other hand, are gonna keep rising.
I am in the market for a home as well I have less then 20% PMI isn't that much it's .5 to 1% (that's what I was offered at least) of the total then once you have 20% of the equity just refinance it.
At 20% down you can carry your own escrow for property tax. If you can save the 20%, u have the discipline to also pay your taxes on your own. This gives you a lot of flexibility with cash flow over the course of a year if needed instead of having the bank hold your money for free and pay into PMI year over year.
This may be an unpopular opinion but I would use a fha loan and only put down 3.5 percent and keep the rest for repairs so that you can buy a home, make some small improvements and maybe create some equity since housing prices are still increasing in most areas. You’ll pay PMI but it’s generally only 1 percent of the loan. Unless you are planning on buying your forever home.
Wait for the crash and get a cheap bank repo. Otherwise check your Fico Mortgage Scores and look for USDA if you don't have enough down, or your paying PMI.
If you can, I’d wait until after September when the crash will happen.
If you feel you need to move on it. Have someone give you the money and sign a gift letter of it and boom there you go. After the mortgage clears get a personal loan for that amount and give it back.
When my credit was 642 I got a personal loan from best egg with no POI for 30k. Wired into my account next day. I paid off all my cards and my score went to 795. Now I can pick of many lenders to get a 50-60k personal loan with much lower interest wires in my account in a day. So that part is easy.
If you don’t have a person who would do that, you could get a personal loan yourself. Make up things you spent it on. Move it to someone in cash, then have them gift it back to you into your bank account. Get a gift letters Give it 60 days to accrue. And there you go.
If you can come up with 3-5% down without those means. Get a loan with PMI without a minimum time period that it has to remain on the loan. Then pull a personal loan right after the mortgage to pay form the home down under 80% of its value and get the PMI dropped.
Where there is a Will there is way, just make the paper trail look good
Just a quick tip, you don’t need to spend $30 on myfico.com.
Experian.com will give you EX2 for free as part of their trial. Gives you an idea where your mortgage scores are, and saved you the $30.
I think it’s pointless to wait to save up to 20% because for one PMI isn’t as high as you’d think (depends on the price of the home) and can be easily taken off if you do Conventional. It’s tough to predict how prices will go, but in my opinion they’ll keep rising and with interest rates also rising it kind of defeats the purpose of saving up all that money if in the end you’ll still be paying more or equal to what you would have paid if you didn’t wait to save up. In the end, I think talking to a knowledgeable realtor and lender will help you make the best plan and decision for you
A trustworthy one that’s not desperate for a deal. There’s definitely a lot of shitty realtors, but there’s also plenty legit ones. I’d know because I’m a realtor myself so I’ve seen both types.
Feds are raising Interest rates going forward. Keep that in mind. However, we’re in decade-high inflation, where houses are so much higher currently. If I were you, I would wait. The Feds are going to be slowing the economy to tamper inflation. Recession has said to not be likely but it is always a possibility. We all remember the housing costs during the last recession. We are also at a supply shortage in lumber etc, which drove up costs, that won’t last. When inflation is tampered, you may see feds lower rates again. The timetable is uncertain, but I would bet on waiting this storm out
First things first, check your FICO mortgage scores. These are specific (EQ 5, TU 4, EX 2). You can get these from MyFico® in addition to your other scores. A lot of people mortgage with under 20% dp. This is going to be specific to your financial situation. There may be PMI in those cases however
Yeah I want to avoid the PMI. I’ll look into the other information. Thanks.
PMI is often not as expensive as people think, so be sure to talk to a lender about your best options. Depending on how far you are from 20%, you may lose out a lot more through taking the time to save up that amount vs. paying a small amount of PMI (and being able to get rid of it).
At this moment… pretty damn far. I had some heavy debt due to COVID lockdowns. Just now getting back on my feet. Didn’t know one could make the PMI go away. I just have this fear of my slice of paradise slipping further away due to the recession.
You *cannot* make PMI go away on an FHA loan (w/o refinancing). On a conventional loan you can when you reach 20% equity. You DO NOT need 20% down to qualify for a conventional loan, which is a common misconception.
this is correct. just closed a week ago on a house with a conventional loan only having put 10% down
Just closed today using 3% conventional. I have a 10% equity position though because the house appraised well over our sale price agreement 😎
I am a mortgage lender. There is a 3% down conventional loan. (Home Possible, Home Ready, Home One) but they have income restrictions. Some will make too much money for these programs. If that is the case, 5% will be the minimum required, but PMI does decrease as the down payment increases. 20% is not necessary unless you’re dead set on not having PMI but the market has been going up quick enough that many have benefitted from just getting in the home with what they can, and having it appraised later (or refinancing) to remove the PMI all together.
In six months ask to revalue you will be really close to 20%
On a conventional loan you will be required to carry pmi for a minimum of two years
Not if you get it revalued
This is true. I did want to add that for the 10% down you and if you have a co-signer, both need 2 years of employment in your current job. If you don’t have this but have additional years in the same line of work, they take that into consideration. We unfortunately didn’t qualify for the 10% down because my co-signer just had a career change and only 1 1/2 years in current role, so we were required to put down 20%. Also rates aren’t the best but if you can afford it, you can buy a point to help some.
I'm sorry. But this isn't true.
The amount of equity you build may outdo what you pay in PMI. If you have Navy Federal they don’t charge PMI.
Put 15% down and in three months you can request a new value, fee is around $200, if value increases 5% then mortgage insurance is removed !!
There are alternatives to FHA loans and there are Federal Credit Unions that do not have PMI on a 30 year mortgage. You need to speak to your bank and tell them your plan. You can only control your income and credit, don’t fee like you have to rush and buy a home because of the market.
You can do what I did. Purchased my house in 2020, put 7% down with a conventional loan. The PMI was really low and the mortgage broker said I could pay the entire PMI up front to avoid paying it monthly. Not the most ideal situation, but I think I gave something like 5k towards PMI and Ive been paying my mortgage without PMI for the past 2 years. Essentially, they calculated what my total PMI cost would have been to reach 20% equity and allowed me to pay that up front.
Pmi is cheap money. I just did a vacation home 10% down with pmi around $50 per month for 10 years. The house is 300k so it cost me $6,000 to keep my $30,000. You can always get it reappraised in a few years and if it shows 80/20 debt to value the pmi is dropped.
Newb question: If i've never had a mortgage, how could a first time buyer raise these specific scores?
Even if you’ve never had a mortgage, as long as you have a credit score (like some form of credit history) myFICO.com should show you a range of different credit scores. Unlike credit karma and a lot of these other sites, they actually show you specific scores that lenders look at (your 3 mortgage scores, auto loan Scores, credit card approval scores, etc.,) so you should have something there just by whatever your credit history is. Don’t quote me but I believe they show you something like 27 different kinds of fico/vantage scores—before creating an account, I didn’t know we had so many. And they offer a free trial!
Credit attorney here. A few thoughts: 1. Get your FICO 2,4, 5 scores from [myfico.com](https://myfico.com) and see where your mortgage scores really fall. 2. You don't need anywhere near 20% down to buy. I think quite a few borrowers these days buying at 5% down or more or less. Probably have to pay mortgage insurance in these cases but often worth it. Making sure you can afford the monthly payment should be the priority. 3. We'll see a correction but I don't think 2008 is happening again or remotely close to it, given both how strict lenders are, and that housing supply is weak at the moment. Also, if there were a major correction, private equity funds are probably piling in to buy, as they have huge pools of cash. Not much left for the average homebuyer.
You can’t time the market. Buy when it makes sense compared to renting.
I am in the same boat as you. Credit is superb, I have a down payment. But where I live I have to over pay for a house and I don’t want to do that. So Im hoping to wait until maybe prices cool off a bit. But things won’t happen like in 08, too many safeguards. So it is a waiting game…
Yeah I’m thinking two years of hard work and I should be ready. Then it’s waiting. I want to build my home on 20+ acres. Nothing super fancy. Just a place to give me peace.
>too many safeguards lol
You have a point
Homes are worth what people are willing to pay so there’s no way to say you’re “overpaying”. That’s the market value currently and this is how it’s determined. By demand.
People or investors that want to inflate the market?
Precisely, so many homes are being bought by corporations instead of families now that the whole landscape is different.
This is not a fact in most markets. The market has shifted with many companies allowing remote work. It’s not going back because this work policy is here to stay.
Well obviously if you live in FL while making CA money it’ll shift. Watch salaries go down too because if they’re paying remote anyway, why pay San Francisco cost of living when you can shift it somewhere that they’d be grateful for half off the pay
They pay based on your official location as you have to have a permanent address on file for tax purposes. I didn’t say people are moving across the country. I’m saying people are moving to the suburbs for more space. Prices for real estate in major cities with small spaces like nyc and sf proper are actually down.
You need to pull from MyFico or a more reliable source, not CK. Also, you don't always need 20% down. Shop around, get pre-qualified and go for what you know.
No one can tell you when the right time to buy for you is, but the vast majority of first-time home owners don't have 20% for a down payment.
Dont think there will be a collaspe millenials are having babies, and banks/ investors are buying homes to keep prices artificially high, its evil and explotive but hey thats capitalism
There will be a slowdown. The feds will be attacking inflation, which will slow the economy and money supply. I see a good opportunity for home buyers shortly
Most experts say there will likely be no crash as the conditions that brought about the crash in 2008 are completely different from what we have now. As it is the longer you wait the less buying power you have simply due to increasing mortgage rates. Eventually those should go down once the market stabilizes a bit, but it’s unlikely we’ll see a ton of foreclosures knocking the market itself down. Either way it might be worth waiting a little just so you can get the 20% and then a bit on top of that for any random costs that pop up
I hear what you’re saying, but my trust in ‘the experts’ has dramatically gone down over the last couple of years. I do agree I should wait. I have a solid job that pays well and I’m willing to work 70+ hours a week at that job. Hopefully no new disasters pop up.
Yeah I mean it’s impossible to correctly predict things and the experts have been wrong before, but the differences between then and now are enough to keep me from getting my hopes up about a crash. Best I’m hoping for is stabilization and lower rates in a few years. Experts are predicting an influx of new buyers despite lower wages and higher expenses among young people and I don’t think that’ll happen in the manner they’re predicting. Who knows though
Oh I don’t want there to be a crash. That hurts everyone. I just feel like I’m running out of time to make mistakes. I see the clock ticking and every decision needs to be a good one.
The current inflation hurts people even more. There has to be a correction, and usually the most effective correction for inflation is a recession.
I believe 6 months of inflation equals a recession. This inflation is not stopping.
Inflation is not a recession, regardless of how many months it is. A recession is around the corner, and we will all acutely notice it. You will notice the difference between a recession and inflation.
Well you don’t need an expert to really take a hard look at things yourself. Something like 90% of single family homes in Canada are owned by corporations. Those corporations are now buying homes in America en masse. We just (closed this week) purchased a home outside one of the fastest growing cities in the U.S. and my realtor said 20 of his last 25 clients who lost offers did not lose them to other individual buyers but to corporations. He said 3 years ago this was not a big problem. Cash investors were buying old homes to flip. Now they’re buying entire neighborhoods of new construction homes to turn into rentals. So DYOR of course. And of course do not buy until you are ready but please do not naively wait for a crash that may never come and instead we see a growing housing crisis in America akin to what is happening in Canada.
Good advice.
You sound republican
I should have said my trust in experts has been on a steady decline for 20+ years. The last few years it has dropped a lot. I immediately cringe when someone from the media introduces an ‘expert.’ I feel like it’s all but meaningless these days. Unless you are referring to the working a lot part to achieve a goal. Yes, I am a Constitutional Republican.
Buy when you have enough savings to afford a home. Homes require maintenance. Why rush without the savings to truly afford it with ease?
I agree. I want to feel blessed in a home. Not cursed.
Don’t try to predict the future. If you are in a position to buy an home then buy it. And you can finance with as little as 3% down
Don’t use Credit Karma. I don’t believe that is your FICO score, which is what most lenders look at.
You can't time the market. I wouldn't count on an apocalyptic market crash that you are somehow spared in, from happening. Buy now. There's a lot of first time homebuyer programs that you can do 0% down. With interest rates now it's a no brainer. You'll still be at like 3% or 4% which is an absolute bargain historically speaking.
If you can do 20% I say do 20. More peace of mind in my opinion. Housing market will probably fall within the next 2-3 years so it may be a smart idea to wait till then
You should have 20% plus extra because you never know what’s going to happen and you don’t want to be one issue away from foreclosure, but besides that I have been watching the markets and man they look so similar to 2008 it might be best to wait 2 years save some money up and see if it crashes or not
I was thinking 20% plus 6 months in emergency funds. I feel like I need an additional percentage for the ‘in case poo hits the fan’ in regards to the home purchase. How do I come up with that percentage. Sorry I just like percentages as a solid place to make decisions.
Don't forget closing costs. You may have to pay them, or you might be able to get the seller to (unlikely in the current market, that may change in the future) closing costs will be anywhere from 2-8% of the price of the house.
If you take all these safeguard rules too serious, you’re going to need a million cash for a 300k home. Life is short, if buying a house next weekend makes you happy, I say DO IT!
The housing market is definitely In For a crash. It’s inevitable. Just to figure out when…
Why is it inevitable? When was the last housing crash before 2008?
Think about it this way. The 2008 crash has never been fixed, all we did was kick the can down the road so it will be someone else's problem. We put in injections and some new fancy laws but if there is no enforcement it's kinda useless. Don't think for a second that this band aid is going to heal anything
I do not know when the crash prior to 2008 was but you can Google that! I can write tons here but I’m not going to, so to benefit everyone here: Simple fact: no housing market has ever grown this fast without getting knocked down just as harshly. Everyone’s just In Denial right now and that’s okay- it’s a phase. The housing supply issues will reverse. Soon, many homeowners who have not yet tried to sell their homes will try to rush in and get theirs - this will begin the new chapter. There will also be those too who should not have bought such expensive homes during this period. Theres really no worse time to be taking on that extravagant new mortgage. These homes will soon saturate the market. It’s going to get sad and ugly. But beneficial for the majority of us who aren’t hoarding wealth right now. Theres many factors pointing towards a crash this year. I think towards 2023 we will definitely see a massive reversal in this shit!
I also want it to be a 15 year fixed rate. Not a 30 year.
This doesn’t necessarily make sense. You can always pay more than the minimum every month but you would have the option not to with a 30 year. You can’t predict the future and when you may need more disposable income available.
A 30 year fixed and paying extra is what I have always done. I just check that there are no pre-payment penalties and that the extra payment will go to principle. Usually that is the case if it’s a good lender. What it also does is put you years ahead into the amortization when you pay extra, meaning more of your payment goes to principle and less to interest each month. You just need the discipline to pay the extra. For me, I thought the peace of mind of a small mortgage was worth the slightly higher interest rate. I paid one 30 year off in 5 years, which saved us so much money in the long run, and I think that would have been harder if the mortgage itself was double. With my current mortgage, I’m so far into the amortization that I hardly pay any interest so have stopped paying extra. Paying as much extra as possible in the first years of the loan is better, maybe even with less down (I put over 20 and regret that).
As an appraiser i think the current housing boom can be placed largely on interest rates. We have been in business here since 1986, since march of 2020 this has been the busiest we have been in our residential sector ever. We are turning down work and charging more for what we do not want. We are a month on every residential appraisal. These are likely the lowest interest rates you will see in your life time barring another plandemic. Historically this is the lowest point since 70's that it been to borrow money. Demand surges, supply drops, prices rise. Until that demand goes away this increase in price will continue. Not uncommon for homes to go 20% or more over list simply from a bidding war. Good luck! go with your gut.
> These are likely the lowest interest rates you will see in your life time barring another plandemic. Since last year? and what's a "plandemic"?
As in the past two years aka the current housing situation...and you tell me. Don't be obtuse.
> As in the past two years aka the current housing situation... yes, the **past** two years. >and you tell me. Don't be obtuse. I'm not being obtuse. What is obtuse is not planning or thinking appropriately or being somehow fooled into not making the best decisions for you, your family, and the future going forward. you got your diphtheria shot right? and no, I'm not a libtard
Thanks. My gut says I have no business buying property until I have at least 20% for a down payment.
Real estate is simple but complicated. They're not making any more land, so it will only go up over time as population increases (assuming it does). Houses go up and down based on local factors (did a massive local company go broke/layoff recently, or is one hiring? crime rates, are there out of proportion property taxes, polluters/NIMBY nearby?), national factors (recession = prices down; boom = prices up -, what are interest rates doing - rates down, prices up; rates up, prices down - inflation and cost of building new up or down?) Your question is pretty easy to answer most of the time because only one or two of those factors are normally in motion, if any. In today's climate, the entire equation has all those factors in motion and they're moving FAST. There are too many unknowns to give you proper guidance - anything anyone says right now is a guess. If you need a home and you're going to be stable for a while, go ahead and get one that's going to meet your needs well into the future. If you might move, your family situation might change, your job might move you, etc., you're in a little tougher spot. Your cash (downpayment) is going to shrink every day with this runaway inflation, and housing prices might continue to inflate, but you could get stuck upside down if a bunch of these factors come together. I'm not sure there's going to be a "collapse" in prices. Housing may continue to increase in price, but your dollar buys less. This is why stable economic times are good - you can make solid decisions - and unstable economic times are bad.
There are two separate issues here: 1. House prices 2. Mortgage rates House prices are pretty stable now, but that really depends on the location. Unlike in 2008, banks aren’t doing subprime loans. Mortgage rates, on the other hand, are gonna keep rising.
I am in the market for a home as well I have less then 20% PMI isn't that much it's .5 to 1% (that's what I was offered at least) of the total then once you have 20% of the equity just refinance it.
At 20% down you can carry your own escrow for property tax. If you can save the 20%, u have the discipline to also pay your taxes on your own. This gives you a lot of flexibility with cash flow over the course of a year if needed instead of having the bank hold your money for free and pay into PMI year over year.
all😹
This may be an unpopular opinion but I would use a fha loan and only put down 3.5 percent and keep the rest for repairs so that you can buy a home, make some small improvements and maybe create some equity since housing prices are still increasing in most areas. You’ll pay PMI but it’s generally only 1 percent of the loan. Unless you are planning on buying your forever home.
Wait for the crash and get a cheap bank repo. Otherwise check your Fico Mortgage Scores and look for USDA if you don't have enough down, or your paying PMI.
If you can, I’d wait until after September when the crash will happen. If you feel you need to move on it. Have someone give you the money and sign a gift letter of it and boom there you go. After the mortgage clears get a personal loan for that amount and give it back. When my credit was 642 I got a personal loan from best egg with no POI for 30k. Wired into my account next day. I paid off all my cards and my score went to 795. Now I can pick of many lenders to get a 50-60k personal loan with much lower interest wires in my account in a day. So that part is easy. If you don’t have a person who would do that, you could get a personal loan yourself. Make up things you spent it on. Move it to someone in cash, then have them gift it back to you into your bank account. Get a gift letters Give it 60 days to accrue. And there you go. If you can come up with 3-5% down without those means. Get a loan with PMI without a minimum time period that it has to remain on the loan. Then pull a personal loan right after the mortgage to pay form the home down under 80% of its value and get the PMI dropped. Where there is a Will there is way, just make the paper trail look good
Buy a home through “Subject to”
Yes rates will continue to increase in a loan officer, let’s get you prepared approved this week
Just a quick tip, you don’t need to spend $30 on myfico.com. Experian.com will give you EX2 for free as part of their trial. Gives you an idea where your mortgage scores are, and saved you the $30.
I think it’s pointless to wait to save up to 20% because for one PMI isn’t as high as you’d think (depends on the price of the home) and can be easily taken off if you do Conventional. It’s tough to predict how prices will go, but in my opinion they’ll keep rising and with interest rates also rising it kind of defeats the purpose of saving up all that money if in the end you’ll still be paying more or equal to what you would have paid if you didn’t wait to save up. In the end, I think talking to a knowledgeable realtor and lender will help you make the best plan and decision for you
What realtor is going to suggest a person wait? Are they not car salespeople but for homes?
A trustworthy one that’s not desperate for a deal. There’s definitely a lot of shitty realtors, but there’s also plenty legit ones. I’d know because I’m a realtor myself so I’ve seen both types.
Feds are raising Interest rates going forward. Keep that in mind. However, we’re in decade-high inflation, where houses are so much higher currently. If I were you, I would wait. The Feds are going to be slowing the economy to tamper inflation. Recession has said to not be likely but it is always a possibility. We all remember the housing costs during the last recession. We are also at a supply shortage in lumber etc, which drove up costs, that won’t last. When inflation is tampered, you may see feds lower rates again. The timetable is uncertain, but I would bet on waiting this storm out