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This is exactly what I was thinking. I think most of the commenters here aren't homeowners. I just bought a home. Even with excellent credit I still had to put
by DarronWyke 9y ago
This is exactly what I was thinking. I think most of the commenters here aren't homeowners.
I just bought a home. Even with excellent credit I still had to put down roughly 10k on the house (which was only 3%!) -- that includes the down payment, option and earnest money, fees for stuff like appraisal, inspection, and more.
10k is a lot of money for a lot of people. Granted they can get some of that back if they sell an old house, but as you said if the house value is low to zero they can only get the land value for it, if there is any. Now they're starting over from square one, paying off a new house.
And that 10k isn't even covering other expenses, like repairs I need to do, furniture (pretty much buying everything new now), moving supplies/expenses, first utilities, and more. Homeowning is not cheap, especially not upfront (though it does get a little easier beyond the initial investment).
- toomuchtodo 9y agoGet out of the FHA mortgage into a conventional as soon as you can [1]. It'll save you the monthly mortgage insurance, which is for the life of the loan now. [1] Keep an eye on home values 6-12 months from now; once you think you might have 20% equity, attempt to refi into a conventional. Should save you $150-200/month on the FHA monthly premium.
- DarronWyke 9y agoI'm already on a conventional; I was able to get 3% because of my excellent credit and good income. I only have PMI because I didn't want to put the full 20% down. The amount saved for each monthly payment + PMI wouldn't be worth the pain associated with virtually dumping out my nest egg hitting 20%.
- toomuchtodo 9y agoAhh! Excellent news! I don't have time to be fully up to speed on mortgage guidelines, so whenever I see a down payment under 10% I assume its FHA. Congrats on the new home!
- DarronWyke 9y agoThank you. Our lending officer and real estate agent are awesome folks, so if you're ever looking for real estate in the DFW area, let me know. We were complete novices coming in and left understanding enough to practically sell homes ourselves. Plus the previous homeowner was a great guy and worked with us a lot, so we really got lucky with this one.
- panopticon 9y ago> whenever I see a down payment under 10% I assume its FHA It's increasing common to see non-FHA loans in the 3% ballpark (among anecdotal evidence from my friends and coworkers who've recently purchased). My gut keeps telling me something is wrong, but no other indicators seem to agree.
- buerkle 9y agoYears ago I was able to get a 85/15/5. 85% first mortgage, 15% second mortgage and 5% down. The 2nd mortgage worked out to about the same as the cost of PMI but with the advantage I could deduct the interest on my taxes so overall it ended up cheaper. Not sure if that's an option now.
- ryanwaggoner 9y agoNot sure you saved anything since they charged you 105% of the sale price ;)
- buerkle 9y agoWhoops, I meant 80/15/5 :)