Anyone bought a new house lately?

[alkemyst]

FHA, Down payment as low as 3.5% Sellers are allowed to pay up to 6% of the purchase price to cover the closing costs.

VA can have no money down under a certain house price.

There are some state bond programs as well with 3% down or so.

For second homes or non-primary residence, probably at least 10%.

Credit scores need to be higher than historically as well. We don't touch anything with less than a 620 here.

 

[crazylocha]

Alkemyst, here in FL second homes are averaging around 20% down for most banks unless you have >780 credit(your nearly a bank in FL above 830 for reference).

Being an investor ourselves, my wife and I knew where and how to look.

3 acre farm, 3 bed/2 bath, small garden house turning into chicken coup and vegetable garden, 80x30 pole barn, concrete floored shop 35x20 (big enough to park my full size tractor w/ front end loader and 5ft. bush hog attached and room to close doors). Middle of horse country and just beautiful. There is some clean up work but not too bad.

$17,900 cash. closed in 45 days. No loan, taxes due or anything. $12.5k per acre average for neighbors. 3 years ago was 19.5/acre raw land cleared.

For those that chose to do mortgages, bit of a tip. Put what you can down and check rates for a 10 or 15 year mortgage. Total paid out in long run is huge. You pay your principal down much faster with less amortized interest, which is the killer.

30yr $200k at 6%-

• Monthly Payment:$1199.10
• Total Interest:$231676.38 (No pre-payment)
• Avg Interest Paid Each Month:$643.55

20yr $200k at 6%-

• Monthly Payment:$1432.86
• Total Interest:$143886.91 (No pre-payment)
• Avg Interest Paid Each Month:$599.53

15yr $200k at 6%-

• Monthly Payment:$1687.71
• Total Interest:$103788.46 (No pre-payment)
• Avg Interest Paid Each Month:$576.60

So even if you can squeeze the extra $200/month you can save over $100k on the loan. Average time in home being 7 years before moving up makes a difference too. On a 30yr you would still owe- Balance: $175544.71. 20yr-Balance: $146832.18. That is a 30k difference in loan value that you get to pocket, even though you paid just shy of 17k in payment/interest difference. Can you find $200 in pizza/movie/starbucks money for that?

Pre-shopping for mortgage rates and terms is one of the best things you can do. Most will let you lock in for 45-60 days before bid acceptance. And I mean check everywhere and then some. Then ask what they have for foreclosures and see what lights up.

 

[alkemyst]

Alkemyst, here in FL second homes are averaging around 20% down for most banks unless you have >780 credit(your nearly a bank in FL above 830 for reference).

I am in Florida. I stated a minimum, I was stating credit score for primary residences only.

If you have proper ratios and a down payment you should be able to get a second with over a 720...

$17,900 cash. closed in 45 days. No loan, taxes due or anything. $12.5k per acre average for neighbors. 3 years ago was 19.5/acre raw land cleared.

There are tons of deals in Florida's cowtowns. driving down I75 has billboards every mile about land for crazy deals per acre (<$10k).

For those that chose to do mortgages, bit of a tip. Put what you can down and check rates for a 10 or 15 year mortgage. Total paid out in long run is huge. You pay your principal down much faster with less amortized interest, which is the killer.

This has come up, it's in mosts best interest to do a 30 year and simply pay more per month.

The difference is negligable.

If you know you are never ever going to be tight in any month short terms are great.

 

[jiggahertz]

FHA, Down payment as low as 3.5% Sellers are allowed to pay up to 6% of the purchase price to cover the closing costs.

VA can have no money down under a certain house price.

There are some state bond programs as well with 3% down or so.

For second homes or non-primary residence, probably at least 10%.

Credit scores need to be higher than historically as well. We don't touch anything with less than a 620 here.

This actually changed in april from 6% to 3%.

 

[ISAslot]

Closing in a week. 2/3rds down. 15 yr at 3.675%

 

[Ninjahedge]

Very nice.

The only problem?

You have NO incentive to pay off early. There are savings accounts that get close to that (maybe bonds and such).

When interest rates were in the double digits 9ouch) housing prices were MUCH more affordable and you could actually get decent return on any savings you had.

Also, if you decided to pay just an extra $100 a month, you could end up cutting your payback time in half.

But now? With loans in the dirt and prices still incredibly high? You buy something and you are pretty much stuck. You better like what you get, because you will lose cash if you change your mind too soon......


(We basically leveraged ALL the wiggle out of housing by the boom and recession).



Aside from the negativity ISA, GL! I hope you love it (just remember to keep saving $$, you will have a lot of additional expenses if this is your first... If it isn't then you already know this!! )

 

[DrunkenSano]

Wouldn't it make sense to put as much down as you can without endangering your personal funds? Since the bigger the loan, the higher the interest, thus the more money you end up 'paying' a bank for giving you the loan.

 

[vi edit]

Wouldn't it make sense to put as much down as you can without endangering your personal funds? Since the bigger the loan, the higher the interest, thus the more money you end up 'paying' a bank for giving you the loan.

It just really depends on the loan, rate, other debt of borrower and what kind of returns they can get elsewhere.

If you have enough money to get to 80% then great. That gets you out of PMI which you get no value from. But downpaying beyond that the reward is just a lot lower in return, especially with these uber low rates.

Who knows, maybe in 5 years interest rates on savings accounts will actually go up and you'd make more money with it sitting in an account than you would paying it off on a loan. Maybe you have a car loan that you are better off paying down to save $200 a month instead of $50 from the P&I you'd get from the downpayment savings on the loan.

Maybe you just sleep a lot better at night knowing you have $20,000 in cash available for some freak event rather than having that equity tied up in your house.

It's just not as simple as saying "pay down as much as you can".

 

[Ninjahedge]

Figure it this way, if you can get 6&#37; back on a conservative stock portfolio (average) over 30 years, why would you pay off a loan you have at 4%?

You would have to do the math for taxes, but you only have to pay taxes on what you earn (what you do not re-invest) and the max you get taxed is 15% Federal, unless I am mistaken.

Nice what the politicians write for their "friends" in the tax code, ain't it?

 

[alkemyst]

This actually changed in april from 6% to 3%.

AFAIK and I am not an account manager, it was a projection and it's still not down to 3%.

I will have to verify. I am out of the office today, but google searches including a quick hud.gov one showed 6% still.

Do you have a link on hud's crappy site?