Posts
1818
Joined
7/26/2015
Location
MA
US
Transferring for work to a small town in Kentucky and there is a possibility that we will only be there 1-3 years. I would really like to rent something, but the rental market is all but non existent there.
We are starting to talk to real estate agents but not moving until June. Has anyone bought recently and are comfortable sharing what their out of pocket costs to buy were? I’m trying to figure out how much we may be looking at putting down and then how much roughly other costs were out of pocket if anyone wants to share their experience.
I know there are a million different things to take into consideration like credit scores, down payments, lawyers fees, inspections and interest rates but I just want to get a gauge for what kind of out of pocket money we may be looking at. The houses we are interested in are in the $200-$225k range.
Also if anyone has had a house that they have had to sell within a year to few years, how big of a hit did you take? Thanks this is our first house and I’m stressing all these things!
We are starting to talk to real estate agents but not moving until June. Has anyone bought recently and are comfortable sharing what their out of pocket costs to buy were? I’m trying to figure out how much we may be looking at putting down and then how much roughly other costs were out of pocket if anyone wants to share their experience.
I know there are a million different things to take into consideration like credit scores, down payments, lawyers fees, inspections and interest rates but I just want to get a gauge for what kind of out of pocket money we may be looking at. The houses we are interested in are in the $200-$225k range.
Also if anyone has had a house that they have had to sell within a year to few years, how big of a hit did you take? Thanks this is our first house and I’m stressing all these things!
Banks like to see 20% equity. In other words, 20% down. If you cannot meet this requirement, you'll most likely have to get Private Mortgage Insurance. You pay for this coverage, but it actually insures the bank against you defaulting on the loan. Crappy, right?
You can also get by with 3% down on an FHA loan. I believe Bank of America is also offering $0 down loans now. I don't know for sure, but I would guess they are raping you on the interest rate or fees with those loan products.
Also, keep in mind that home prices have been soaring for a while now. In my opinion, a little too much, at least here in CA. I don't know about KY. There is bound to be another adjustment soon and hopefully it doesn't tank the whole economy like what happened in 2008/2009. Just be careful what you buy and for how much. If you are planning to sell in the short-term, you're probably OK. In the near-to-mid-term (3 years or so,) I'd be worried. Ten years or more, you're fine.
Finally, if this is your primary residence, you can sell it after 2 years and avoid paying capital gains tax. If you sell it before then and make money, Uncle Sam wants some of it.
Other posters, chime in if I'm missing something.
Have VA loans that we can use as well. It’s a little harder getting realtors who are well versed in those.
The market correction is something that is definitely worrying. We found one rental house that has a nice garage and 17 acres which would be awesome ( track? Haha) but it’s way over what we want to pay. We get a housing allowance of about $915 to help but the rent is around $1800 so I don’t want to be house poor.
Wife and I have been really good about saving money and staying out of debt, but with this recent transfer we weren’t quite expecting to have to buy so soon, and then possibly have to move. If we were guaranteed to be there 4-5 years I’d be much less stressed.
The Shop
The market here is up. We bought a town house in 2015 for 89k, and sold it back in November for 119k.
If your getting a housing allowance of $915 from your work or wherever I would buy a 150k house. That would put you around the 1k a month mark for total payment. Use their money and not that much of yours. Do a few upgrades yourself and if the market stays the same you’ll be able to sell it for the same if not more. Don’t put any money down save yours, use that allowance, and damn near live there for free.
FML
These loans have very low rates, and very inexpensive mortgage insurance (they call it an "annual fee", but for all intents and purposes its private mortgage insurance).
If you aren't in an area that is eligible for a USDA loan...if you're a veteran, get a VA loan (no money down, no private mortgage insurance)...if you aren't a veteran...then you'll be looking at a 3% down conventional loan, or 3.5% down FHA loan (which is best for you depends on credit score...the higher the credit score the more financially beneficial the conventional loan is).
Most states/counties have various down payment assistance, grant programs...I don't know about Kentucky though...those could be used to help cover your down payment and/or closing costs.
Closing costs will depend entirely on the rate you pick. Rates and fees are like a "teeter-totter" on a play ground...as rates go down on one side...fees go up on the other...and visa versa.
So you can have a lower rate with higher fees....or a higher rate with literally no fees (your lender will pay them for you)...or some place in between. If you won't be there long (less than 3-5 years) then take the higher rate and pay no fees. It's cheaper to pay a .5%-.75% higher rate for a few years than it is to pay thousands in closing costs.
I hope that helps!
Unless you have a government loan (FHA, VA, USDA)...the mortgage insurance is permanent on those...so you have to refinance to a conventional loan to get out of PMI.
Most mortgage servicers will make you pay PMI for at least two years...but after two years, and/or your mortgage balance is less than or equal to 80% of the value of your home (whichever comes later) call your mortgage servicer and ask them what it takes to get rid of the PMI.
I’ve heard a lot of different opinions On whether to put money down or not. We have down payment money set aside but if it doesn’t really matter because we’ll only have the house a few years maybe we’ll do 3% and save the rest.
On a VA loan, if you can get to 5% down, it will save you some money on VA's upfront funding fee (that they just roll into your loan), and you'll finance less money so you'll have a lower monthly payment. That is the only benefit of putting money down.
1st house after just over 2 years of ownership would sold it for 6.5% more which would have just covered the realtor fees. I was fortunate, work covered realtor fees for selling the house and some other stuff so we did pretty well but would have broken even more or less when it was all said and done if we sold purely on our own. Be picky on your realtor, one told us we wouldn't make what i wanted on the house, had 2 full price offers almost immediately when i told my realtor what i wanted to sell it for (above her recommendation).
We put 20% down both times. Went from a 15yr mortgage to a 30yr on the new house (bought a house larger than an apartment this go around) and actually ended up with an even better interest rate surprisingly. Think were at 3.25% for a 30yr.
You need to see if your work covers a lot of this as that'll provide some comfort in your decision making. We have a stop loss program that they'll make up the difference if the market takes a crap when they transfer you again. Some companies have a lot of perks, but you need to know them to take advantage. Ask your HR if you haven't already.
I think to get a compareable place to mine in California id pay like 1-3 million depending on location. California is insane!! I’d imagine you’re making more out there though. Not sure.
I suspect with the move to be during summer time, a lot more will pop up for you to choose from and potentially some rental options that you don't see now. We started looking in July as i thought i was getting transferred and ton of awesome houses, when we finally did lock down a transfer in mid September most of the houses that fit our criteria had dried up. We only looked at probably 3-4 houses we were actually interested in (around a HUGE part of Houston), the rest were fillers just to see if maybe we were willing to consider a neighborhood, smaller yard, etc.
Pit Row
For a conventional loan (as we know) you have to pay PMI if you don’t have 20% down...that being said it won’t automatically drop off until your loan reaches 22% equity.
No monthly insurance at all.
Post a reply to: Anyone bought a house lately? Down payment?