Radio Flyer1647545514 Posted October 13, 2015 Report Share Posted October 13, 2015 I have a large bonus check coming in before the years end, %90 of which I want to use to put towards purchasing a home. I'm not planning on buying this year or even next year as it seems the market has peaked or is near peak, correct me if I'm wrong. My mom and grandparents both went backwards on the value of their properties and neither of them are even at the break even with the current market rates vs original purchase price, this doesn't even include inflation. This is what I'm trying to avoid running in to. My plan is to invest %45 of this check so I can make my money work for me until I'm ready to buy, still leaving me with enough money to easily put down %20 on a home. I'll be a first time home buyer, currently with a credit score in the high 700's to low 800's with zero debt to my name so, loan approval shouldn't be an issue. Is it smarter for me to take advantage of a FHA loan and only have to put down %3 and keep more money on hand? Depending on what I decide to buy, it wouldn't be out of the question that I may be able to purchase a home in cash and avoid going to a bank at all, it seems as if for tax purposes it may be more beneficial to carry some sort of mortgage. I'm looking to purchase a few acres of land in the Lancaster area or something similar, outside of city limits. I don't know if a home on land loses value as much as a home in a Gahanna neighborhood or Pickerington neighborhood for instance. I'm basically looking for people to point me in some directions on what things I should read up on and pay attention to while I start this process since it's all very new to me. What options I should look at and why? Quote Link to comment Share on other sites More sharing options...
greg1647545532 Posted October 13, 2015 Report Share Posted October 13, 2015 Keep in mind that with the FHA loan you'll have to pay for MIP (mortgage insurance) or PMI. There's an upfront chunk of money that you have to pay for that and then a monthly bit, for me it was 5 years. I put 20% down anyway so I thought it was bullshit, I refinanced after 2 years just to get rid of it (and got a lower rate in the process). Quote Link to comment Share on other sites More sharing options...
Supplicium Posted October 13, 2015 Report Share Posted October 13, 2015 Keep in mind that with the FHA loan you'll have to pay for MIP (mortgage insurance) or PMI. There's an upfront chunk of money that you have to pay for that and then a monthly bit, for me it was 5 years. I put 20% down anyway so I thought it was bullshit, I refinanced after 2 years just to get rid of it (and got a lower rate in the process). you want to avoid the temptation of low down payment FHA loans. Put 20%+ down so there is no PMI. Paying for PMI literally gets/gives you nothing so its literally throwing money out the door. location location location and buy right meaning not unique or funky layouts or overpay for what you are getting compared to market (simple price per sq ft is a good start). gahanna/pickerington house should sell faster and hold value easier then one in the middle of lancaster. ... this is my personal opinion, I am not a pro Quote Link to comment Share on other sites More sharing options...
dakotart Posted October 13, 2015 Report Share Posted October 13, 2015 PMI on my mortgage through FHA came out to about 10% of the monthly payment. I ditched that as fast as I could. Look for first time home buyer grants. Ohio had one a few years ago. Quote Link to comment Share on other sites More sharing options...
greg1647545532 Posted October 13, 2015 Report Share Posted October 13, 2015 I think putting 20% down is just a smart idea in general, it won't guarantee that you'll never be underwater but it helps. Useful in case you have to sell in a hurry. Quote Link to comment Share on other sites More sharing options...
AngryBMW Posted October 13, 2015 Report Share Posted October 13, 2015 I would be more than happy to have an in-depth conversation with you regarding your situation and financing options. Feel free to shoot me an email at mstock@usavingsbank.com and I will do my best to give you more information that you may ever want about the home buying process. Thanks! Marc Quote Link to comment Share on other sites More sharing options...
mmrmnhrm Posted October 13, 2015 Report Share Posted October 13, 2015 Yep, get with Marc. Spent the better part of two afternoons playing all sorts of numbers games to see how best to apply the <20% I had when buying my place two years ago. In my case, it turned out the best method was to have about 10% down (which actually left a little bit of cash on the table) and pre-pay the PMI, which pushed me way into the itemized deduction realm come tax season, letting me recoup a portion that I wouldn't have gotten using standard deductions. Quote Link to comment Share on other sites More sharing options...
Lauren Posted October 13, 2015 Report Share Posted October 13, 2015 What do people think about 5/1 arm if you are not planning on living In the house for more then five years or interest only for a few years? The wife and I lease a condo but we want to purchase a house come spring. We will have been in our place two years then. We have 4 years left on on business lease and at that point we are not sure if we want to stay in Columbus. I was thinking an arm or interest only for cash flow reasons but if we do stay could t we just refi into a traditional mortgage? Quote Link to comment Share on other sites More sharing options...
Turbs3000 Posted October 13, 2015 Report Share Posted October 13, 2015 Are you planning on buying something that is turn key or something that needs fixed? Also, talk to Marc. In my opinion your best option will be something like conventional w/ 10% down. Leaving the rest of that cash to work for you in renovations or the market. If you are someone that's up for sweat equity their are still tons of homes to be had at good prices that are in need of some love. What do people think about 5/1 arm if you are not planning on living In the house for more then five years or interest only for a few years? The wife and I lease a condo but we want to purchase a house come spring. We will have been in our place two years then. We have 4 years left on on business lease and at that point we are not sure if we want to stay in Columbus. I was thinking an arm or interest only for cash flow reasons but if we do stay could t we just refi into a traditional mortgage? You also should chat with marc. You are not going to want to sit on an arm that long. Also why would you go arm vs fha or conventional? Both offer benefits of those with low reserves. if you went arm I'd look to refinance after 2. Quote Link to comment Share on other sites More sharing options...
Lauren Posted October 14, 2015 Report Share Posted October 14, 2015 I would go arm route because I don't think I will be in the house 5 years. We would either out grow it and want something new or we would sell and move to Alabama to be with family. I don't mind sweat equity but I don't want to do a full reno on a property. Quote Link to comment Share on other sites More sharing options...
mmrmnhrm Posted October 14, 2015 Report Share Posted October 14, 2015 What do people think about 5/1 arm if you are not planning on living In the house for more then five years or interest only for a few years? If interest rates can be trusted to remain stable, or are already stupid high (think early 80's inflation-busting levels), ARMs make sense for short-term situations like yours. However, we're living in interesting times, where the Fed has held overnight rates at 0% for years, and they're making noise like they want to raise, so neither of those conditions are met. Unless you're able to refinance into something more fixed, or succeed in selling before the first rate adjustment, it's possible (nay, likely) that you're going to be in a world of hurt five years from now. ARMs and their ilk are a good part of why we had a housing bust to begin with. Quote Link to comment Share on other sites More sharing options...
street pilot Posted October 14, 2015 Report Share Posted October 14, 2015 For what it's worth, it is possible to get a loan without PMI irrespective of your downpayment percentage if your credit is good enough. Quote Link to comment Share on other sites More sharing options...
Berto Posted October 14, 2015 Report Share Posted October 14, 2015 For what it's worth, it is possible to get a loan without PMI irrespective of your downpayment percentage if your credit is good enough. Where is more information on this? Other than doing an 80/20 loan. Jive, I thought you had an accountant on your payroll, why asking the forum for advice? . I'd never get an ARM, too much risk and interest rates are so low, its not worth it. Who knows when they'll go up. They keep saying they will go up soon but that's been several years with the same story. So no one really knows. Along those lines to the OP. Are you looking for a 'forever house' or a 'just for now' house? It took us 18 months to find our 'forever' house. We got a good deal and I think a very good interest rate for the time. The advantage of buying now with a really low interest rate may completely blow out of the water 20G's you might save on a house over the loan repayment period. Quote Link to comment Share on other sites More sharing options...
LJ Posted October 14, 2015 Report Share Posted October 14, 2015 For what it's worth, it is possible to get a loan without PMI irrespective of your downpayment percentage if your credit is good enough. Correct, if you can get a bank that will do a portfolio loan. Our mortgage was 0 down with no PMI through Huntington. Quote Link to comment Share on other sites More sharing options...
Radio Flyer1647545514 Posted October 14, 2015 Author Report Share Posted October 14, 2015 My forever home is a house where I can shoot my guns off my back porch. If I can't find that in my budget when I'm ready to buy then I'm willing to build towards that. I could go out the day I get my check and start looking for a home in today's market, I just don't feel that's the smartest decision. It has been brought up that with current interest rates it could end up being the smarter choice which is why I'm asking these questions. The current condo we rent, which is more than enough space, in a decent area sold for 18k in the down market and needed about 8k worth of work. This place isn't my forever home but I don't mind living here now. It would easily sell now in the mid 60's. If prices came anywhere close to this I could buy two in cash, update both with cash and still have enough money to live the way I do now for a year without any income. That gives me zero mortgage on my home, allows me to bring in extra income from another property, and if I can gain even 8,000 worth of value on both that's a decent chunk toward my forever home or another project. What I want to avoid is what I've seen the rest of my family members fall into. Buying a place for 114k years ago, the value dropping to the mid 40's and in today's peak market being worth 20,000 less than original purchase price. I feel like if I start looking for a home this moment I'll fall into this trap. If it was my forever home, I wouldn't care. I'm 25 and don't think I know what I really want or where I really want my forever home. Quote Link to comment Share on other sites More sharing options...
Turbs3000 Posted October 14, 2015 Report Share Posted October 14, 2015 Meet your new best friend. https://www.hudhomestore.com/Listing/PropertySearchResult.aspx?&zipCode=&city=&county=Franklin&sState=OH&fromPrice=0&toPrice=0&fCaseNumber=&bed=0&bath=0&street=&buyerType=0&specialProgram=&Status=0&OrderbyName=SCASENUMBER&OrderbyValue=ASC&sPageSize=10&pageId=1&sLanguage=ENGLISH Quote Link to comment Share on other sites More sharing options...
street pilot Posted October 16, 2015 Report Share Posted October 16, 2015 Where is more information on this? Other than doing an 80/20 loan. http://www.yourstatebank.com/contact-us.htm They have an office in Dublin. Good people. Quote Link to comment Share on other sites More sharing options...
AngryBMW Posted October 19, 2015 Report Share Posted October 19, 2015 For what it's worth, it is possible to get a loan without PMI irrespective of your downpayment percentage if your credit is good enough. Not being a jerk...I'd love to hear more about this... Correct, if you can get a bank that will do a portfolio loan. Our mortgage was 0 down with no PMI through Huntington. Interesting...how old is your mortgage with HNB? What actual loan type? The ONLY program I know HNB will do this for is a Physician loan...which is pretty much the same for any lender in Ohio. What I mean by that is the only way to get such a loan is to be a physician...OR a disabled vet using your VA benefit. http://www.yourstatebank.com/contact-us.htm They have an office in Dublin. Good people. They do still require a down payment...just not 20%. And it is an adjustable rate program if I remember correctly. -Marc Quote Link to comment Share on other sites More sharing options...
LJ Posted October 19, 2015 Report Share Posted October 19, 2015 Not being a jerk...I'd love to hear more about this... Interesting...how old is your mortgage with HNB? What actual loan type? The ONLY program I know HNB will do this for is a Physician loan...which is pretty much the same for any lender in Ohio. What I mean by that is the only way to get such a loan is to be a physician...OR a disabled vet using your VA benefit. They do still require a down payment...just not 20%. And it is an adjustable rate program if I remember correctly. -Marc 2012 HBAN will do portfolio loans for Private Banking clients, which I am. Quote Link to comment Share on other sites More sharing options...
AngryBMW Posted October 19, 2015 Report Share Posted October 19, 2015 2012 HBAN will do portfolio loans for Private Banking clients, which I am. ARM? What requirements to be a private banking client? $x on deposit, etc? -Marc Quote Link to comment Share on other sites More sharing options...
LJ Posted October 19, 2015 Report Share Posted October 19, 2015 ARM? What requirements to be a private banking client? $x on deposit, etc? -Marc Fixed, 15/30 Private banking is based on assets and/or business relationship Quote Link to comment Share on other sites More sharing options...
AngryBMW Posted October 19, 2015 Report Share Posted October 19, 2015 Fixed, 15/30 Private banking is based on assets and/or business relationship Absolutely understood. I was really trying to dig in and see what all would be required to get such an exception made...as someone else without your assets/current relationship with HNB would probably not be able to get the same deal you did. It is great that you were able to get that type of loan...but the average person may not have such accessibility. -Marc Quote Link to comment Share on other sites More sharing options...
LJ Posted October 19, 2015 Report Share Posted October 19, 2015 Absolutely understood. I was really trying to dig in and see what all would be required to get such an exception made...as someone else without your assets/current relationship with HNB would probably not be able to get the same deal you did. It is great that you were able to get that type of loan...but the average person may not have such accessibility. -Marc They still do them for different specific relationships. Say, someone whose parents are private banking, or are extremely longterm customers. Huntington like to hold mortgages when it benefits them. The rates are slightly higher, but the customer benefits are awesome. Quote Link to comment Share on other sites More sharing options...
AngryBMW Posted October 19, 2015 Report Share Posted October 19, 2015 They still do them for different specific relationships. Say, someone whose parents are private banking, or are extremely longterm customers. Huntington like to hold mortgages when it benefits them. The rates are slightly higher, but the customer benefits are awesome. For sure. I would always suggest doing a true cash analysis on upfront MI vs a higher interest rate over your expected life of the loan. Sometimes paying MI is cheaper than the higher rate. What rate are you rocking? If you have enough equity now it may make sense to refinance... -Marc Quote Link to comment Share on other sites More sharing options...
LJ Posted October 19, 2015 Report Share Posted October 19, 2015 For sure. I would always suggest doing a true cash analysis on upfront MI vs a higher interest rate over your expected life of the loan. Sometimes paying MI is cheaper than the higher rate. What rate are you rocking? If you have enough equity now it may make sense to refinance... -Marc 4.125 Quote Link to comment Share on other sites More sharing options...
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