The Super Official Homeowners Thread

[Senor_Taylor]

That total per month there is still way less than we pay in rent currently. I suppose the goal should be to have at least 40k cash to put down and pay fees and such right away? Then have 10k saved for repairs and stuff? Yowza

[SlimKlim]

Yeah brother it stings. I still rent because I like shiny things and instant gratification too much.

[Deceus]

That total per month there is still way less than we pay in rent currently. I suppose the goal should be to have at least 40k cash to put down and pay fees and such right away? Then have 10k saved for repairs and stuff? Yowza

I'll get you a break down of what all I paid to close on a $400k house. You'll need some cash on hand upfront to put in an offer (earnest money) and some money to pay for inspections ideally but most of it is paid at closing. I had to put down $4,500 to make the sellers happy (it's a deposit so you get it back) and I spent $1,200 between the home, pool and plumbing inspections.

This dude has some good content that will answer a lot of your questions especially with FHA loans:

https://www.youtube.com/watch?v=ujc7775SDEk

[JPolen01]

YMMV on earnest money. We had to put a deposit of like $250 if I remember correctly. But yeah you'll need quite a bit of cash just to close on the house. Can't finance that cost.

Plus money for movers, new furniture, deposits for utilities, money for home inspection, chimey inspection. So much money spent while moving.


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[Deceus]

Points (.484%) to get 2.75%: $2,000
Commitment fee: $395
Underwriting fee: $699
Appraisal fee: $525
VA Funding Fee: $14,400 (this is basically PMI everyone getting a VA loan has to pay don't worry about this number)
Recording fee: $90
Prepaid taxes + insurance: $2,158
Initial Escrow: $1,131
Title Insurance: $26

Total: $23,710
Deposits: $7000
Financed: $14400
Cash to close: $2310

The $2500 concession and $4500 deposit brought the total down to $16,181,those were paid when I put the offer in like I mentioned and the funding fee was financed. I paid about $1500 total during the due diligence period to make sure I wasn't buying a total dumpster fire. It won't look exactly like that as VA loans are a little different but most it will be the same.

[Senor_Taylor]

YMMV on earnest money. We had to put a deposit of like $250 if I remember correctly. But yeah you'll need quite a bit of cash just to close on the house. Can't finance that cost.

Plus money for movers, new furniture, deposits for utilities, money for home inspection, chimey inspection. So much money spent while moving.


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Yeah, no doubt. Just looking for some real numbers on what these end up being. Online searching is one thing, but hearing it from the people that spent the money will probably give me a better idea. 

Just spitballing, but have people pulled out personal loans to cover closing costs?

[Deceus]

YMMV on earnest money. We had to put a deposit of like $250 if I remember correctly. But yeah you'll need quite a bit of cash just to close on the house. Can't finance that cost.

Plus money for movers, new furniture, deposits for utilities, money for home inspection, chimey inspection. So much money spent while moving.


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Yeah $4,500 is pretty high for earnest. I had to move fast in a hot market and was putting next to nothing down and what really spooked the sellers was they needed to move fast as well and I was putting in an offer without actually seeing the house in person. The faster you need to move, the more you're going to get burned on either end of real estate. I didn't mind it as I was pretty set on the house so I knew I'd be getting the money back.

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YMMV on earnest money. We had to put a deposit of like $250 if I remember correctly. But yeah you'll need quite a bit of cash just to close on the house. Can't finance that cost.

Plus money for movers, new furniture, deposits for utilities, money for home inspection, chimey inspection. So much money spent while moving.


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Yeah, no doubt. Just looking for some real numbers on what these end up being. Online searching is one thing, but hearing it from the people that spent the money will probably give me a better idea. 

Just spitballing, but have people pulled out personal loans to cover closing costs?

You can roll some costs into the mortgage itself but you have to be invested personally to some degree especially with an FHA. You'll need 3.5% in cash you own minimium and that does NOT include the the other closing costs (non-recurring closing costs, pre-paid expenses, and discount points).

[Apoc]

Don't buy a house in nova in your 20s unless you knocked someone up. I did it, twice. The house part, not the knocking up part. Way overrated. Wish I enjoyed my freedom way more.

Our last nova house was $545k. Our out of pocket when we purchased it was about $125k and we used a 7/1 ARM to get our payment to $2200/month all in.

[.RJ]

Start playing around w/mortgage costs calculators to get a feel for how it breaks down, you'd probably do an FHA loan with a 3.5% downpayment which would look like this. Although it doesn't show closing costs (2-3% of home price). 

Any downpayment under 20%(?) requires PMI or... MIPs on FHAs I think, which adds a significant amount to your monthly cost until you've made a certain number of payments.

Yes on the loan calcs, but not all loans have PMI. I've never had PMI and always done a 10% down payment - if you can get in with Navy Fed your life will be much easier, but there are other good CU's out there too - run the costs, do the research, build a spreadsheet, because a 30 year fixed mortgage is not always the best thing - if you are stretching your budget then every point counts. PMI is money you will never get back avoid it if you can. More % down means lower interest rate too, but you can always refi later. But 10% down on $550k means bringing $70-80k to the table to close.

Also don't buy a house while you are young and not married. You'll spend your free time maintaining the house and limit your relocation abilities dramatically.

Caveat - yes to a point, but, buy something you can hold and rent if you decide you dont want to be tethered to it. I wish I'd done more to build wealth/savings earlier but racecars motorbikes no ragrets dot gif.

Also $550k is a ridiculous budget for a house for someone that only needs a house for themselves.

Yeah, this here. Figure out what you want - i.e. garage space, bedrooms, roommates, etc - and then figure out if you can a) afford the location(s) you want or b) live with the commute options.

Its a really hard market - and you kinda have to look at a bunch of houses to figure out what you want so it may be worth looking at what you can see now, if there are open houses around (not sure because hot market and covids). Once you've been in a bunch of houses/neighborhoods you can better make a judgement on photos alone.

Its a big purchase and its stressful but it can be worth it.

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Just spitballing, but have people pulled out personal loans to cover closing costs?

Bad idea, IMO. If you're borrowing twice you cant afford it.

Happy to talk this over more over a beer if you want.

[JPolen01]

Another point - don't use the bank pre-approval amount as your budget. Bank doesn't care if you can't afford utilities, food, furniture, car payment, etc. Be realistic.

We were approved for nearly $700k. Could we have paid the mortgage? Sure, but we would be sitting in the dark, on folding chairs, with no cars because we wouldn't have been able to cover any other costs.

It's extremely unlikely a bank will give you a mortgage if they see you borrowing for closing costs. They (and you) know you can't afford it. You can't pull loans while in the buying process.


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[Deceus]

Caveat - yes to a point, but, buy something you can hold and rent if you decide you dont want to be tethered to it.  I wish I'd done more to build wealth/savings earlier but racecars motorbikes no ragrets dot gif.

So much this. It was VERY painfully letting the old place go knowing the income potential there. Not only did I lose out on the chance to make a ton of money, it would have been really great to keep a little retreat to visit whenever we wanted for races, friends and whatnot. Had I had $70k-80k on hand I could have easily kept it but I wasn't even close. Painful lesson to learn but learned well. If I want to be truly well-off and secure I have to stop fucking around so much.

[Senor_Taylor]

Thanks everyone. Let's keep this rolling. Whether or not I try to make something happen, it's good to have the right information. The right answer may be to move out of this townhouse and try to find a "real" house to rent. I just hit the jack pot on a 2+ car garage plus unlimited street parking and even a parking spot for my trailer. Rent goes up every year by about 5% so eventually we'll be paying 4k a month for this place so either I need to find another perfect rental, buy a house and make it mine, or be ready to lower my expectations.

[Sijray21]

Another point - don't use the bank pre-approval amount as your budget. Bank doesn't care if you can't afford utilities, food, furniture, car payment, etc. Be realistic.

We were approved for nearly $700k. Could we have paid the mortgage? Sure, but we would be sitting in the dark, on folding chairs, with no cars because we wouldn't have been able to cover any other costs.

It's extremely unlikely a bank will give you a mortgage if they see you borrowing for closing costs. They (and you) know you can't afford it. You can't pull loans while in the buying process.


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Yes, haha.

They approved $650k for me and that would've been so much loan for me at the time. Hot dogs, ramen, and rice for years if I did that.

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Thanks everyone. Let's keep this rolling. Whether or not I try to make something happen, it's good to have the right information. The right answer may be to move out of this townhouse and try to find a "real" house to rent. I just hit the jack pot on a 2+ car garage plus unlimited street parking and even a parking spot for my trailer. Rent goes up every year by about 5% so eventually we'll be paying 4k a month for this place so either I need to find another perfect rental, buy a house and make it mine, or be ready to lower my expectations.

Yeah, good to start the research and info rolling in for a little while before buying a house. There's a lot to learn and a lot to risk initially.

[.RJ]

Caveat - yes to a point, but, buy something you can hold and rent if you decide you dont want to be tethered to it.  I wish I'd done more to build wealth/savings earlier but racecars motorbikes no ragrets dot gif.

So much this. It was VERY painfully letting the old place go knowing the income potential there. Not only did I lose out on the chance to make a ton of money, it would have been really great to keep a little retreat to visit whenever we wanted for races, friends and whatnot. Had I had $70k-80k on hand I could have easily kept it but I wasn't even close. Painful lesson to learn but learned well. If I want to be truly well-off and secure I have to stop fucking around so much.

Also, Taylor - what is your motivation here? If its to build wealth/income then you can also buy smaller houses just to rent. Being a landlord is another job in itself, but, its an option - dont you have family further south in the state? You could probably buy 5 rentals there for the cost of 1 here.

[HAULN-SS]

Polen already said everything I was going to say. Count me as +3 to not buying before you are actually ready to settle down. You can't just dump a house when you're tired of it unless you get extremely lucky - and selling if probably going to require you having some money on hand too, depending on your equity situation. There's also shit for inventory right now. Not even worth looking at houses online 2 years out in my opinion so you don't accidentally get sucked into trying to do something before you're ready. I would also not recommend buying anything more than 4x your income as a rule of thumb.

[JPolen01]

Negotiate your rent with the landlord. Don't just take 5% in the ass. If you guys always pay on time and are good renters (you seem to be fixing up things here and there) then tell the landlord no increase.

It's extremely difficult to find good tenants. Especially right now. He should be extremely happy you continue to pay and he isn't up shits creek with everything that is going on. Flipping a house for new tenants cost money, background/credit checks cost money, the time to find a new tenant costs money.

Use those shrewd negotiating skills!


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[Apoc]

It's not untrue you can build wealth with property, but too many people get caught up in TAH RENTAL INCUMZ ideal. You know how you get to a satisfactory income/savings level in your 20s? Move at the drop of a hat for any job that piques your interest in a high growth company.

Landlords worth a damn will negotiate. It costs money, in one form or another, to find new tenants. We only had one slight change in three years renting in Seattle. Also, who cares about total cost of your rental? You aren't paying it and you're gonna have roommates whether you rent or own at this point.

[Senor_Taylor]

Our rent was supposed to go up $500 our first year and I negotiated to keep it the same. This third year it went up 333 dollars, which we were fine with.

Motivation for wanting to buy is to have less uncertainty and start building something that is mine.

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[Apoc]

I think you misspelled freedom.

If you want less uncertainty, keep a car for five years. If you can manage that, you might be ready for the commitment of a house.

[Senor_Taylor]

Alright thanks everyone for the advice I didn't ask for.