Mortgages

[bone collector 13]

Love all the info so far. Definitely not ghosting this thread. Soaking it all in. Genuinely appreciate everyone’s insight. Is it weird that I trust this group of internet strangers more then regular internet strangers?

 

[bojangles808]

Look into a USDA rural housing loan. Depends on the area (there's a map online if you search;think non urban areas) , but we moved into our place in 2018 for only 7k in closing costs and zero down payment The rate was lower than a conventional 30 year too and we saved our down payment instead. It's a sweet program

 

[bone collector 13]

And to clarify. More like in what @CorbLand is describing, dont necessarily have the 20% right now, But I can swing it in time. But do I wait till I have 20% and then start looking or just jump now at 5-10%?

 

[Fire_9]

And to clarify. More like in what @CorbLand is describing, dont necessarily have the 20% right now, But I can swing it in time. But do I wait till I have 20% and then start looking or just jump now at 5-10%?

I would just pay the PMI and go 30 year conventional. I'm far from a money expert but I feel like it's your best bet

 

[CorbLand]

And to clarify. More like in what @CorbLand is describing, dont necessarily have the 20% right now, But I can swing it in time. But do I wait till I have 20% and then start looking or just jump now at 5-10%?

Meet with a lender and go over all the options. Your lucky in that they are having to actually work to make money now.

My PMI ended up only being 60 bucks a month and we should be able to get rid of it next month. I would not let having to pay PMI discourage you from buying now.

Personally, I think we are set up like the 70/80s again. Things are going to stagnate out, prices wont change and in 20 or so years, you will wish you had bought two houses. There is always a black swan event that could happen, make the best decision you can with what you have now.

The thing I wish I would have done sooner is have a little more faith and confidence in myself to make it happen.

Also, @Yellowknife advice is spot on. Couches are expensive, lawn mowers are expensive, weed whackers are expensive, buying the house is the cheap part.

 

[S.Clancy]

We bought in 2022, so fairly recent. I ran a number of scenarios. We had the $$$ to do 20% down. We chose not to, instead used some of that money to buy down our rate back before anyone was doing that. We have the same payment even with a very small PMI. It is all about running the different options and deciding what is best for your situation.

Also, we used a local broker, but worked with several online brokers as well to get a full picture. Don't just settle for the first broker, set up a competition for who can come up with the best idea. Make them work for their $$$.

 

[hobbler]

Look into a USDA rural housing loan. Depends on the area (there's a map online if you search;think non urban areas) , but we moved into our place in 2018 for only 7k in closing costs and zero down payment The rate was lower than a conventional 30 year too and we saved our down payment instead. It's a sweet program

Even without enough info, this is the correct route. 30 year fixed will help you sleep better. If you want to post marital status, income, kids, potential kids, balance sheet etc. you can, but the answer will be the USDA on 30yr fixed if u qualify (location and income).

 

[BFR]

Both of my daughters are in home mortgages, this is their advice.
Since you are a first time homebuyer, get with a mortgage broker and find out about your options for first time homebuyers. Just make sure the broker is familiar with the programs. They usually have reduced rates and potential down payment grants.

 

[southLA]

I was going to put down 20% on my first house (2020), but ended up going with 10% down since PMI was only $25/month. I did get a 3.65% rate though.

 

[Yellowknife]

Also, we used a local broker, but worked with several online brokers as well to get a full picture. Don't just settle for the first broker, set up a competition for who can come up with the best idea. Make them work for their $$$.

The last few times, I've done something similar. Mortgage terms are negotiable within reason, and it helps to have several options on the table.

 

[TCUHunter34]

Do some research on “subject to” mortgage or loan assumption. Call realtors in your area and see if they have anybody that will sell in this manner. There are risks with it you need to familiarize yourself with but you can get a nice house at a good rate with minimal money down.

 

[ShallowMinded14]

I would echo the sentiment that time in the market beats timing the market. I went the FHA route on my first home purchase in 2020. The fine print in the FHA loan is that you have an FHA fee (akin to PMI) that never goes away for the life of the loan regardless of equity.

I could have done a 30-year conventional but got a better rate with the 30-year FHA and the math worked out to where the "FHA Fee" was about equal to the interest increase in the convectional loan.

Outside of the loan advice, I would advise you to buy a home you like in an area you love as soon as you can.

 

[Customweld]

The thing I wish I would have done sooner is have a little more faith and confidence in myself to make it happen.

I think about this often.

 

[svivian]

That’s not necessarily true. I’ll take my 2.95% fixed 30 year and pay that as long as possible, while putting the extra money in t bills paying me 5.40% and state tax deductible.

While this is smart it unfortunately does not apply to the OPs situation.... or anyone buying or getting a new mortgage in this rate environment.

 

[svivian]

And to clarify. More like in what @CorbLand is describing, dont necessarily have the 20% right now, But I can swing it in time. But do I wait till I have 20% and then start looking or just jump now at 5-10%?

PMI is not forever... you will hit 20% faster than you think between payments and potential appreciation. Those who bought in 2020 with nothing down are far better off now than those who tried to wait to get 20% down.

If you look at housing prices over the last 100 years, time in the market is far greater than trying to time the market as others have said.

 

[Ucsdryder]

While this is smart it unfortunately does not apply to the OPs situation.... or anyone buying or getting a new mortgage in this rate environment.

Agreed but I was quoting someone that said refinance when rates drop then pay off early.

 

[MattB]

I would go with a 30-year fixed rate loan, even though a 15-year will have a slightly lower rate. You can always prepay principal on a 30 to pay it off sooner, but you won’t have the option of reducing the monthly payment on a 15 if you hit a rough patch. If rates fall significantly, refinancing to a 15 is always an option.

 

[TN2shot07]

PMI is not forever... you will hit 20% faster than you think between payments and potential appreciation. Those who bought in 2020 with nothing down are far better off now than those who tried to wait to get 20% down.

If you look at housing prices over the last 100 years, time in the market is far greater than trying to time the market as others have said.

Partially true - the pmi is based on the loan to value ratio and will go away once you hit the 80/20. That’s based on the original value so you’d have to pay for a new appraisal if you want the new value reflected (and it has to be an appraisal through someone the bank approves). If you have a 30 year mortgage and pay it that way you barely touch principal the first 7-10 years so PMI will stick around a while.

 

[svivian]

Agreed but I was quoting someone that said refinance when rates drop then pay off early.

Gotcha, unfortunately I think that we are in a strange period similar to the early 1980s where mortgage rates were high and deposit rates were similar if not higher. Those who were able to take advantage of the historically low mortgage rates in 2020/2021 are now getting to reap the benefits of high deposit rates while having a low mortgage rate.

I dont see an era like this happening for another 20-30 years but hell who knows anymore.

 

[TaperPin]

The difference between average and great mortgage brokers can’t be stressed enough. In any town, 80% of the loans will be made by 20% of the brokers - average lazy ones will gladly make the loan, but they aren’t up on the latest options and don’t really care if you get the best deal, because they are just working for a paycheck.

Now is a good time to find who the good ones are and have them give you a workable path to go from where you are to getting in a house. One broker failed to tell us the state had a pot of money for first time home buyers that paid $3k of our closing costs.

Even having to pay PMI can be better than renting a few more years, but it is nothing but money down the toilet and into the lender’s pocket.

Just as important is getting a good deal on the house - old house or new, sometimes odd things pop up in your favor. A niece found a new house that the original buyer needed to back out of, but already had a contract with the developer, so she got $100k in the original buyer’s upgrades for free and had their interest rate paid down quite a bit. They couldn’t have swung it had this deal not popped up.

Same happened with our oldest - a small high quality builder had a cash flow issue and dropped the price of one of their new houses for a quick sale - saved them $60k over what the identical house sold for next door.

Used houses are a whole big topic in themselves. Lol