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June 2011 Moms
DaisyJanie
member
NBR: Down payments, buying a new house etc.
DaisyJanie
member
We are looking at buying a bigger house. We are going to talk to mortgage brokers soon, but there's always someone around here who's an expert at something, so I figured I'd ask here about how the mortgage market is right now. We were planning on being able to sell our current house at a small profit and use that toward a down payment for the next house, but it seems that's not gonna happen anytime soon - we'll probably have to rent it out. So I just don't see us being able to afford a 20% down payment on the next house. I bought our current house with only a 5% down payment, but that was the crazy days in 2007 - are people still doing loans like that? We have excellent credit, stable jobs, etc etc, and will definitely be able to afford the payments on the houses we're hoping to look at.
Also, we'll be considering both older homes and brand-new homes. Are builders offering a lot of incentives like paying for closing costs? My family and I have always bought older houses so if we went that route, that would be entirely new to me!
Has anyone bought a house recently or work in the field, and can shed some light on this?
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Re: NBR: Down payments, buying a new house etc.
I purchased our home in 09 with 3.5% down. I financed the mortgage completely in my name but the title is in both our names.
Why dont you see if you can finance the new home in either you or DH's name only?
ETA we made an offer on a new house and the builder gave us 20k in upgrades and $5k towards closing. We purchased another home but the offer was definately on the tale.
I am in no ways an expert, but we are in the process of refinancing so I have some recent knowledge.
They are still doing loans without 20% down. They have to. Who the hell has 20% down nowadays...at least where we live in New England, house prices are just so high that 20% down seems unreachable for people of moderate income. Anyways, they charge PMI (private mortgage insurance) when you don't have 20% down. I know that the have doubled the PMI payments since we originally bought our home. We are paying the PMI off in this refinance so we don't have to pay it anymore.
I work for Ryland Homes in Charleston - we do new construction and have in-house financing. We include a $4k closing cost incentive, on top of a sales incentive (usually $10-15K) for home options.
In general, we collect 5% for conventional loans, 3.5% for FHA loans, and have some outside lenders that offer various programs (CHIP, bond loans, etc) with a 1% down payment. I'm not on the mortgage side, so I don't know all the ins and outs, but I think the down pymt %% are fairly standard. Hope that helps
See, I knew I'd get some good info here, but I didn't expect someone to work for a builder in my own town.
I didn't know that's what you did, skrichar.
This all sounds good. We pay PMI on my current house, and I was hoping to avoid that, but it's okay if I can't, I guess. I was really getting disheartened thinking about how we were going to manage to come up with $40K cash, and wondering how in the heck everyone else does it. And I know houses in our neighborhood are affordable, I can't imagine in the Northeast!
Skrichar, do many people come in with a buyer's agent? Would that end up costing us more money? We're talking with a realtor we know, and he sent over some paperwork for us to sign, and I guess I'm a little scared of the commitment...
Yes, I'm not in sales - I do corporate accounting for Ryland, so I don't know all the details, but I do know some
A good amount of our buyers have agents - and Ryland pays their commission - generally 3%, so it costs the buyer nothing. I believe that is generally the case. So something to consider if you did think about selling your current home - you would be responsible for paying a realtor for your buyers (if they had one).
Also, we generally only require a $2k down payment at the time of contract, and the balance of your earnest money (5% or less) is due prior to the start of your home. Of course, there may be some additional cash due at closing, depending on your closing costs and all, but we do provide $4000 towards those if you use the Ryland mortgage.
I am, by no means, an expert either, but do live in the area. We did an FHA loan on a relatively new house in West Ashley. The only thing you have to worry about with FHA loans is that they tend to have pretty strict inspection standards so foreclosures, short sales or really old houses may not work out for an FHA loan.
Putting 20% down was not even close to an option for us so we pay PMI every month. It sucks but will drop off in the next 2-3 years once we have a bit more equity in the house.
Our mortgage broker was excellent so PM me if you want his contact information. Just let me know if you PM because I am horrible about checking them!
Will you be able to get another mortgage if you still have one out on your current home?
I've seen on the Nest that most lenders want you to have a year or more of steady rental income before they consider it a true rental property. Also, apparently there are some mortgages that do not allow you to rent out the home -- from what I've heard a lot of "first time home buyer" incentive type mortgages make the stipulation that the mortgage must me used for the home that you live in, not one that you rent out. You should check the terms of the mortgage you currently have to make sure you aren't possibly violating them by renting your house.
These are some of the reasons H and I aren't renting out our house and instead we are re-listing it next month and hoping to break even. The mortgage we would qualify while still carrying our current mortgage isn't enough to buy the giant house I want (and we need).
Good luck!