Ok, bear with me here. I am as green as it gets when it comes to buying a house. Im 28 now, and know where I want to live, so Its time.

Today I looked at a house that I really liked.
Its 1250 Sq ft, and it also has a huge garage thats about 1000 sq ft.

2 acres around it also by the way...

They are asking $119,000, it was built in 2001, but they never got a chance to enjoy it apparantly the gentleman past away (not in the home) a few months after they built it :(

Some of my Questions are...


1) With 2% down, I will have a monthly morgage of $680, if they accept my $116,000 offer. This is at 5 7/8 on a 30 year loan.

So, thats $8,160 in a year* ($680x12)
$81,600 in TEN years*($8,160x10)
$244,800 *($81,600x3) in the 30 year loan..

So, Im paying $128,000* ($244,800-$116,000) in INTEREST in those 30 years:eek: or am I looking at this wrong!

I am planning on going through the Veterans Association (VA)
I dont have a huge amount of cash to put down, I just spent about $7,000 moving from Washington State to Minnesota, so the big down payment option is out unfortunetly.



Also, I left a $1,000 check at the office, is this normal practice?
They said it wont be cashed if they do not accept the offer..

Thanks for helping me out here.

Chad
http://forums.collectors.com/include/uploadbox/viewfile.cfm?files=home2%2Ejpg


http://forums.collectors.com/include/uploadbox/viewfile.cfm?files=home%2Ejpg

You numbers for interest sound right on. Scary ain't it?? Go with a 15 year loan if you can foot the payment. WAAAAAAAY less interest for a little bit more a month in payment.

Nice place by the way.

As for the 1000 deposit, we didn't have to do that, but we delt with a realtor who was a family friend so I couldn't tell yah.

Good find, that house would cost 250,000 in Chico...I hate CA realestate!

Yes that is normal, you realize your buying something over 30 years. You are paying for the use of that money, the risk associated with lending you the money and inflation. You know what a dollar buys you today, how little do you think that dollar will go in thirty years?

Also with 2% down I am surprised you where able to get to 5 7/8% interest. Does the figure you posted include a second or third mortgage? Most first's will at most cover 90% of the home's value which means you have to take a second and even a third to cover the remaining 8%

Also make sure to have a couple thousand in reserver to cover unexpected closing cost's.

And yes a deposit is standard, make sure you can get it back in the event of a problem with closing the deal.

Originally posted by Chad H

http://forums.collectors.com/include/uploadbox/viewfile.cfm?files=home2%2Ejpg


http://forums.collectors.com/include/uploadbox/viewfile.cfm?files=home%2Ejpg

If that house has a basement... then I am REALLY jealous. Otherwise, that is about right for here too, but I want the basement.

A 2 yr old house on 2 acres with a 1000sq ft garage and a good size main living area would sell for about $300-400k up near Sac. That is IF you could find one.

As for the interest you're right on.

and for a 15 year loan. Higher payment, but waaaaaaaay less paid in total interest.

buy buy buy buy, intrest is fun, just pay it and laugh! jiMMy

or do what my parents do, pay cash for everything!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

oops forgot the file the first time.

here is the 30 year numbers, not taking into account the down payment.

Originally posted by Chad H
Also, I left a $1,000 check at the office, is this normal practice?
They said it wont be cashed if they do not accept the offer..
Chad

That $1000 is called an "Earnest Deposit". Generally, it shows the seller that you truly are interested in buying the house.

There are some rules/procedures that surround the process of leaving an earnest deposit. Most significantly, if they accept the offer and then you decide to back out (generally for any reasons other than inability to get approved for a mortgage), then you forfeit the deposit.

In theory, the $$ is to make the seller whole for the time that the home was off the market, etc. etc. Not a big deal if you are committed to the house, but if you get 'cold feet' (no pun intended) then you most likely will lose the $1000.


Place looks great - good luck!

No Basement :(

Where am I gonna put my Pool Table :confused:


Actually that garage has room for that...

Im currently paying just under $1,000 in Rent, so maybe I will look into a 15 year loan instead. I only have one other "Bill", a $130 monthly payment on my Quad.

Im kinda excited, but a lil sceered :eek:

Thanks Glo that is some VERY good information, I appreciate it!

Originally posted by Chad H
Im kinda excited, but a lil sceered :eek:

Right on! Good luck.

Another thing to consider is that you can write the interest off of your taxes. Which has been a life saver for me, I don't know what the fawk I am gonna do when the place sells. I will have to buy another quick! :D

Originally posted by Chad H
Thanks Glo that is some VERY good information, I appreciate it!

If you have excel I can send you this spreadsheet I created. You can plug your numbers in and mess with it. Kind of nice to go into the bank and know exactly what should be happening. :D

Numbers are right and that's a great loan rate. Take the 15 year if you can possibly manage it.

Is that a modular home? Not quite as great a deal if that's the case for that area but the land is hard to beat, especially if it's close to a town rather than out in the middle of corn and cow country.

I think that leaving the 1000.00 is a bit odd but not unheard of. Are you using a real estate agent or going independent?

Question ALL closing fees. They will try to bill you for a standard package of fees that they think they can get away with and you can knock hundreds, possibly thousands off those fees with didligence.

John

Also, don't forget that in addition to the $680 of Principal and Interest on your loan, you'll also be on the hook for monthly payments to cover your property taxes and insurance on the house.

I'm not sure with VA Loans, but on FHA loans, you also have to pay for Private Mortgage Insurance if the loan-to-value ratio is above 90%. This is an additional fee that gets (typically) added to the monthly payments and provides the lender with additional protection in case the homebuyer (you :) ) decides to default in the future.

Just saying all of this so that you are aware that your TOTAL monthly payment WILL be more than the $680. On the plus side, once you own a home you may have enough deductions to go over the 'standard deduction' amount for your tax return. It that happens, it means that you will pay less in income taxes, which, in a roundabout way, means your monthly home cost is lowered...

jdjanda:
Don't need seconds and third's for VA, they back up to $286K with 0 down, so 2% is more than a lot of people pay.

Spaceman:
VA doesn't require PMI.

Chad H: Do question all costs, my realator referred to them as blonde haired, big tittied, secretary fees. Make sure you get your property tax and home owners insurance figured out, it's the other half of the monthly cost.
If you want to scare yourself, use microsoft money and punch in your numbers for the loan, then amoritize it. It'll break down your monthly to interest and your monthly to principal over the life of the loan. Also do it with a 15 year mortgage and look at the difference.

VA mandates certain costs to the seller. See how much of the rest the seller will pick up.

Add the house insurance and the property taxes to the monthly amount.

GOD DAMN THATS CHEAP!!!

Uh... is that a DOUBLE WIDE? Just with the skirt and size of the house... it looks like a MOBILE HOME. :eeK:

Most likely a pier and beam, but seems to sit high. :confused:

If so... as long as the tongue and axles are removed, no problem with a loan. :D

Have fun!

Tom :usa:

Originally posted by welndmn
GOD DAMN THATS CHEAP!!! But the house is small, the garage however :D :D . Hell, I paid $107,500 for a 1650 sq ft 4 bedroom in CA in 97.

He never said if it was a modular home or not. A lot of time they depreciate instead of appreciate.

Well?
:confused: :confused:

It is a modular home. Beggars cant be choosers :)

The shop makes up for that !

Originally posted by Chad H
It is a modular home. Beggars cant be choosers :)

The shop makes up for that !

I most definitely agree! I wasn't ripping on it. I just wanted you to keep in mind that modulars often devalue instead of appreciate so don't expect the value to go way up. The land and shop appreciation should keep you pretty stable as an overall asset.

The appraiser should tell you if it's worth the asking price. If they say it is, then you're good to go.

Congratulations!


John

I highly recoemmned doing everyhting possible to get your hazard insurance, property taxes etc rolled into your escrow via your mortage payments.

It is much easier having only one bill to pay to the lender and they will handle all your tax payments, insurance payments and stuff.

Your monthly payment will be adjusted a bit up and down every year as the lender accounts for changes in insurance and taxes in relation to the amount you put into escrow each month (as part of your mortage payment).

This past year, my payment changed from $1,083 to $1,117 to account for a shortage in the etimated escrow payments. It should go back down next year since the escrow estimates will be back on track. Or you can usually lump sum the increase and keep your "regular" payment, but at the time it was easier to chang the payment. The prevous year, I payed the $140 lump and kept the original payment amount.

Also, what gets a lot of folks is the Supplemental Property Tax bill that shows up a few months after you buy. It has to do with the time between tax payments and who owned what and when. Ask your lender or county assessor/collector for more info on what they estimate the bill to be so you can be prepared.

Chad... my eagle eye wife was the one who spotted the photo and said "double wide" :D

With the 2 acres having lots of room... it is very common for folks to buy a Mobile Home and later build a house. Depreciation is not as much as a factor, compared to having a place on a RENTED LOT (trailer park).

Oh, also remember your 2% VA funding fee can be wrapped into the loan amount. (3% if you already used it once before).

Sounds like a good deal...

Spaceman... LTV needs to be below 80% to get away from PMI. :D

Tom :usa:

Side note... I'm afraid if I ask Pam one more question about mortgages... she'll smack me one. Current market she is putting in 19 hour days. Start at 8... finish up around 3 am. :(

$120k...
you suck.
I couldn't find an porta-crapper in a swamp for $120k in NJ if I looked for the rest of my life :flipoff2:

Hahaha...in San Francisco, that house would sell for . . . well, I don't think you'de be able to find ANYTHING like that down here. But two acres would probably sell for around 10-20 MILLION :eek: Doesn't exist though...:flipoff2:

Use this to play arround with term lenght, interest rates and such.

http://www.mortgage-x.com/calculators/default.htm

-Jeff

We went through all of this just last month. Part of our deal was to take homeowners courses and we learned all this crap. ;) The other thing you may consider is finding an online site where you can print an amortization table (shows your principal vs. interest for the entire 360 payments), get a 30 yr loan, but pay the interest for the next month on top of your payment, ideally as a seperate check with "principal only" on the memo line.

That way, you are paying your loan off faster but not committed to a 15 year loan, just IN CASE something changes like a layoff, etc... Seeing the payment as just principal and interest seems cheap, but if they haven't figured your insurance and taxes in there, it will be more. And like they said, they added another $900 to our closing costs the day before closing, so have reserves ready!

Good luck and congrats :)

Thanks to all of you, I've learned a ton. I know that the Reality agency wouldnt have explained all of this to me, well maybe but I doubt it.........

http://ray.met.fsu.edu/~bret/amortize.html


I am against trailer/double-wide/mobile homes.... they DEPRECIATE instead of APPRECIATING like a real house.


But hey, if that is what you can afford, I guess that is what you can afford :)


Try for the shortest note you can afford... a good rule is no more than 1/3 of your monthly take home pay (make sure to include TAX and INSURANCE)

Originally posted by Chad H
Ok, bear with me here. I am as green as it gets when it comes to buying a house. Im 28 now, and know where I want to live, so Its time.

Today I looked at a house that I really liked.
Its 1250 Sq ft, and it also has a huge garage thats about 1000 sq ft.

2 acres around it also by the way...

They are asking $119,000, it was built in 2001, but they never got a chance to enjoy it apparantly the gentleman past away (not in the home) a few months after they built it :(

Some of my Questions are...


1) With 2% down, I will have a monthly morgage of $680, if they accept my $116,000 offer. This is at 5 7/8 on a 30 year loan.

So, thats $8,160 in a year* ($680x12)
$81,600 in TEN years*($8,160x10)
$244,800 *($81,600x3) in the 30 year loan..

So, Im paying $128,000* ($244,800-$116,000) in INTEREST in those 30 years:eek: or am I looking at this wrong!

I am planning on going through the Veterans Association (VA)
I dont have a huge amount of cash to put down, I just spent about $7,000 moving from Washington State to Minnesota, so the big down payment option is out unfortunetly.



Also, I left a $1,000 check at the office, is this normal practice?
They said it wont be cashed if they do not accept the offer..

Thanks for helping me out here.

Chad
http://forums.collectors.com/include/uploadbox/viewfile.cfm?files=home2%2Ejpg


http://forums.collectors.com/include/uploadbox/viewfile.cfm?files=home%2Ejpg

hey, a garage/shop as big as your house - that sounds like DRM.

Get your real estate agent to give you estimated numbers for ALL the closing costs. Around here the buyer typically pays for just about everything. There may even be things like 'overnight express of paperwork', formal apprasal (sp?). tax stamps (different than the taxes themselves).

If you buy in the first 5 months or so in NC YOU will get the previous owners money for the part of the taxes this year that he/she owned the house. Then comes the end of the year YOU get the tax bill for all 12 months and have to pay it. Lets say they pay 3 months worth, you get the money, then at the end of the year you pay all 12 months but only get to take 9 months off on your taxes. If you buy later in the year the process is reversed and you pay to the previous owner (which means more out of pocket expense at closing time).

You may also be paying 'points' on the loan. Which means each point is 1% of the loan. So thats another $1000 you pay prior to closing on a $100,000 loan. The closing lawyer around here is about $400 so that is another expense you pay.

If you are lucky, the county did a tax re-evaluation in the last few years and you will get a few years before everything is re-evaluated (which means the taxes will go up then).

Oh yeah, one (or is it two?) VERY important thing. Be sure to get a full title search before closing (another $300 around here). Traditional mortgage companies require it. A full survey is typically required also. You don't need to find out the property lines are 10 feet from where everyone thinks they are. And you don't want to find out there is a hidden lien/mortgage against the property from 50 years ago.

You can probably save significant on the house insurance if you raise the deductable. My deductable is $500 and if I don't have a claim for 3 years I break even. Every year after that I save money assuming no claims.

Enjoy home ownership. You are now in more control than before. Learn how to fix leaky toilets/faucets, broken windows, stuck doors, broken dishwashers, etc., etc.

Originally posted by surlynkid


hey, a garage/shop as big as your house - that sounds like DRM.

house is 240 sq/ft bigger thankyouverymuch :p

Originally posted by DRM


house is 240 sq/ft bigger thankyouverymuch :p

you'll add on to the shop soon......................

All you people saying how cheap it is, Mapquest Bemidji, MN. It's way up there. Great country if you can get work. :beer:

Originally posted by RE:Todd
jdjanda:
Don't need seconds and third's for VA, they back up to $286K with 0 down, so 2% is more than a lot of people pay.

Spaceman:
VA doesn't require PMI.

Chad H: Do question all costs, my realator referred to them as blonde haired, big tittied, secretary fees. Make sure you get your property tax and home owners insurance figured out, it's the other half of the monthly cost.
If you want to scare yourself, use microsoft money and punch in your numbers for the loan, then amoritize it. It'll break down your monthly to interest and your monthly to principal over the life of the loan. Also do it with a 15 year mortgage and look at the difference.

VA mandates certain costs to the seller. See how much of the rest the seller will pick up.

That is good advice, and good job clearing up the VA stuff. Your information is dead on.

Originally posted by Pavemen
I highly recoemmned doing everyhting possible to get your hazard insurance, property taxes etc rolled into your escrow via your mortage payments.

It is much easier having only one bill to pay to the lender and they will handle all your tax payments, insurance payments and stuff.

Your monthly payment will be adjusted a bit up and down every year as the lender accounts for changes in insurance and taxes in relation to the amount you put into escrow each month (as part of your mortage payment).

This past year, my payment changed from $1,083 to $1,117 to account for a shortage in the etimated escrow payments. It should go back down next year since the escrow estimates will be back on track. Or you can usually lump sum the increase and keep your "regular" payment, but at the time it was easier to chang the payment. The prevous year, I payed the $140 lump and kept the original payment amount.

Also, what gets a lot of folks is the Supplemental Property Tax bill that shows up a few months after you buy. It has to do with the time between tax payments and who owned what and when. Ask your lender or county assessor/collector for more info on what they estimate the bill to be so you can be prepared.

About escrow....

In MI, my sister&bro had their mortgage sold, no big deal. BUT, one of the companies took the escrow money as a fee or payment, so they were stuck building that back up in 6 month's time. Most loans I've heard of with >80% LTV require an escrowed ITI accounts anyway, but do you have any more information or advice about that escrow account? Anything at all would be fine. :D

Originally posted by DRM


house is 240 sq/ft bigger thankyouverymuch :p

WHEN I get the shop built.... 3000 sq ft (two story)... house is 2500 sq ft. Seems about right. :)

Tom :usa:

Originally posted by rusted


About escrow....

In MI, my sister&bro had their mortgage sold, no big deal. BUT, one of the companies took the escrow money as a fee or payment, so they were stuck building that back up in 6 month's time. Most loans I've heard of with >80% LTV require an escrowed ITI accounts anyway, but do you have any more information or advice about that escrow account? Anything at all would be fine. :D Question the escrow account also. I've heard many varied stories about them. Bottom line is you can pay your own property tax and your own insurance instead of having it come from the escrow account, once you close the deal. Generally, the initial escrow account covers the first payment on these, and also your closing costs. That said, I let my tax and insurance pay from an escrow account so I don't have to deal with it.

I didn’t calculate it but the interest sounds about right.
You can reduce the term of loan by seven years by including an additional 1/12 of the payment each month. You figure out how much you’ll save to get out 7 years early.
Go to bankrate.com, great info and calculators.

You also need an accurate estimate of what your payment will be after they screw you with the PMI, and add your escrow payment.

Your rate sounds great.

Also they Check you left is referred to as a “Good Faith” down payment, it’s typical.

It might be too late, but buy a book called “House buying for dummies” it’s great.

Good luck.

Originally posted by RNM2000
We went through all of this just last month. Part of our deal was to take homeowners courses and we learned all this crap. ;) The other thing you may consider is finding an online site where you can print an amortization table (shows your principal vs. interest for the entire 360 payments), get a 30 yr loan, but pay the interest for the next month on top of your payment, ideally as a seperate check with "principal only" on the memo line.

That way, you are paying your loan off faster but not committed to a 15 year loan, just IN CASE something changes like a layoff, etc... Seeing the payment as just principal and interest seems cheap, but if they haven't figured your insurance and taxes in there, it will be more. And like they said, they added another $900 to our closing costs the day before closing, so have reserves ready!

Good luck and congrats :)
Good advice but let me clerify.
You pay the priciple it shortens the loan and saves you money. Just make sure your loan will alow that. Some don't.
Now if you were in buisness for yourself you can play with this by paying extra towards the interest as well. This too shortens the loan BUT the gain is you take it back off your taxes when you do an itemized deductions. If your employed by someone else then no gain but this would sometimes help the self employed lower their taxes.

Even an extra $20 a month against priciple adds up. The first couple years that $600 payment may be $550 in intrest and $50 in principle. Towards the end of the loan your payment would slowly flip and $550 of your payment is towards the priciple and $50 towards interest. The banks get their money up front.

At your age and the current interest rates.....Go for the 30 and pay extra when you can. If you stay there 20 years then as your property appreciates your on top. Odds are it will double in value but you will have that nice low payment.

so when are you gonna invite all the 2BB's up there for some wheeling? good luck chad and we miss you here in WA.

Originally posted by rusted


About escrow....

In MI, my sister&bro had their mortgage sold, no big deal. BUT, one of the companies took the escrow money as a fee or payment, so they were stuck building that back up in 6 month's time. Most loans I've heard of with >80% LTV require an escrowed ITI accounts anyway, but do you have any more information or advice about that escrow account? Anything at all would be fine. :D

Well, my mortgage was sold three times prior to me refinancing last year. The escrow money followed it around too. There were some adjsutments made here and there as I said before, but the money was never "touched" like your relatives was.

That sounds sort if illegal though, as that is YOUR money in escrow that you are saving for the lender to pay your bills with. It is NOT their money to use as they please. Its the same as if your bank took all the money out of your account to pay their electric bill and never put any money back in your account.

Just be sure to read all the fine print aobut the escrow account and what they can and can not do with/to it.

If you are worried about it, then don't use escrow after the loan closes and then open a new checking account and setup some sort of automatic transfer from your regular checking into it using the estimated numbers the lender gives you, plus a few % extra. Then have your insurance company do electronic withdrawls for the hazard ins payments, and then you should hopefully have most of your property taxes are covered when the bill comes every 6mo (well, here in CA its every 6 mo). Beats trying to come up with $1,000+ when the bill shows up. Its more work for you and you need to figure out how tomake adjsutments every year as things changes, but you have the control. I still prefer the rolled escrow so its one bill for me.

I also recomemend looking into local "taxes", bonds and supplementals the lcoal gov't adds. You can't do anything about them, but they won't be a suprise when you wonder why there are 5 extra things on your tax bill adding a few hundred bucks to it.