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Lights flicker from the opposite loft

I'm thinking of buying a house.  Yes, this is in part because of my enormous frustration with the cable situation.  But also because I'm paying a lot of money for what is ultimately a fairly small and inconveniently-arranged space. 

My parents have tentatively agreed to help out with the down payment.  I have enough income, but I have only about half the cash I'd need for a sizable down payment.  I've offered to pay it back, pay interest, etc. 

I still have lots to learn.  I can't even remember the name of the insurance you have to pay for if you don't have a 20% down payment.  I'm not even sure I have that factoid right, that 20% is the magic percentage.  

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( 7 comments — Leave a comment )
capemaynuts
Feb. 20th, 2011 10:02 pm (UTC)
Take your time and do your research. Talk to mortgage lenders and look around where you want to live. I don't know where you are, but in my area, the mortgage is not a problem, its the property taxes that are causing all the foreclosures. I'm almost at $9,000.00 a year and I know others paying way more then that. So before you agree to a mortgage and think you can easily handle the $700 a month, make sure that you can also cover the cost of homeowner's insurance, taxes and utilities as well as have a nice amount of savings to deal with problems like replacing appliances. (My inexpensive dryer cost over $500)
Good luck. Home ownership is wonderful, but takes a lot of work too.
np_complete
Feb. 23rd, 2011 10:16 pm (UTC)
Thanks very much for the good advice! Fortunately, property taxes here seem to be much lower. ($9000? OMG!) The real estate sites seem to list the taxes for houses pretty regularly. But one of my goals will be to get a picture of the total cost of living in a place before I consider buying it, factoring the things I don't currently pay (directly) for, like snow shoveling, yard care, gutter cleaning, and so on. I do have renter's insurance now, so that's something I'm already paying for, but I'm sure home owner's is much more expensive.

Thanks again for the advice and suggestions!
bouncy_castle79
Feb. 20th, 2011 10:43 pm (UTC)
What you're thinking of is an FHA insured loan. Typically, the buyer puts 3% down, in exchange for a higher interest rate over the life of the loan than someone who is able to provide 20% down. An FHA borrower can also "buy back" some of the interest rate points, which may be a good investment, since the interest rate can have a significant effect on how much money you end up spending overall.

To echo the first comment, make sure you research the total cost of home ownership. You may need to spend up to $5000 of your down payment money towards inspection and closing costs. Property taxes can be ridiculous in certain areas. Also, down here in South Florida, it's very hard to find a house that isn't in a home owner's association, where they demand an extra $300 a month from you for a 70 year old security guard to sleep at the gate and to maintain community pool you never use. I sound bitter, don't I? :)

Anyway, this is a pretty big decision, so definitely take your time. My boyfriend and I are looking to buy a bigger place, and we've started doing research now for maybe, possibly buying in 12-18 months. Good luck, and I hope you find what you're looking for!
np_complete
Feb. 23rd, 2011 10:23 pm (UTC)
Hey! It's great to see you! And thanks for the suggestions! I appreciate getting the benefit of people's experience!

While I don't want to stay here for another full year (I'm that pissed off) it sounds like I will need to accumulate more cash than I currently have to do this comfortably. So that means a longer ramp up. Though I don't want to move again (I just moved in 2007!) perhaps getting a different, cheaper apartment would be a good interim choice.
kalleah
Feb. 21st, 2011 02:37 am (UTC)
Be very very careful with accepting gifts for your down payment - it makes the financing much more complicated. One other option (depending on your situation) is to borrow against your 401(k). You pay it back with interest, but to yourself. If your parents are willing to help, it might be much simpler to temporarily borrow against your 401(k), do the financing yourself, and use their contribution to pay yourself back early after the closing.
np_complete
Feb. 23rd, 2011 10:30 pm (UTC)
Be very very careful with accepting gifts for your down payment - it makes the financing much more complicated.

Ooh, thank you for the warning. I hadn't heard that before. How does it become more complicated? Do the giftors become parties to the loan in some way?

On borrowing against my 401(k): the problem there is that I just changed jobs, so my last, well-funded 401(k) is no longer available as a source of loans, and my new one has only about $5000 in it. *sigh* I could also tap my Roth IRA, which is funded with after-tax money, or cash out some other non-retirement investments, but I'd rather not.
kalleah
Feb. 24th, 2011 12:51 am (UTC)
Well, you have a lot of income documentation and proof of gift involved. Not sure of the exact details but I've had enough friends run into it to know it's a headache.

Is there a way to roll over your old 401(k) into an IRA or some other account so you have more control?
( 7 comments — Leave a comment )