Approved to buy my first home!

[deerplanter]

First off, congratulations!

Second, I close on a house on Friday. I elected to do the 10 year ARM. It was a great rate and it is locked at that rate for 10 years. Why is that a bad idea for people? You can always refinance after 9.99 years and not have to deal with the giant jack up in price. I know it cost money to refinance but what am I missing????

If your house and real estate market appreciates in value then it's good. If it depreciates then you may not be able to finance what you owe on the house. This happened to a lot of people about 10-15 years ago when the real estate market crashed and people owed more on the house than the value. The people that couldn't pay down on their houses got hit with 18-20% interest and lost their houses. It's a gamble with an ARM.

[JakeM]

If you know of any changes you want to make to the house do it before you move everything in(if possible)! It makes it a lot easier to do floors, paint, etc. without a ton of furniture in the way.

[TildenHunter]

If your house and real estate market appreciates in value then it's good. If it depreciates then you may not be able to finance what you owe on the house. This happened to a lot of people about 10-15 years ago when the real estate market crashed and people owed more on the house than the value. The people that couldn't pay down on their houses got hit with 18-20% interest and lost their houses. It's a gamble with an ARM.

Thanks for this. Sorry to hijack the thread.

In theory, after I sell my current home and recast my loan, I will have paid down 65% of house cost. I should be somewhat protected from the above mentioned scenario, correct?

[deerplanter]

Thanks for this. Sorry to hijack the thread.

In theory, after I sell my current home and recast my loan, I will have paid down 65% of house cost. I should be somewhat protected from the above mentioned scenario, correct?

You should be, it would take a very bad market to loose 65% but there is still a chance of loosing some value. I am not trying to talk you out of it, just telling you what could happen if things were bad. If things are good then you make/save money.

[NannySlayer]

You can PM me, if you would like - my wife and I are 35, have had (3) houses built and bought and sold (4) - we are currently having one built in the DFW area and we have learned a lot of what to do and not do.



We have gotten pretty good at playing the markets.

PM SENT


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[Dale Moser]

Now you know for a fact that’s hard to do....especially for a first time home buyer.
Avoiding PMI (Private Mortgage Insurance) requires 20% down payment of the loan, thereby establishing enough “equity” in the home to where the lender is protected somewhat.
If you have less than 20% of the sales price or value of a home to use as a down payment, you can basically do 2 things.
1. Establish 2 mortgages where you pay PMI on the first smaller loan (usually the amount under the 20% down payment you are lacking) and then pay the second mortgage until said mortgage reaches 78%, at which point the PMI mortgage can be eliminated.

2. The only other option I know of is pay a helluva lot higher interest rate without PMI.....provided you can qualify

This is what we had to do when we built our house, my mortgage guy was great about getting it all set up, and prepping us for the jump in property taxes after year 1. We payed on it for 3 years to get the PMI to drop off, then refi'ed to a 15 year note. I want to say at the time he told me it was going to save us well over $100k over the life of the loan. It has been a struggle at times, with increasing property value, and insurance, but as it is we will pay it off when my son gets his drivers license, as opposed to when he turns 30

[KNEE DEEP]

Tex Cattlemen on TBH can help you with your questions. Great guy to do business with.

[TeamAmerica]

Do your best to keep the emotions out of it and stay patient. My wife said "this is the ONE!". after about the 5th time she said, i would give her lots of grief.

good info in this thread.

[tmurray]

This is what we had to do when we built our house, my mortgage guy was great about getting it all set up, and prepping us for the jump in property taxes after year 1. We payed on it for 3 years to get the PMI to drop off, then refi'ed to a 15 year note. I want to say at the time he told me it was going to save us well over $100k over the life of the loan. It has been a struggle at times, with increasing property value, and insurance, but as it is we will pay it off when my son gets his drivers license, as opposed to when he turns 30

exactly the same situation here

[HotRod Hunter]

Everything that is stated above and don’t be in a hurry to find one. Make a list off all the things you want in a house or don’t. Talk to the potential neighbors find out how the neighborhood really is and if it floods.

[Tex_Cattleman]

Can I PM someone what the lender sent me so we can break it down what this all means?

Thanks for all the help.


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Shoot it to me. I'm happy to take a look.
Trey@treypowers.com

[SaltwaterSlick]

Atta Girl Stephanie!! My congratulations to you!! Pretty much everything has been covered in the very thorough posts above... One thing you might want to check out in the neighborhood is how many bicycles and other "kid" stuff you see around the house you're looking at... Your son will need playmates... Good to move into an area where those are close by and available...


I will say a little prayer for you to have a great first home buying experience and all goes well... However, this whole thing is something that indeed you can control almost every aspect of yourself and it sounds like you have a good start with a good lender and a good realtor. As long as you "trust but verify" what they tell you, you should be set up!!
Congrats again! I'm real proud for you! It is so well deserved!!

[Duckologist]

All great advice. Just bear in mind that pre-approved doesn't mean you will be approved when it comes time to borrow. Basically pre-approval means nothing.

[Jon B]

Do your best to keep your payment under 25% of your income. Do NOT believe the free mortgage calculators. Even with the insurance and tax estimator mine was 40% more than estimated.

[Slew]

Small house , small yard! More money to buy beer and less time spent mowing grass and more time you can spend fishing! I unfortunately didn't follow my advise but that's what it is!!!

Congrats!