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Need some outside input here on mortgages: Both are 30 year fixed APR VA loans. This is new construction so these rates are what they are offering now as we get pre-approved to prove we can get a mortgage to pay for the thing in order for them to start digging our foundation but who know what rates will be in a few months when we're <60 days from closing. We are building a $350,000 house, we have already had the design meeting so that is the total price including options and upgrades, not the base price. We have a little over $50k saved for our down payment with a reserve $20k oh poo poo fund/money set aside for miscellaneous expenses we can't roll into the mortgage like fencing the back yard, buying sod, breaking our apartment lease, etc. I did the math and we could put down the full 20% but it'd only leave us with a reserve $3000 which makes us a little anxious. We have another 6 months or so to sock away more money but we're going off of what we have in our accounts right now this instant. That being said, here's what we've got on the table: Mortgage A: Navy Federal, offering 3.625% Pros: No bullshit underwriting fees and stuff, VA loans are their jam, excellent customer service, pretty drat low rate compared to most everything else we've seen. The loan officer was fairly confident she could get us out of paying PMI but the final determination will come when we actually get the mortgage. Cons: Not local (no branches anywhere in the state) builder has not worked with them before and vice versa, if we go with them we lose preferred lender incentives from the builder (listed below) Mortgage B: Builder's preferred lender, offering 3.8% Pros: If we use them we get a "free" front yard and sprinkler system (if we go with NFCU we have to pay the builder $5000 for the front yard, we are not allowed to close per contract without a front yard in place installed by them) and $3000 towards closing, they are local and work very closely with the builder so they know the terms of our contract. Cons: Customer service is kinda terrible, as in we and our realtor had to hound the loan officer daily to get our pre-approval done by our deadline per the contract, rate is meh, not as well versed in the ins and outs of VA loans Our realtor is guessing our closing costs will come out to about $6000, so we'd only have to bring $3k to the table at closing if we go with Mortgage B, vs having to bring $11,000 ($5000 yard and $6000 closing costs) with Mortgage A. Is the lower rate worth forking over that much money at closing?
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May 12, 2017 04:06
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Problem! posted:
Uhh, has this lady ever done a VA mortgage? You're also not required to put anything down at all. VA.gov posted:This reduces the loan's cost to taxpayers considering that a VA loan requires no down payment and has no monthly mortgage insurance. Also, according to a calculator I found here. Using $350k with 14%($49k) down, if you go for the 3.8% at .857 points(i.e. percentage points of the total loan or ~$3k) versus the 3.625 with 3.143 pts (~11k), you'll save about $166 over the course of the loan. They're pretty well even, I'd say just pick whichever you feel more comfortable with. Your builder's lender might stop being your servicer after completing the loan, as some people re-sell the mortgages to bigger institutions who will take your payment from there-on out. Mine was resold within a month of closing. After getting the loan, there's little to do about the "ins and outs" of VA loans, you're just making payments to someone servicing the loan. HarmB fucked around with this message at 04:22 on May 12, 2017 |
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May 12, 2017 04:13
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supercrooky posted:401k loans are due within 60 days of ending employment. If your emergency is losing your job, you're going into default and getting whacked with the penalty anyway. In the hypothetical that I posted, if your emergency is losing your job then you just lose your emergency fund paying off the 401k loan. Then you're no worse off than had you not taken the loan My suggestion is that taking a small 401k loan gives you more financial flexibility in an extremely affordable way, and if the alternative is to exhaust all of your savings then I think the 401k loan is the safer option
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May 12, 2017 06:47
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supercrooky posted:401k loans are due within 60 days of ending employment. If your emergency is losing your job, you're going into default and getting whacked with the penalty anyway. This is not universally true and it depends entirely on the specific terms of the specific 401k plan. I did something similar, using a 401k loan when I purchased my house in order to keep my cash reserves higher. I then got laid off about 6mo later. However my employers 401k plan let me keep the loan indefinitely, I just had to register a bank account for them to do monthly withdrawals on the payment.
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May 12, 2017 11:50
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Selling my house update: This morning, the buyer of our house just unlocked our front door and walked straight loving in. We knew we had an inspection today, we didn't know that the buyer wanted to be here the whole time, and that the buyer loving has the code to our lockbox. That guy's realtor is an rear end in a top hat.
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May 12, 2017 16:37
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Twerk from Home posted:Selling my house update: This morning, the buyer of our house just unlocked our front door and walked straight loving in. We knew we had an inspection today, we didn't know that the buyer wanted to be here the whole time, and that the buyer loving has the code to our lockbox. That guy's realtor is an rear end in a top hat. You should chew out both realtors on a conference call. If it's against your contract with your listing agent, report him. http://realtormag.realtor.org/law-and-ethics/ethics/article/2013/11/lowdown-lockbox-access
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May 12, 2017 16:42
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H110Hawk posted:You should chew out both realtors on a conference call. If it's against your contract with your listing agent, report him. That is against the contract, and our realtor is PISSED. Seems like this is actually a really big deal. We had been told "the inspector doesn't have the code, so you have to be there to let him in. The buyer might show up around 11:00 AM," so of course what actually happened is the buyer walking right in at 9 saying "where's the inspector?"
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May 12, 2017 16:50
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Should have started shooting. Castle doctrine or whatever it is.
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May 12, 2017 17:04
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When the house we lived in went on the market the selling agent had us bring the lockbox inside and only put it out in advance of scheduled appointment times because apparently most realtors are shady fucks who don't give a poo poo if the house is occupied or not.
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May 12, 2017 17:37
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Spermy Smurf posted:Should have started shooting. Castle doctrine or whatever it is. It's a terrible dilemma, because you don't want to shoot them until you close and get their money but then it's no longer your castle. I guess only shoot them if it is a sellers market.
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May 13, 2017 02:57
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PCjr sidecar posted:It's a terrible dilemma, because you don't want to shoot them until you close and get their money but then it's no longer your castle. I was going to say, talking to the next set of buyers about what happened to the previous deal was going to be awkward...
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May 13, 2017 03:43
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So why did the other buyer back out? Oh they didn't back out they came in.
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May 13, 2017 21:37
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We used the VA loan twice and both times it was pretty painless. (well except never work with cherry Creek mortgage. gently caress this guys with a rake)
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May 13, 2017 21:45
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What the general thought towards paying for mortgage rate locks these days? I have an accepted offer for a house closing on June 21st, so I could see a risk of rates going up by then.
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May 15, 2017 20:34
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I like how the only financial "news" that ever makes the rounds on social media is when someone ridicules millennials:quote:“When I was trying to buy my first home, I wasn’t buying smashed avocado for $19 and four coffees at $4 each,” Gurner told the Australian news show 60 Minutes. We’re at a point now where the expectations of younger people are very, very high,” Gruner said. “They want to eat out every day, they want to travel to Europe every year. The people that own homes today worked very, very hard for it, saved every dollar, did everything they could to get up the property investment ladder. http://time.com/money/4778942/avocados-millennials-home-buying/ If you just live on twitter this is the only event that has happened in business in months!
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May 15, 2017 20:54
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Pryor on Fire posted:I like how the only financial "news" that ever makes the rounds on social media is when someone ridicules millennials: stop buying iphones and then you can afford health insurance, menials 
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May 15, 2017 20:58
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While said in a very, very poor way, he is mostly correct. It's very BWM to spend money every day on Starbucks / whatever coffee.
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May 15, 2017 21:09
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twitter says that rear end in a top hat got a 40k loan from his granddad to buy his first property
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May 15, 2017 21:11
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ohjoshdarnit posted:What the general thought towards paying for mortgage rate locks these days? You should be able to get a free rate lock for June 21st. Shop your mortgage to several people.
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May 15, 2017 21:12
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Pryor on Fire posted:I like how the only financial "news" that ever makes the rounds on social media is when someone ridicules millennials: More like millennials are increasingly realizing that home ownership is not going to be attainable so gently caress it.
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May 15, 2017 21:21
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or you know, median household incomes have been stagnant for more than 20 yrs, house prices keep on going up up up thanks to near-zero interest rates for going on 8 year and bank deregulation, but no, it's because menials are dum and buy $4 coffee and avocados
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May 15, 2017 21:22
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'oh no, millennials arent buying homes. Let's ask some millionaires why' - an idiot if you look at the stats and break down home-buying by socioeconomic status, rich millennials are still buying homes and you realize it's actually just poors not buying homes. poor people not buying homes doesn't sell copy or generate clicks though
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May 15, 2017 21:50
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Kirios posted:While said in a very, very poor way, he is mostly correct. It's very BWM to spend money every day on Starbucks / whatever coffee. Actually he's mostly wrong because the popularity of coffee is not what's making home ownership unaffordable
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May 15, 2017 23:54
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Those costs absolutely add up...before I actually looked at it and really crunched the numbers I spent hundreds of dollars per month eating out without realizing it. Had I not stopped I would have never been able to afford a house.
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May 16, 2017 00:19
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Kirios posted:Those costs absolutely add up...before I actually looked at it and really crunched the numbers I spent hundreds of dollars per month eating out without realizing it. I'm not sure what you mean by hundreds of dollars, but let's say you mean $250/month (noting that you're talking extra, over the cost of eating at home). That's $3k a year. So it'd take you over 10 years to save up that $34k lump sum he received as a 19 year old to start his financial empire. It undermines his point of scolding millenials for squandering money when he never had to face the challenge of a soaring housing market & education costs (in the US at least) coupled with stagnating salaries without the huge advantage of a rich relative willing to drop a wad of cash in his lap. Faced with those challenges, it's no wonder some folks go for some instantaneous splurges rather than living like a pauper for 10 years just to scrounge up enough for a down payment for a house that will bankrupt them when the inevitable structural collapse and/or major appliance failure occurs. Being frugal is good and smart, but you can't become a millionaire by cutting coffee, artisinal snacks, and/or social outings if you have a middling salary and no financial godfairy.
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May 16, 2017 00:59
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Kirios posted:Those costs absolutely add up...before I actually looked at it and really crunched the numbers I spent hundreds of dollars per month eating out without realizing it. Boomers ate out and drank unnecessary beverages and smoked cigarettes by the carton yet homeownership was still pretty accessible for them, so maybe those aren't the real causes for plummeting youth homeownership rates (the real causes are soaring prices and stagnant wages)
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May 16, 2017 01:16
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Rated PG-34 posted:house prices keep on going up up up thanks to near-zero interest rates for going on 8 year and bank deregulation Nah. I agree completely with your sentiment, but interest rates are a red herring. The housing market is a market - it still works on the basis of supply and demand, and pricing is completely a product of that. Interest rates affect the amount of the money that goes to the bank vs. the seller, but the effective price (e.g., the affordability of housing) is still exactly the same, because it is set by the market conditions and not the split. The list dollar price of houses would be lower if interest rates were higher, but someone making enough to afford no more than $1500 a month in payments will not suddenly find their cost to own lower if interest rates rose. Housing is getting more expensive because the population of the country is concentrating in the cities, and the cities are not keeping up with housing demand. Exactly why that is the case is complex, and not necessarily the same in every city, but a lot of it has to do with the current homeowners resisting density, the inability of cities to continue to sprawl as they did during the 20th century, and the recent housing crisis having created a multi-year total stop on new housing starts which created a backlog that is still not really filled. Deregulation of the banks made for more risky financial conditions for those banks, and - pre-crisis - people getting loans that they should not have qualified for, sold by predatory financial institutions happy to get fees for originating them and then passing the risk off on investors who didn't understand what they were investing in. But liar loans and huge balloon ARMs are mostly a thing of the past, so that's not what's driving the current run-up in house prices. Really this country went through a long period of expansion of cities into suburbs, and now that expansion is complete and cities are facing the much more (politically) difficult prospect of having to reduce people's views, build housing without 2 parking spaces per unit, tear down neighborhoods full of NIMBY house owners who have seen their 1989 $200k investment turn into a $650k wad of generational wealth in order to build apartment buildings and condos, and so on; or else see the low-wage workers who make cities actually work get pushed into the absolute fringes of the suburban sprawl and then clog the transportation network with their daily commutes to their jobs serving coffee and cleaning hotel rooms and so on. Gen Xers got rich on the cheap houses they bought in the 1970s and 1980s and they don't want to give them up, and they also can't recognize that market forces have made the opportunity to buy much less available to millenials. But if we want cheaper housing there really is only one option to get it, and that's to build a whole lot more units, faster than the rate at which demand is rising. e. New housing starts, last 10 years:  (source and 1957-present  This latter chart really highlights the hole we've dug for ourselves in terms of housing shortage. Leperflesh fucked around with this message at 01:32 on May 16, 2017 |
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May 16, 2017 01:26
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Just look at this chart This plots median price to buy a house divided by median household income vs time. As this ratio increases, people on the lower end of the income scale get priced out of the real estate market. Source, some Economist blog: http://www.economist.com/blogs/graphicdetail/2016/08/daily-chart-20 What trend does this chart show? Who is on the lowest end of the income scale? That sufficiently explains why millenials are buying fewer houses. Restaurants and coffee are red herrings e: gently caress, Leperflesh coming in with the ninja edit and adding his own plots, Leperflesh you sly devil 
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May 16, 2017 01:36
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This is a very interesting and I assume accurate post and I am going to take it and pass it off as my own thoughts. edit - I will add however that interest rates as a function of total price aren't completely correlated to the product they are financing. To use a housing example, you are to some degree more likely to buy a house if you can buy more house at a given price point. IE, if I can get $300,000 worth of house for $1800 a month, I'm somewhat more likely to leave this apartment than I am if I can only get $150,000 worth of house. bewbies fucked around with this message at 01:49 on May 16, 2017 |
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May 16, 2017 01:38
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QuarkJets posted:Just look at this chart Well, also at the beginning of the chart interest rates were quite high so mortgages were more expensive. Ideally you would take 30 yr fixed mortgage annual cost for a median house divided by median income.
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May 16, 2017 01:55
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Bozart posted:Well, also at the beginning of the chart interest rates were quite high so mortgages were more expensive. Ideally you would take 30 yr fixed mortgage annual cost for a median According to the post, housing prices in the chart are in "real terms", accounting for both inflation and the cost of interest over N years. So a $200k house that costs $300k in interest over 30 years would be priced at $500k
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May 16, 2017 02:08
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bewbies posted:edit - I will add however that interest rates as a function of total price aren't completely correlated to the product they are financing. To use a housing example, you are to some degree more likely to buy a house if you can buy more house at a given price point. IE, if I can get $300,000 worth of house for $1800 a month, I'm somewhat more likely to leave this apartment than I am if I can only get $150,000 worth of house. Right, but what I'm saying is that the "real" cost of a home is the monthly payment x the number of payments. So, for your example, the market should ensure that the $300k house with low rates is identical to the $150k house with high rates (that spread is actually way too wide, but I'm aligning the argument with your example). If rates rise, borrowers must borrow less across the board, so collectively they must bid less for houses, so the list prices of those houses must drop. Actually though... not all home purchases are financed, cash buyers aren't forced to adjust their maximum bid downward as interest rates rise. But a large number of cash purchases are for properties that will then be rented. Anyway because non-financed offers exist, the ratio of list price to real cost of a house to our putative millenial home-shopper does vary a little bit by interest rates, to the degree to which cash offers increase the list price irrespective of rates. But: the majority of homes are still sold to people with mortgages, and so we can safely assume due to basic principles of macroeconomics that should interest rates rise, borrowers overall will have to lower the offer price they can meet for houses, which in turn affects the supply/demand curve proportionally. What I'm getting at here is just that "rates are super low" doesn't affect the actual cost of buying a house for shoppers anywhere near as much as... supply (current stock minus units "lost" to private ownership plus new units built) vs. demand (rising population, shift of populations into cities, buying power of shoppers, general cultural trends towards wanting to own, etc.). In fact, half the argument put forward on this page is that real wages for the middle class have stagnated (and they have). If real wages were to rise faster, demand for houses will rise (more people will have extra money with which to try to buy), and all else being equal, that added demand will push prices even higher. Because of this, we absolutely cannot solve the problem of homes being unaffordable solely through increasing real wages for the middle class. There are only two knobs to be turned to affect affordability of housing for millenials (or anyone else): increase the supply somehow, or decrease the demand somehow. That's it. I think it's often invisible to people, what is happening with supply and demand. We focus more on interest rates, jobless rates, wages, and the general reporting on house prices, and try to draw conclusions about what is driving the market based on that stuff. But it's a basic fact: if there were a lot more houses, they would cost less, and if houses cost too much, it's probably because there's not enough houses to go around.
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May 16, 2017 03:06
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Except you're ignoring that houses are also a speculative asset that contains about 60% of world wealth and absorbs a buttload of surplus capital. Housing is not merely bought and sold for people to live in.
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May 16, 2017 03:28
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Indeed, for a long time real estate has been considered a good investment on the basis that people tend to make a real positive return on a long enough timescale. If real home prices continue rising while real wages stagnate every year, we would expect less of the population to be able to afford homes over time
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May 16, 2017 05:44
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Clearly at some level yes, but you can also see what Leperflesh is saying in the SF real estate market, which is almost entirely supply constrained. Techies moved in, bid up the comparatively small amount of available units, driving prices higher. In this case, increasing wages had an inverse effect on affordability as measured against the median income of the region. It's a truism that people need to be able to afford a product, but the price of that product is also dependent on what people are willing to pay, and in real estate the price is entirely whatever the market will bear. In NYC, increasing wages will only mean rents go up as a fairly static number of units get chased by an increasing number of renters (and then you have an issue where new units cater to newly minted millionaires making them, for the moment, inaccessible to the hoi polloi). Prices can only drop in such a situation by a building boom, or a wholesale collapse of demand, but the latter would of course imply all sorts of disastrous causes to the broader economy. (Ignore if you're in a speculative bubble and you have massive outside capital doing irrational things, ala Vancouver.)
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May 16, 2017 16:48
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kw0134 posted:It's a truism that people need to be able to afford a product, but the price of that product is also dependent on what people are willing to pay, and in real estate the price is entirely whatever the market will bear. In NYC, increasing wages will only mean rents go up as a fairly static number of units get chased by an increasing number of renters (and then you have an issue where new units cater to newly minted millionaires making them, for the moment, inaccessible to the hoi polloi). Prices can only drop in such a situation by a building boom NYC has actually had a bit of a luxury building boom so prices are falling a little at the top of the market https://www.nytimes.com/2017/01/06/realestate/2017-year-of-the-renter.html Though I wouldn't hold my breath waiting for that to filter down to the normal person market.
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May 16, 2017 16:57
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Right, I had that in mind when I put in NYC. The market for high-end condos in the million dollar plus range softened when you build multiple 80 story skyscrapers within a few miles of each other. Who knew?! Meanwhile shoebox studios for the newly graduated have stagnated entirely and now you have to squeeze the entire graduating class of Wellesley into a third floor walkup in Chelsea so they can make rent.
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May 16, 2017 17:35
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edit: misread graphs
baquerd fucked around with this message at 18:06 on May 16, 2017 |
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May 16, 2017 18:02
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baquerd posted:Uhhh, these charts don't match each other. Not only do they not have units, but one is showing a high over 2000 units and the other a high of 1400 units. Which points don't? I only looked briefly. 600 in 2009 1200 in 2017 in both.
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May 16, 2017 18:04
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baquerd posted:Uhhh, these charts don't match each other. Not only do they not have units, but one is showing a high over 2000 units and the other a high of 1400 units in 2008, but they show similar units in present day. They appear to match fine to me... one is for 10 years and one is for like 60 years, did you notice the different time frames? He also linked the source of the data, you can click that to learn what the chart is actually showing if you are unfamiliar with housing start numbers. Here it is again: http://www.tradingeconomics.com/united-states/housing-starts
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May 16, 2017 18:06
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