Mortgages

I could never bring myself to go the Adjustable Rate Mortgage......risk is just too great for my gut these days.....the $$ you save if the rates go down rarely end up in savings .......something always comes up & then when rates spike your left with possible eviction.
That's what happened in the 08 financial crisis. That & all the jumbo loans that people fell for. Left thousands out on the street.
Our first home, ( was an old bungalow, great home, but needed constant projects,) was FHA, after a few years, we re-financed at a better rate & got rid of the PMI. Later on we sold it & bought a new home (with less projects,) but had enough equity we were able to go Conventional .....at a really good rate. Thankfully we were able to pay it off several years ago.....now the property taxes are creeping up every year & will soon be as much as our mortgage was, lol.......its always somethin uh??
 
NewVegasRanger said:
A conventional loan is solid if you can come up with 20% down; it'll help avoid PMI and might offer better rates. FHA loans are great if you don't have the down payment saved up. You'll have PMI, but sometimes it's worth it to get into a home sooner.

ARM loans can be a bit risky if rates go up, but if you think they'll drop, it could work out. Just be sure you're comfortable with the risk.
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so....I went through this a couple of years ago, and I found that checking out various home loans options really helped. Some lenders provided good advice that made the process smoother.
 
Wag482 said:
School me on mortgages.
First time home buyer and trying to figure out what my options truly are. I know I know. Now's not the time to buy. But realistically I'm tired of spending 1900 a month to rent, a new sub development is breaking ground just down the street and I think jumping on it is the best option for me right now. Homes will probably be in the 4-500 range. I guess my questions are

-conventional loan? Do I go with that and muster the 20-ish %?
- look into a FHA with 0 down and pay PMI? Making bigger principal payments? Is that even a thing?
-yesterday I went down the rabbit hole of ARM loans. Is that really a good gamble in this market? Basically betting the interest rate is going to go down in the next 5,7,10 years?
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Wow, $1900/month? It's like $3k and up here in Missoula…
 
Bucklowery said:
Make bi monthly payments if you can it add up over the life of the loan
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Pretty much the best advice on mortgages.

You don't have to make a second "full payment", meaning the total once-a-month amount they tell you to make that includes principal, interest, and escrow. That's way too daunting at first.

Instead focus on making a second payment for just the principal amount (usually 20-33% of the payment total at the beginning of a loan) - it really makes a dent in the long term.

Save that second payment for the first six months, put it aside, and never touch it until something breaks in the house. Then keep on making that second smaller payment and after 5 years you will have saved a whole pile of money in interest. Usually $3-4 saved in interest per each extra dollar you pay on that second payment. Gets you out of PMI faster too. I don't like PMI, but if that's the price of admission pay it because IMO the market isn't going to get more affordable any time soon.

Find a deal that works for you is important, don't sweat making all the details perfect if the overall picture is what you need and can do. You can either get a good rate, or a good price, but almost never both. Rates are higher, prices are being held down by that. Might not seem like it because prices have been on a hockey stick upswing lately, but mark my words as the Fed shaves 100 points off the prime rate in the next six months prices will increase even more as the rate drops. Too many people focused solely on the monthly payment and sellers/financers squeezing the nickels out wherever they can.
 
dogz said:
Naturally the home has to meet the FHA requirements as well
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The one I saw was already on a FHA loan. So if transferable the buyer has to come up with the balance and assume the same loan amount. There's probably other details that I don't know about.
 
You can get a conventional loan with less than 20% down. That's what we did on our house. We were closer to 10%. PMI isn't that bad. Definitely avoid it of you can, but it's better than throwing money away on a rental.

You'll pay PMI until you hit 20%. The day you hit 20% call the mortgage company and have them take the PMI off. They won't do it automatically until you hit a higher percentage, I think 22%.

The big thing is to have a paper trail for your money. If you suddenly deposit $10,000 a month before you try to get a mortgage you're going to have problems. If it's a gift you'll need a gift letter. Any other income will need a paper trail. You can get away with depositing a few thousand dollars per month, especially if you start doing it now. Keeping cash under the mattress is a bad idea in general, but especially if that's going to be your down payment.

15 year mortgages will often have better interest rates than 30 year mortgages. Do the math on how much you'll pay on a 15 year vs a 30 year paid off in 15. Even if you can afford a 15 year mortgage it might be worthwhile to go with a 30. In our case the savings with a 15 year loan would be minimal, so we went 30 and have been paying more than required. The extra flexibility was worth paying a little more to us. If we need some cash we can just make the minimum payment for a while.

Paying extra, even $100/month, helps. It all goes to principal.
 
The market is ready for a re-set in value in many areas in the country. I am not sure that a home is a good investment at this time as houses are greatly overvalued in addition to high interest rates.

Before we went off of the Gold Standard, there was a Depression every 80 or so years to re-set inflated values, we are due.

This election is going to have major implications on the economy of this country.
 
VinceMule said:
The market is ready for a re-set in value in many areas in the country. I am not sure that a home is a good investment at this time as houses are greatly overvalued in addition to high interest rates.

Before we went off of the Gold Standard, there was a Depression every 80 or so years to re-set inflated values, we are due.

This election is going to have major implications on the economy of this country.
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Completely agree. Home prices are ludicrous.
 
Montana started their reset May of 22, since then inventory has been growing. We went from about .1 or .2 of a month supply to finally close to or at 6 months supply of inventory. We think of 6 months being a balanced market (IE not a sellers market and not a buyers). Though IMO it's more of a buyers market than anything else. Lots of over priced homes, sellers who've just not embraced the thought that it's not the runaway that it was for so long before May of 22. Montana is easily back 10% since May of 22.

Factors of the slow down:

*Leadership of the country (and or lack there of)
*Ukraine
*Mid East
*Gas prices
*Inflation
*Election year (always hits the RE market but especially this year...)
*Fed rate and every time Powell talks
*Interest rate, when we had 2.5-low 3's people got plain spoiled the 30 year average is 7.9

Lots of people with low rates who are holding on to their low rates and their homes and one can't blame them. Even if they have the money sitting in an account to pay of their mortgage why would they when they can make their payment and yet make 5-6% elsewhere and have their money working for them.

As always, getting into the game (home ownership) is the tough part. But it can still be done, one has to be good with their money and their money choices (can't have 150K of toys and new trucks in the driveway....). One has to make good choices with school loans and calculate which loans will pay off and which won't and then when one finishes school one has to hit it straight out of the gate and pay off that debt before one get's into any other loans. I'm always amazed when I see young people with a 70K truck and they'll take on paying that off in 60 or 72 months but they won't set down the basic discipline to pay off a 70K school loan in the same 60-72 months....choices eh

Couple last things

Stats tell us that when the mortgage rates go down 1% that there are up to 5 million people waiting to do something. I could be wrong, have been so many times before but IMO once the rates get into the low 6's (6.25 etc) that it's going to take off hard. Prices will once again climb rapidly as inventory rates decline. There's a reason for the saying "marry the home, date the rate"

Uno Mas stat...I looked at one home the other day that they fella bought several years back. It's an entry level home and since buying his house has gone up in value 3100 a month. That's pretty much making his house payment (in theory) and that's without taking into account any tax benefits from being a home owner.

How the housing market goes IMO is heavily weighted on November and the results. If they go one way (IMO) then the market will get really good, if they go the other way then hold onto your pennies!

Just a few random thoughts on a gorgeous morning in Montana
 

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