Considering New Home Purchase - Need Advice

NEW -> Contingent Buyer Assistance Program
Giltee, do not do the jumbo 3/1.



You should try be fixed for at least 10 years. What kind of rates are you getting on the 3/1 and 10/1? Take a look at penfed.org and consider the 5/5 arm. This might be a good compromise for you. It's currently at 5.75%. You are fixed at 5.75% for 5 years and it will readjust every 5 years(2% max). So the worst case scenario is 5.75% for 5 years and 7.75% for 5 years.
 
Fifteenth the longer mortgage suggestion. The current mortgage sellers are going to have all their current capital stripped from them by losses over the next few years. The government is already having to partially quasi-nationalize the market through back doors like the TAF and the FHLB. 3 years forward will be near the end of a monster wave of foreclosures and I think it's very hazardous to count on being able to refi then at a bearable price. Look at what Fannie had to do with the jumbo lite guidelines - refi's require 25% down, i.e. just take a hike if you really need it. And that's now, before the real losses have hit.
 
<p>giltee - You may find that many 10-yr products actually exceed the interest rates on 30-yr fixed products. The tip on penfed.org is accurate, they do have great rates. Note, if your mortgage will exceed 750K, you will need 25% down and great credit. Also consider dcu.org. They tend to have very good rates - certainly enough to make any mortgage broker feel ashamed of doing business. Good luck. Also, consider seeing whether the builder-seller can provide any financing incentive - as in a rate subsidy...(not that 6K towards closing costs BS). Your best deal can often be taking 25K in builder "funy money" to buy down a 30-yr fixed mortgage through their shill/mortgage broker.</p>

<p> </p>

<p>PS - not to interrogate or anything, but did your first post say something about not intending kids, but also taking note of being in the IUSD? And buying a relatively large home? I guess its better to expect the unexpected. =)?</p>
 
<p>We have a 2850 square foot house which was great when our son lived here with all his friends sleeping over virtually every weekend. Now we find that there are several rooms we hardly ever even go in. </p>

<p>We have no intention of selling the house, but really the square footage is more than what we need. If I can persuade my mom to move here, which looks impossible now, then we would need the space again.</p>
 
Thanks for the loan tips. I was eyeballing my Navy Federal Credit Union 3/1 jumbo rate, but like most other ARM rates, that has climbed .5 over the past few weeks. It's still at a good 5.625, and with no origination or discount points, I could have it at 6%. Regardless, I'm going to heed the advice on avoiding the 3/1. Even though we could probably manage it if the 5.625 went up to the max 11.625, I don't think we'd choose to be in that situation.



That 5/5 sounds great, but I won't be able to 25% down (or even 20%), so I'll probably have to pass on penfed.org. Maybe dcu.org will have something workable.
 
<p>gilt - check out <a href="http://www.mtgcapital.com/ratesheet-interestonly.html?state=ca&rs=interestonly">http://www.mtgcapital.com/ratesheet-interestonly.html?state=ca&rs=interestonly</a></p>

<p>7/1 jumbo I/O at 6.375%. Lender fees are reasonable @ $900, or maybe $950...</p>

<p>I'm not advocating the 7/1 necessarily, but if you are gonna buy anyway, you might as well get some helpful advice. </p>

<p>I think the 3/1 is crazy, the 5/1 scary, the 7/1 a possibility, and 10/1 fairly safe. I'd think sometime over the next decade, the credit markets will return to normal and risk premiums will have fallen back to typical levels. Unfortunately, we could have some pretty high inflation at that time, so who knows where rates are going... Personally, the shortest I'd settle on is seven years, but that is mostly because I'll have zero daycare expenses by then and an extra $3K per month to throw at a mortgage if rates were materially higher. </p>
 
Thx IPO. Just woke up and am researching rates now. Our situation is that we'll be taking an 835K first and a 100k 2nd. We'll be able to pay off the 100k w/in a year and pay down the 835k another 100k w/in 2 more years. That's why we were looking at the 3/1, but we'll see what else is out there.
 
Just good bonuses coming in w/in next couple of years. Principal pay-off will generally be 30k per year barring any large expenses. It's still going to take us about 20 years to pay this off. If more bonuses come in, then fewer than 20, and if we take on some add'l big expenses then more than 20.
 
I'd wait for the bonuses to come in first. But that's just me. In some ways, I am very very risk adverse. One of those ways is shelter. I've attended too many eviction and foreclosure hearings. On both sides of the fence.
 
LL: We thought about that, but by the time those funds come in, we will have had to have turned down the existing cash offer on our current house, and the value of our house will have possibly dropped below what we paid for it, and the good deal on the home we're looking to purchase will most likely be gone.
 
Not formally accepted the offer yet. And we're choosing to buy vs. rent because after having looked at used and even recently new unused properties over the last several weeks, we haven't found anything we'd be completely happy with. Whereas w/ the house we're eyeing, we're not thinking of it as a short-term investment, we could be happy w/ it 15-25 years, it's within our budget, and it wouldn't need anything other than landscaping.
 
Not sure if I misread, but you are spending just under $3,000 a month? Plus a $2,000 rent I would guess, so you are spending $5,000 a month or $60,000 a year. Something is not adding up...to me someone buying a $1M home would be spending $4,000-$6,000 a month in expenses.



I'm a math guy, are you able to explain how this make sense?



Are you rushing into a decision? Take your time and rethink about everything. You say you are not a risk-taker, but you have all the facts you need to realize that you are taking a huge risk. I don't understand...is it your heart or brain taking the decision?
 
$2870/mo. in expenses. We try to live frugally. Our current I/O mortgage pmt. is $1696. Painfully, HOAs are $333. Not sure why we should be spending more each month in expenses. Thanks for the words of caution; I think we'll be ok to make this purchase, though I am still investigating jumbo loan options beyond 3/1s. Probably 5/1 or 7/1 if we can get jumbo interest-only w/ those.
 
You must log in or register to reply here.
Back
Top