I'm buying?....please help

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poorgovworker_IHB

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My wife and I got a 100% loan from the credit union, 30yr fixed, 6.875%, no PMI. The APR is 6.99% and they quoted the closing cost at $5,000 for a $300K loan. Monthly will be $2,500 including taxes and $200 HOA. We have excellent credit. Combine income is about $95,000. Zero debts. We need the 100% financing since We only have $6,000 cash and no relatives to borrow from. Do you think we can get a better deal with 100% financing from somewhere else? If so, where would you recommend?



I've been reading here the past couple weeks and it seems most people would tell me to wait. Does it matter if we will be staying at this place for at least 5 years? Rent in Irvine would be about $1,700 for a 2bed/2bath. Can you tell me why shouldn't I pay $800 more and own my own place? We have stable jobs, hence 'poorgovworker' and will there until we retired or win the lotto.



There are some decent condo/townhomes 3bed/2bath near Irvine (Lake Forest, Aliso Viejo, Laguna Niguel, Laguna Hills, etc.) for $300k and under. That's part of the reason why we are buying. Also, we don't think we can save that much more money if we wait. Any opinion/advice/comment would be appreciated.
 
[quote author="poorgovworker" date=1210809015]My wife and I got a 100% loan from the credit union, 30yr fixed, 6.875%, no PMI. The APR is 6.99% and they quoted the closing cost at $5,000 for a $300K loan. Monthly will be $2,500 including taxes and $200 HOA. We have excellent credit. Combine income is about $95,000. Zero debts. We need the 100% financing since We only have $6,000 cash and no relatives to borrow from. Do you think we can get a better deal with 100% financing from somewhere else? If so, where would you recommend?



I've been reading here the past couple weeks and it seems most people would tell me to wait. Does it matter if we will be staying at this place for at least 5 years? Rent in Irvine would be about $1,700 for a 2bed/2bath. Can you tell me why shouldn't I pay $800 more and own my own place? We have stable jobs, hence 'poorgovworker' and will there until we retired or win the lotto.



There are some decent condo/townhomes 3bed/2bath near Irvine (Lake Forest, Aliso Viejo, Laguna Niguel, Laguna Hills, etc.) for $300k and under. That's part of the reason why we are buying. Also, we don't think we can save that much more money if we wait. Any opinion/advice/comment would be appreciated.</blockquote>


Your post is foolish. If you can't save money even if you are spending less after-tax each month on housing (rent vs. own) how is it possible you can afford to buy? You can't save and yet you are willing to spend $800 more per month to live somewhere? LOL. It's too incredibly stupid for me to even further comment on...
 
Payment including taxes is $2500 + $200 HOA = $2700



Rent = $1700.



Thats $1000 Savings per month. You can save up an extra 12k over the next year at minimum.



Also, you have 6k in savings, and you have to pay 5k for closing costs? You will have nothing left for reserves, build up your reserves for at least a year, and the house prices will be down even more in that time.



Be patient. It's a no brainer.
 
You';ll be hard pressed to find anyone here that will say buy a condo now for anything over 250k. Hug your wife and tell her you two should wait a few more months. btw, you'll be able to get a better loan in a few months as well.



Good luck
 
I'm bullish on owning, but I can't encourage you to do this now. You will see some tax savings, so it won't be $800/mo more, but what scares me here is that you have only saved $6K. Zero debts is awesome! How much per month are you currently putting in savings and how long have you been doing this? $500/mo for 12 months is $6K. I highly highly highly recommend that you start putting $500/mo into savings now and if you touch a dime of it over the next 8 months or are in anyway uncomfortable without the money, it's too much to bite off. You NEED to have an emergency fund available after closing costs.



You have time take advantage of the better values. Strengthen up your reserves in the meantime. I'd also suggest that you look at a lower purchase price. You will be a lot more comfortable with a $250K mortgage.
 
Yes, I always preach having a reserve fund. (Always saw my parents coffering away a few dollars whenever they could...) You never know how or when something will happen. Just having even a few dollars around will prove 10x LESS stress. You just pay it and move on. (Now if I could get my wife to learn this...).



-bix
 
"What did everyone think about the loan we got? "



Even though they are saying that you aren't paying PMI, that rate is higher than if you have a down payment. Run the numbers on 5.75 mortgage and see what a difference it makes over 6.875. For 100% financing 6.875 isn't bad, but I'm just not a fan of 100% financing, even for first time buyers.
 
Your boss will never lay you off and you will never have to work hard either. With that being said your raise is virtually a very small percent each year. In order to compensate for hardly a salary increase workers work slower and take a longer break. (I am not saying that it is you)



Base on the aforementioned assumption your future (lack of) income is predictable. Owning a "used" home comes with many unexpected expenses like maintenance and repairs. Set aside another 2% of your home value just for that.



In your financial status you are cutting it close with too little reserve. The 100% teaser loan is like a lay away plan for furniture. It is very attractive for the poor consumers. Buy now and pay later will eventually catch up to you.





[quote author="poorgovworker" date=1210813331]Yes, I agree we need to save up. We will definitely wait. What did everyone think about the loan we got?</blockquote>
 
pgw-



I put the question to would-be buyers this way: Would you buy a pet if you could only afford to pay for its food?



If you have no reserves, you will likely become a new circle on the foreclosureradar map. We have enough of those already.
 
[quote author="bkshopr" date=1210814744]Your boss will never lay you off and you will never have to work hard either. With that being said your raise is virtually a very small percent each year. In order to compensate for hardly a salary increase workers work slower and take a longer break. (I am not saying that it is you)

__________________________________________________________________________________________________________________

That description is pretty accurate. I'm not proud of it, but it is what it is.
 
[quote author="IrvineRealtor" date=1210815526]pgw-



I put the question to would-be buyers this way: Would you buy a pet if you could only afford to pay for its food?



.</blockquote>


Dude!! That's exactly my example for how ridiculously financially conservative we are. We didn't get a cat until we knew we had $200 per month available to set aside for her.

If we won't take on the responsibility for an animal until we have reserves we're certainly not going to act any more recklessly about buying a house! Unfortunately there are a lot of pet owners who don't understand this concept.



PGW-



The rate you got was a good one for a 100% loan, but if you actually find you can put aside $800 per month from the difference between renting and buying you will be amazed at how much less stressed out you will feel, and also how much less willing you will be to part with that hard saved cash when buying. Limiting yourself to a 20% downpayment, or even a 10% one is quite helpful when bargaining a price down. (At least that's my untested theory that I'm hoping to take advantage of shortly)
 
"I put the question to would-be buyers this way: Would you buy a pet if you could only afford to pay for its food? "



IR, that's a great analogy!
 
I know it's common sense to you guys, but we were so hell-bent on getting a place. I appreciate all the comments. Looks like I need to save at least $30k.
 
"I know it?s common sense to you guys, but we were so hell-bent on getting a place. I appreciate all the comments. Looks like I need to save at least $30k. "



3% down isn't necessarily a bad idea, but the key to doing a 97% loan is having at least 3 months, but preferably 6 months of living expenses in the bank AFTER closing.
 
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