I'm now a home owner

[jpiniero]

is that the rule of thumb? Income x 2 = house value?

I seem to remember hearing about income x3 plus 20% down for the mortgage. Of course interest rates were much higher then.

 

[soulcougher73]

LOL everyone look at the cute child trying to play finance. It's sweet that he thinks he knows what he's talking about.

Care to share how he is wrong? As far as i know he is correct. You stop making mortgage payments and the bank will take the home from you. So how is it the person owns the home and not the bank?

It is the same thing with cars. Stop making payments and the bank comes to take it. You can fight all you want to say you own it, but you dont until its paid off.

 

[Tweak155]

Care to share how he is wrong? As far as i know he is correct. You stop making mortgage payments and the bank will take the home from you. So how is it the person owns the home and not the bank?

It is the same thing with cars. Stop making payments and the bank comes to take it. You can fight all you want to say you own it, but you dont until its paid off.

Technically you own the house, and the bank uses your agreement to take it from you.

 

[Tweak155]

Meant to add more to my other post, why not just increase my post count?

I'm in a similar position, only I'm trying to buy a house cash. I hear it gives me a lot of "power" as far as bargaining, but damn is it hard enough just to find something you want even near the figure you had in mind.

Luckily we came across a gem just earlier today. Even their asking price is well within our cash on hand (that we have for just a house), so it could be a golden opportunity!

 

[FallenHero]

Care to share how he is wrong? As far as i know he is correct. You stop making mortgage payments and the bank will take the home from you. So how is it the person owns the home and not the bank?

It is the same thing with cars. Stop making payments and the bank comes to take it. You can fight all you want to say you own it, but you dont until its paid off.

Because the bank only owns the mortgage. Your house, just like your car, is the collateral you put up backing the loan. The president of the bank can't just come into your house uninvited, nor can anyone else. You OWN that property. In order to actually take possession of that house, certain legal proceedings have to take place. Each state has a different set of rules regarding it, but it still takes time and effort despite the contract that you signed for a bank to legally take your home from you.

 

[Red Squirrel]

Technically you own the house, and the bank uses your agreement to take it from you.

This, I find it silly when people say you don't really own things.

Say you are buying drugs from a drug dealer. You don't have cash and tell him you'll pay him back later. He'll say ok, but make sure you have the money to me by end of week or I'll slice you into tiny little pieces and feed my dogs. You say ok, no problem, take the drugs and leave. The drugs are yours, you can use them when/how you want. But as per the agreement, you still have to get the money, or consequences will happen. A mortgage is same idea, except the agreement is that if you can't pay it, then they take the house and sell it to make up their loss. In the case of the drug dealer, he wont have to buy dog food for a couple weeks, thus, making up his loss.

 

[Mike Gayner]

Care to share how he is wrong? As far as i know he is correct. You stop making mortgage payments and the bank will take the home from you. So how is it the person owns the home and not the bank?

It is the same thing with cars. Stop making payments and the bank comes to take it. You can fight all you want to say you own it, but you dont until its paid off.

The bank doesnt own the house, nor does it own your car. It has a registered security over your assets if you agree to that (which you always do with a mortgage), but that's not the same as them owning your house. Your bank doesn't sign the title over to you when you make the final payment, you know.

 

[Mike Gayner]

I'm in a similar position, only I'm trying to buy a house cash. I hear it gives me a lot of "power" as far as bargaining, but damn is it hard enough just to find something you want even near the figure you had in mind.

It really doesn't. Put yourself in the vendors shoes - they don't give a shit how you're paying for it, as long as they get their money on settlement day. It makes literally zero difference if you're a cash buyer, other than you're less likely to enter into a conditional agreement on finance.

 

[Tweak155]

It really doesn't. Put yourself in the vendors shoes - they don't give a shit how you're paying for it, as long as they get their money on settlement day. It makes literally zero difference if you're a cash buyer, other than you're less likely to enter into a conditional agreement on finance.

Yeah there is no hassle in waiting for the money. It is the only advantage that seems logical.

 

[lothar]

Just put an offer in on one myself. Can't wait to hear back and get things going.

Is this the same house that you took a dump in?

 

[FallenHero]

Is this the same house that you took a dump in?

Yes, yes it is. We should have a deal done today. I'm going to put a monument in that bathroom.

 

[SKORPI0]

Actually, you're technically not an "owner" until you pay off the Mortgage. The bank owns your home. They're just letting you live there as long as you keep making the payments.

You are wrong. They own the mortgage, not the house.

Technically you own the house, and the bank uses your agreement to take it from you.

http://en.wikipedia.org/wiki/Mortgage_loans

A mortgage loan is a loan secured by real property through the use of a mortgage note which evidences the existence of the loan and the encumbrance of that realty through the granting of a mortgage which secures the loan. However, the word mortgage alone, in everyday usage, is most often used to mean mortgage loan.
The word mortgage is a Law French term meaning "death contract," meaning that the pledge ends (dies) when either the obligation is fulfilled or the property is taken through foreclosure.[1]
A home buyer or builder can obtain financing (a loan) either to purchase or secure against the property from a financial institution, such as a bank, either directly or indirectly through intermediaries. Features of mortgage loans such as the size of the loan, maturity of the loan, interest rate, method of paying off the loan, and other characteristics can vary considerably.
In many jurisdictions, though not all (Bali, Indonesia being one exception[2]), it is normal for home purchases to be funded by a mortgage loan. Few individuals have enough savings or liquid funds to enable them to purchase property outright. In countries where the demand for home ownership is highest, strong domestic markets have developed.

Bank owns the mortgage loan to the house, if said "owner" fails their obligation in paying this loan it ends up as a foreclosure.
So how come a lot of these houses end up loosing their original value after a few years and "owner" decides to bail/default on their mortgage loan, does that mean they don't "own" the house anymore?

 

[SandEagle]

2x less than your income? did you pay 20k for a dump in Detroit?

 

[FallenHero]

http://en.wikipedia.org/wiki/Mortgage_loans



Bank owns the mortgage loan to the house, if said "owner" fails their obligation in paying this loan it ends up as a foreclosure.
So how come a lot of these houses end up loosing their original value after a few years and "owner" decides to bail/default on their mortgage loan, does that mean they don't "own" the house anymore?

They still own the house and are responsible. The bank only goes through the normal foreclosure procedures to take possession of the house. Until they get possession, they don't own anything but the mortgage. People deliberately defaulting on the loan doesn't change how it operates. The same procedure to gain legal possession still has to be done.

 

[alkemyst]

15 year is a bad choice, esp if you 'plan to pay off in 10'...sadly most go into a mortgage thinking this. You can always pay more on a 30 year loan, but never less on a 15 year each month.

 

[yh125d]

15 year is a bad choice, esp if you 'plan to pay off in 10'...sadly most go into a mortgage thinking this. You can always pay more on a 30 year loan, but never less on a 15 year each month.

Yeah, I wish mine was gonna be 30 year instead of 20. Oh well, I plan to pay it off in only 2-3 years most likely, definitely within 6, and it had to be 20 to be part of the first time home buyer program they have, which also has 100% financing and no PMI and much lower closing costs

 

[Corporate Thug]

15 year is a bad choice, esp if you 'plan to pay off in 10'...sadly most go into a mortgage thinking this. You can always pay more on a 30 year loan, but never less on a 15 year each month.

Agreed. Why box yourself in to a higher payment when you can voluntarily make any payment above the min payment?

 

[ponyo]

15 year is a bad choice, esp if you 'plan to pay off in 10'...sadly most go into a mortgage thinking this. You can always pay more on a 30 year loan, but never less on a 15 year each month.

Difference used to be 1/2 point or more. But rates are crazy low right now for even 30 yr. Why do 15? Because most people don't have the discipline to make the extra payment each month unless they're forced. People say they're going to pay extra but they don't. People tend to do the minimum.

 

[Red Squirrel]

I would imagine payments to be quite high on a 15 year. I have a 25 year and the minimum is 400 bi-weekly. I recently raised it to 450. I have 16 years left according to the status in my online banking. The biweekly alone knocks off quite a few years, and now I'm paying more. Better to go with something affordable, and just put more on if you can, but at least if you can't, you keep the house.

 

[ponyo]

I would imagine payments to be quite high on a 15 year. I have a 25 year and the minimum is 400 bi-weekly. I recently raised it to 450. I have 16 years left according to the status in my online banking. The biweekly alone knocks off quite a few years, and now I'm paying more. Better to go with something affordable, and just put more on if you can, but at least if you can't, you keep the house.

Difference between 15yr and 30yr payment isn't that much. My sister did 30yr initially with plans to pay extra but never did. She's the type who won't save unless you force her. After couple of years, I had her refi to 15yr since the new rates were so low. Her new payment was only slightly higher than her old. She's already couple years into her 15yr and her house will be paid off when she's in her 40s. If you don't overextend yourself and buy more house than you can afford, 15 yr should be no problem. If something comes up and you cant afford 15, then 30 wouldve been the same. Instead of using 30yr as base for how much house you can afford, just use 15.

 

[Mike Gayner]

Difference between 15yr and 30yr payment isn't that much.
...
If something comes up and you cant afford 15, then 30 wouldve been the same. .

You have no idea what you're talking about. They payment differences are huge. For example on a $250k loan at 4% the payments over 30 years are $550 per fortnight, where over 15 years it's $850 per fortnight. That's a fucking huge difference to most people.

 

[Via]

Make sure you have a plunger.

I didn't think about buying a plunger; it might have been the only thing I overlooked.

But then, one day, I found out you better have a plunger.

 

[Red Squirrel]

Difference between 15yr and 30yr payment isn't that much. My sister did 30yr initially with plans to pay extra but never did. She's the type who won't save unless you force her. After couple of years, I had her refi to 15yr since the new rates were so low. Her new payment was only slightly higher than her old. She's already couple years into her 15yr and her house will be paid off when she's in her 40s. If you don't overextend yourself and buy more house than you can afford, 15 yr should be no problem. If something comes up and you cant afford 15, then 30 wouldve been the same. Instead of using 30yr as base for how much house you can afford, just use 15.

How does that work? If it's 1/2 the amount of time wouldn't the payment have to be double? Well maybe a bit less considering there's slightly less interest to pay.

 

[ElFenix]

You have no idea what you're talking about. They payment differences are huge. For example on a $250k loan at 4% the payments over 30 years are $550 per fortnight, where over 15 years it's $850 per fortnight. That's a fucking huge difference to most people.

well and true but the 15 year rate is usually at a good discount to the 30 year rate.

How does that work? If it's 1/2 the amount of time wouldn't the payment have to be double?

no

 

[RaistlinZ]

I want to buy my first place too, but prices are still damn high in my area unless you want an 800 sq feet dump of a condo.