Real Estate gurus ... i'm a newb to this stuff, have some questions

[purbeast0]

I know I've posted quite a few real estate type threads, but I have yet again some more just general questions.

I know there are interest only loans and then ones that aren't interest only. I don't know exactly what the benefits are of each of these, but I have also heard that people who have interest only loans could be screwed in the long run.

Now here is my question. I am looking into condo's and possibly townhomes as high as $200K. I am making about $50K/yr after bonuses and stuff. My credit is around 750 rating (i had it checked when getting checking to see if i qualified on a loan for a car, however i did not purchase a car). Right now I'm paying about $700 in bills/mo so I've seen saving some extra $$.

My goal is to try and save atleast $10K to throw down towards property. So far I am halfway to that. Come next spring, actually around february, I will be getting a pretty large tax return as well as a big bonus (possibly as much as $5K in the bonus).

I am debating if I should start looking seriously into getting a place right now or if I should wait until next spring when I will have more $$$ to throw down in the down payment. It's also harder to save more $$$ in the summer because I'm going on vacation a few times so I won't be saving as much in the summer (and of course I'm not touching that $5K i already have saved up).

General speaking, if I were to get a condo for about $150K and didn't put anything down (putting my $$$ into closing fees, tax, etc), what type of monthly payment would I be looking at most likely? How about if it were $200K? my GF is going to be helping out as well w/the payments just not nearly as much $$$ as I will be putting into it. I also plan on getting a 2 bedroom place and getting a roomate to help pay.

So with that in mind, what type of $$$ would I expect to pay w/that type of price in mind, and would it be better to wait or get a place asap? The reason I ask is because I'm about 10 miles north of D.C. where I work (Columbia, MD), however i'm living at home w/my mom in Silver Spring which is literally less than 1 mile from DC, and the price of living has gone up CRUCIALL in silver spring. However, Columbia has not gone up much but I would expect it's going to go up as well because its a still relatively new area. It's also right between baltimore and DC.

EDIT: and the Condo Fees are monthly fees, right? i was under the assumption they were.

 

[Ornery]

More important than all the money crap is, why a condo? Worst of both worlds. You have to put up with noisy neighbors, can't make any noise yourself, can't remodel the exterior without permission from somebody, and you have to pay for almost everything that breaks! What's the plus side?

BTW, you can hire Mexicans to do landscaping (on your own property) for less than the cost of a pizza every week.

 

[purbeast0]

Originally posted by: Ornery
More important than all the money crap is, why a condo? Worst of both worlds. You have to put up with noisy neighbors, can't make any noise yourself, can't remodel the exterior without permission from somebody, and you have to pay for almost everything that breaks! What's the plus side?

BTW, you can hire Mexicans to do landscaping (on your own property) for less than the cost of a pizza every week.

the $$$, thats the only reason why. homes are just too much $$$ around where I live, w/the exception of some townhomes. but in that case, you still can have loud neighbors on either side of you.

however, input like yours is what I am open to as well, because I would like to know if a condo is even worth it as far as property goes.

 

[Blieb]

Yeah go find my condo thread

 

[gigapet]

if it helps i just bought a condo for 189k including all taxes and HOA fees I am looking at $1500/mo

taxes tend to be much higher than average in my state though(CT)

 

[purbeast0]

Originally posted by: gigapet
if it helps i just bought a condo for 189k including all taxes and HOA fees I am looking at $1500/mo

taxes tend to be much higher than average in my state though(CT)

so the Condo Fees are added on top of that per month? or is that put into account in the $1500 ?

 

[gigapet]

Originally posted by: purbeast0

Originally posted by: gigapet
if it helps i just bought a condo for 189k including all taxes and HOA fees I am looking at $1500/mo

taxes tend to be much higher than average in my state though(CT)

so the Condo Fees are added on top of that per month? or is that put into account in the $1500 ?

included in that.

I did 5% down

also about 2700 in closing costs but my mom is my mortgage broker so she got the bank to waive about 500 in fees.

 

[LordSnailz]

It really depends on how long you'll be staying there, if it's going to be awhile then go ahead and start looking. The earlier the better since rates are still down.
That's the mistake we made, we waited till we had 15-20% but we ended up waiting for 1-2yrs. and missed all the crazy RE market, we finally bought this yr. If you plan to stay there for ~7rs then go ahead and do it.

You'll probably have to get two loans to avoid the PMI but start looking now.

 

[shilala]

Originally posted by: Ornery
More important than all the money crap is, why a condo? Worst of both worlds. You have to put up with noisy neighbors, can't make any noise yourself, can't remodel the exterior without permission from somebody, and you have to pay for almost everything that breaks! What's the plus side?

BTW, you can hire Mexicans to do landscaping (on your own property) for less than the cost of a pizza every week.

Very wise words, Ornery.

1.)Sink your downpayment money into your own house. The more the downpayment, the more equity you'll have available to you immediately.
2.)When you buy your first investment property use your equity in your home as the downpayment.
3.)Buy good, renovate, and have it re-appraised. Use that equity to buy your third property.
4.)Repeat.
5.)???
6.)Profit!!!

 

[labgeek]

Originally posted by: purbeast0
My goal is to try and save atleast $10K to throw down towards property.

If you're thinking of that 10K as being "down payment", add a couple more for all the closing costs and prepaids (tax, insurance, etc.) On the house I am selling, we've worked 4K in for closing and prepaids on a $150K house. To work the numbers, we upped the price, and I'm paying it, so they can keep the downpayment percentage that works for them without them forking over even more cash (house was worth more than I was asking).

 

[dirtboy]

Wait. Having money to put down is important, plus having money to cover closing costs and other misc fees that are associated with real estate purchases. Have a lender give you a good faith estimate (free) for a loan based on what you want so you can see all the fees.

 

[AntiEverything]

If all you're looking for is an estimate of monthly payment, there are payment calculators all over the place. Here's my company's loan calc page:

http://www.homeservices.com/TRIOtools/MortgageCalculator/MortgageCalculator.asp

 

[purbeast0]

Originally posted by: labgeek

Originally posted by: purbeast0
My goal is to try and save atleast $10K to throw down towards property.

If you're thinking of that 10K as being "down payment", add a couple more for all the closing costs and prepaids (tax, insurance, etc.) On the house I am selling, we've worked 4K in for closing and prepaids on a $150K house. To work the numbers, we upped the price, and I'm paying it, so they can keep the downpayment percentage that works for them without them forking over even more cash (house was worth more than I was asking).

So from your guesstimate and knowledge in this area, what would you guess a monthly payment would be on a 200K house if I put %5 down on it? ($10K).

also, what exactly is PMI? i've heard the term before but am not %100 certian on what it is. and since its my first time buying, will i get any kind of "first time property" deal on any of this?

 

[777php]

do not do interest only, unless you know that down the line you'll be making more money than you are now.

 

[Ornery]

Must be different in your area, but the condos around here sell for as much as houses! They're in the prime locations too, so that may have something to do with it.

Suit yourself, but I'd rather buy a shlthole in the best location, than a dream house in a pain in the ass location, which includes long commutes to shopping, work and entertainment, or VERY near freeways, airports or railroad tracks.

First pick two or three of the most choice locations, and hold out for a house in those areas. Maybe something that needs some TLC. It's amazing what people will turn a house down for. A house in need of landscaping, paint or carpeting will sit on the market forever. None of those things cost much at all to do. Time is on your side, and you don't have a house to unload. Get a bunch of real estate agents looking, and tell them not to bother you with anything outside the areas and price you set.

 

[purbeast0]

Originally posted by: Ornery
Must be different in your area, but the condos around here sell for as much as houses! They're in the prime locations too, so that may have something to do with it.

Suit yourself, but I'd rather buy a shlthole in the best location, than a dream house in a pain in the ass location, which includes long commutes to shopping, work and entertainment, or VERY near freeways, airports or railroad tracks.

First pick two or three of the most choice locations, and hold out for a house in those areas. Maybe something that needs some TLC. It's amazing what people will turn a house down for. A house in need of landscaping, paint or carpeting will sit on the market forever. None of those things cost much at all to do. Time is on your side, and you don't have a house to unload. Get a bunch of real estate agents looking, and tell them not to bother you with anything outside the areas and price you set.

that is EXACTLY what I want to do ... find a house that needs work done to it that I can have a bunch of projects on. i love building stuff and customizing everything to what i want, so i would love to buy a bucket and fix it up.

aside from looking on the net, where can i go to find a bunch of listings on this? are there magazines in the store like the Auto Trader type for houses or anything? I am looking to find a house between silver spring and columbia, or else closer to Columbia so my commute is shorter than longer, however I would take the long route as long as its away from traffic. right now i drive 23 miles or so to work, but it takes like 18 minutes because i'm against traffic so it works out okay (thats from silver spring into columbia).

 

[BlueWeasel]

PMI

 

[labgeek]

Originally posted by: purbeast0
So from your guesstimate and knowledge in this area, what would you guess a monthly payment would be on a 200K house if I put %5 down on it? ($10K).

also, what exactly is PMI? i've heard the term before but am not %100 certian on what it is. and since its my first time buying, will i get any kind of "first time property" deal on any of this?

The more money you can put down, the better interest rates you can get and to an extent the more house you can afford since that portion isn't figured into all the equations. There are plenty of calculators out there than can tell you what you can afford based on down payment, income, etc.

When you're serious about looking, go get pre-qualified from a bank or mortgage broker. This will help you determine what you can buy. But be careful, as they'll often give you a much bigger loan than you might ought to have. It makes the rates go up, but they can often work the numbers to do it - you'll see/hear terms like no-doc or low-doc loans, etc.

PMI is insurance that you will not default on the mortgage. IT DOES NOT PROTECT YOU! It protects the lender. You will need either a 20% equity stake (ie down payment), or some alternate type financing. I haven't paid PMI on either house I bought, and I've not put a down payment on either one. First one, I was buying for signifigantly less than it was worth... $105K when appraised for $150K. I took a 6 month interest only bank loan to get it in my name, and let the sellers move quick to buy their new house. Then 2 months later refinanced it. I paid more in closing costs, but it was cheaper than paying PMI. The other, I took a 80/20 split mortgages. In other words, 2 mortgages - first for 80% and a second for the 20% remainder at a slightly higher rate. Still cheaper than PMI, and better tax wise.

 

[Ornery]

Everybody and their brother wants the "fixer uppers", so that's going to be tuff. They have agents on the lookout, or are agents themselves. They buy at sherrif's auctions and I think HUD homes, or something like that. Just get as many agents on the project as possible, and wait for something to fall in your lap. Be ready to move quickly, because a deal isn't going to sit around for even a day.

 

[labgeek]

Originally posted by: BlueWeasel
PMI

Make sure you note this one line if you ever think of an FHA loan:

Additionally, some FHA loans require payment of PMI throughout the entire life of the loan.

You will have to refinance to get out of PMI!!