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Wednesday, January 7, 2009
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22 comments:
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http://pangaloan.blogspot.com/
i was looking at this property at manassas www.FranklyMLS.com/PW6948431 listed for 241K. saw the property. needs applicances,paint job, carpet cleaning/replace and looks fine. has granite, hard wood on main level.
questions now.
1.how much i can offer. can some one give me an idea.
2. i checked the sales this year and i was thinking 220K to start with. is that high/low....
3. if property apprises more then the loan is that counted aganist your down payment and will that reduce/remove my PMI.
4.which is the best place for handy man work like paint/carpet and other remodeling jobs.
5.which is the best place to buy all appliances and get it installed.
6. since i am renting and paying 1400/month is this property worth buying and staying for couple years
7. in the current market is it better to give 20% down or 3.5% which is better.
manju,
lots of questions, some of which I'll be looking for answers for in the near future, so thanks for bringing them up.
ones I can take a stab at:
does it make sense to live in this for a few years if your current rent is only $1400. No.
http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html
If I plug in your rent, current interest rates, (and in the sneaky panel on buying, the $110 monthly HOA fee?) then I get that this property is never worth $220,000 unless you can count on appreciation giving you equity.
However, being unfamiliar with Manassas, I can't tell what this would rent for. If it would rent for $1600, then 220,000 may be close to an appropriate price in this market. To be an actual "investment opportunity" it would need to be just under $200k for a rent of $1600.
I believe that your loan-to-value ratio for the purposes of PMI and rates is the lesser of the appraised value or the sale price. I could be wrong.
3.5% versus 20% down. Well, if you're planning on sticking it to the banks and walking away from the debt if the price goes down then you want to have put as little money into the house as possible. But, if you have the savings to make the lender whole on the note, they have the right to go after you for it. And for the possibility of maybe letting the bank be the bagholder, you're paying interest on the difference at a tune of 5% plus the PMI. I don't know of any vehicles right now that can safely return more than 5% on the cash you'd be able to set aside, so it seems unlikely that you'll do better by investing that downpayment elsewhere while paying interest on the mortgage. That down-payment may be money down the drain if the property continues to lose value, but that's true because of the price you paid, irrespective of where you put the money.
On the other hand, if you need money for your 3-6 months of living expenses savings, or for appliances, carpet and paint, then by all means put down less. And don't steal money from your 401K, 529 or whatever else either.
Manju, checkbook.org has lots of good info, ratings, and neighbor comments on services and products for your home (and many other things). It's like a local Consumer Reports.
Once you move in, your own neighbors CAN be a good source of info about repair and maintenance people - but sometimes they are not (e.g., they may have different standards from yours), so you have to talk to a lot of people, or ask if you can see the work they did for your neighbors.
Since I am back in the annoying world of house hunting, a question:
Since when do banks charge a lot of money for preapproval?
We wanted to get preapproved so we could honestly answer "yes" when asked if we were. Called Navy Fed, who we had used last spring. They are now charging $250 for preapproval. You need to buy within 60 days, and if you don't, it's nonrefundable.
Now I am back to square 1 about which bank to use. Since things seem to be very different now from last spring, anyone have any idea how I should proceed? Why are banks doing this?
And do I really need to set up something with a bank now? At what point do I absolutely have to have a relationship with a bank?
New jobs article is out and its something of a mixed bag.
DC area has the lowest unemployment in the US but could start losing jobs in 09 (we are still gaining jobs now).
High end jobs will have more competition, meaning wages shouldnt be going up. However, there could be "plenty of churn, which will be a boon to the real estate market,"...
http://www.washingtonpost.com/wp-dyn/content/article/2009/01/06/AR2009010602935.html?sid=ST2009010700125&s_pos=list
Bottom line - another article, good with present facts, but lacking in any clear idea on where things are headed.
anonymous
good find.
Moreover, the pool looking for work is filled with educated people who are applying for positions for which they are overqualified.
"There's been a 30-40 percent increase in the number of people coming into our one-stop employment centers. More are educated and there's a lot more competition for jobs,"
That doesn't sound good to me. Educated over-qualified people are looking for work? Perhaps people will have to cut back on their expectations of using 2 salaries to contribute to housing costs at all times. Ah wishful thinking, the masses will never be converted to my conservative personal fiscal policy.
Accompanying new employees will be "plenty of churn, which will be a boon to the real estate market,"
If by boon, they mean create more "have to move" sellers and increased transaction volumes that will more rapidily create price discovery (while churning up real estate commissions and fees) then yes, "churn" is good.
This article had equal doses of strongly held beliefs about the area and "facts". And the facts were pretty scary.
Tabitha,
PenFed still charges only about $65 (I think mostly for the credit report) for pre-approval if you have an account with them - and maybe if you don't. It is good for only about 4 months, though I think you can ask them to renew it for a couple of other months.
They told me that a lot of people apply for pre-approval, then actually get a loan with someone else. (I suspect this is because the closing fees they estimated for me seemed extremely high, and the interest rate may not be as good as you could get these days--so I would shop around too, once I found a house to buy). That makes me think that that is why some banks and credit unions are now charging more for pre-approval - because they might not get the final loan, and they want to cover costs/make a little money on the pre-approval.
Tabitha, USAA has been offering similar rates to Navy Federal for years.
Try them.
tabitha,
Why? To wring blood out of a stone?
Navy Fed was a discount mortgage operation in a large way. Perhaps they're not making as much money as they would like to be, perhaps they're even losing money. Taking $250 a pop from people who obviously have money (b/c their thinking of buying right now) seems like a good business plan.
How wide-spread is this? Have you asked the bank you have checkings and savings with? Pre-approvals (or prequalifications, I can't remember which is which) generally did have a non-refundable time-limited fee, but I thought it was more like $40-$50 (supposedly for the cost of pulling up your credit history, funny, they don't charge that when you open a checking account with them... and yet they still pull a credit check).
Tabitha,
I got free preapproval from Amerisave.com (an upfront mortgage broker) last September. It will be valid for 60 sdays but you can ask them to renew it if you don't make any large purchase during that time. My experience with them has been fine, but they will keep sending regular emails to ask where you are in the buying process.
You don't need to have a relationship with a bank at this stage. Once you have a contract, you are not obligated to stay with the people who gave you preapproval. But companied like Amerisave do shop around (among banks with which they have a relationship) to give you the best rates.
I posted this bank-owned N Arl (22207) 4/3/0 13K sf Cape Cod with interesting exterior characters before. It just dropped another $50K yesterday, now listed at $674,900. That's the third $50K price drop in the last 3+ months. GMAC bought it in Aug for $652,500. Previous sales was on 7/27/2005 for $950,000.
I'm adding this home to my 'why hasn't it sold yet' list. I know it's on a semi-busy street and has no master bath, but still... I honestly think no sane potential buyer in the price range would consider any other property as it offers so much more value for the money (kinda like a 'category-killer' product). But maybe I'm missing something?
Ah, revisiting all these issues is so NOT fun when little ones want you to teach them math and fix them lunch...
But here's a reprisal of terms I once knew well:
Prequalification is the generic "yeah, we'll lend you this much money for this much down," in general.
Preapproval is what you get for a specific property when you are making a specific, in-writing offer.
I vaguely recall paying a small fee for prequalification last year, but $250?! But, Cara, I see your point, I guess.
I forgot about USAA. Makes sense that they would be competitive with Navy Fed.
Isn't there some trick where you allow several lenders to check your credit simultaneously, and that prevents your credit score from taking a hit? I'll have to research that again, too.
In general, I think I need to take a deep breath. We don't need to panic and start making offers. We have the lease through April, and it would switch to month-to-month after that. Since we have our rent on autopay and never ask for things to be fixed, I assume our landlord would let us stay longer, if necessary. That is our fear, I guess, that he will kick us out in April, and the rigidity of the timing will force us to move on a timetable. We didn't want to talk about extending our lease in the same communication about our offer, but I suppose we should address that issue pretty soon. If I knew we had some flexibility, that our landlord would work with us in the timing of us moving out, I would feel more relaxed about finding a new place.
Surely there's no harm in asking?
MM,
Wow, that is some price history. The bird's eye view shows that the front is even more interesting than it first appears on the listing photo, and it looks like a nice boxy sizeable house. The driveway is straight-in with no turn-around, that would have to be added on to, to avoid backing out onto a busy street, but that's what like $5000 tops?
Why isn't it moving? Perhaps because it wasn't put on the market until September? Or, heresy, nothing that size and that age should cost that much even after all the price drops? Given that there are no realtor pictures up on it yet, perhaps no one has even considered it yet.
MM,
I'm inclined to agree with one of Cara's answers, which basically boils down to this:
$674,000 is a lot of money!
Assume 20% down -> 80% mortgage at non-jumbo rate of 6% for easy calculations and a 30-year note and it's a monthly nut of $3200+ for P&I alone. T&I are going to be more.
Now assume standard 1950's style financing and it requires something in the $180-$220K salary range to really pull off. That's a commanding salary, even around here.
Yeah 675k is a lot of money for that house. Location is worth a lot, but not that much.
Remember that for 250-300k you can tear down and build a really nice new 3500 square foot house on a lot in that area. Im talking turn key price with full hardwoods, gourmet kitchen with granite/stainless, 10ft ceilings ect.
Considering the foreclosures that somebody posted the other week in the 400k range, why anyone would pay the same amount for that little old thing I have no idea.
For some "perspective" on what one should get in return for over $600,000, we have this weeks installment of:
NY Times, what do you get for $600,000
Personally, I would take the "compound" on Hilo.
I know, I know, these are all second homes (essentially) so require the $600k mortgage to be paid out of disposable income, not rationalizable "cost-of-living" expenses, but still.
Tabitha,
Navy Federal is good for some things, but I gave up quickly trying to work with them for a mortgage loan. It was very impersonal, seemed to be expensive, and I couldn't get ahold of a loan officer when I needed one. The one they "assigned" me was always out to lunch or otherwise unavailable.
I would be happy to e-mail you some local lenders that I really like. Our loan officer showed up at closing, saved us money at the table, and gave us a nice gift basket. He also would call us night or day to help us through the whole process. The loans are probably going to be sold quickly, though, to places like Countrywide.
I know that Countrywide is corporate Evil but that is who is my lender. I've told the story before but will share again as part of Tabitha's refreshment.
I worked with Chase and USAA on a "pre-qualification" and did not give either money. Both of them ran our credit checks. (by the way, we pay off our credit card every money. One check was run at the beginning of the cycle, no credit card debt and my score was over 800. The other ran at the time in the cycle right before paying the card and it lowed my score to under 800 for a total swing of about 30 points.
Anyway, we found Chase to be the better deal. We picked a house and gave Chase about 500 for an appraisal on the house.
The holidays came and I got a card from my previous loan officer (from chase...she had changed companies). We were less than 30-days from closing but I decided to call her anyway. I told her the story, how I liked working with her in the past, and could she beat the chase deal as rates had dropped but we had already locked in and chase wouldn't lower. She said yes and accepted the Chase appraisal and copy of credit report (as we had them in e-mail).
This PISSED OFF the chase woman. Her counter arguments were that she'd worked a lot on the deal and it was almost done and that we had already paid her 500. I said either match the COuntrywide deal or get fairly close (again, interest rates had dropped). She "asked her boss" but said she couldn't do it. We switched to countrywide and that pissed off the realtors for some reason...I guess they were afraid we weren't going to be able to close on time.
I share my story b/c this saved us about 2000 at closing and a billion dollars over the life of the loan. (the second number is a slight exaggeration).
I accidentally fell into this situation but if I would do it again.
Weekly sales:
Fairfax County
Arlington
Prince William
Cara,
the Hilo compound to say the least is not in a good area.
http://archives.starbulletin.com/2003/09/12/news/story4.html
Like most of the "great discounts" in the DC metro, the location speaks volumes.
Buck,
Sigh, wrecking my Hawaii dreams.
(Isn't crystal meth a problem in all rural areas throughout the US?)
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