Randy's Old House

[Weetabix]

This is so funny.
The house I currently live in is really not big enough for us, so I just started looking at other houses over the last few days.
So anyway, the house I just came back from looking at turns out to be Randy's old house!
I LIKE it.
The idea of trying to sell my house gives me the willies though.

 

[Engloid]

Selling now may be harder than buying...but if you price it right, you can sell.

The thing to keep in mind is that in any market, whether it's high or low... if you buy one and sell another it's usually not going to have as significant impact on the long term as if you bought another house and kept the old one. The reason is that if you buy and sell, you're doing both in a low market. If you buy a new one in the low market, and then sell the old one when the market picks up, you stand to gain more.

Ever considered renting? Even if you got about $200 more a month than your payment, it would likely turn out to be a good deal in the long run. I have a house that has a payment of about $500, and I will soon be renting it out for about $750. I will put $250 into a separate account until I get a little emergency fund for the property, and then I will have $250 a month in my pocket while somebody else buys me more equity.

 

[Engloid]

BTW, if you do buy, you can choose your own mortgage company. Often times, realtors suggest one for you, but I think they do it for kickbacks, maybe gift certificat for dinner or something. You don't have to use their guy and they aren't going to get ****ed if you don't... cause they sure don't want to **** off the customer.

Anyway, I have gone to Chris White at Mortgage Investors Group twice. He is THE MAN to go to for stuff like this. Took him 3hrs to get me approved on my latest mortgage, and he's never missed a closing date in something like 25 years.

 

[Weetabix]

Thanks for input Spencer, I do greatly appreciate it.
I actually had considered renting my current house out.
One of the difficulties with that is that I would have to refinance first, cause the terms of my current loan require me to be the occupant of the house.
I've thought about it though.

I went through a guy in Mortgage Investors Group for my last loan, so that's where I would be inclined to look again.
How does having a house that you rent out change things when you apply for a loan?
How do they look at that?

 

[Engloid]

I actually had considered renting my current house out.
One of the difficulties with that is that I would have to refinance first, cause the terms of my current loan require me to be the occupant of the house.
I've thought about it though.

If it is an FHA or THDA, you only have to stay in it for something like 7 years. After that, you're free to do what you want with it. I was in that situation with my old house...which I still own. For the most part, a mortgage company isn't going to care what you do as long as you are making the payment...especially in this low market.

I went through a guy in Mortgage Investors Group for my last loan, so that's where I would be inclined to look again.
How does having a house that you rent out change things when you apply for a loan?
How do they look at that?

I think you have to have had rental property for something like 2 years before they will consider the income towards purchase of another home. The mortgage company probably won't want to approve you for a second home unless you tell them that you plan to sell the first one after moving into the new one. However, once you get in the new home, neither mortgage company isn't going to care what you do as long as you make the payments. Not only that, but there's nothing that says you can't change your mind after you buy the second house.

Another point: You will gain appreciation on the value of a home. This is not limited to the amount of equity. What that means is if you have a $100k house and appreciation is 4%, the house will $4k in value the first year. This is true whether you owe nothing or owe the full $100k. That said, if you owe only 80%, you will not have Private Mortgage Insurance (PMI) to pay, and it will lower your payment.

With all that in mind, consider a person that has $100k cash money. If they take it and buy one $100k house, at the end of the year, they will have a house valued at $104k. What I think is a better option is to buy 5 properties, each valued at $100k, putting $20k down on each...then you:
1) are paying no PMI
2) Own a total of $500k in property, which gains appreciation
3) Gaining 4% appreciation on $500k, which is $20k gains the first year.

I know it's not a perfect world and the bank isn't going to immediately loan anybody money for 5 houses...but this is a good example of how you can benefit from spending OPM (other peoples' money).

My first house, I bought for $66k, and it is currently worth twice that after owning it for 11 years. I only owe $40k on it now. I would love to refinance it and pull some equity out to invest in more property, but then the loan value goes up too high, the payment goes along with it, and then it is harder to rent and make a profit on it. If I can figure out how to get a nice enough interest rate, I might be able to get it refinanced at about $80k and get $40k to invest elsewhere.

 

[Wildman]

Your mailbox is full. Yea 2:30.