Home Financing

Discussion in 'Buying & Selling Real Estate' started by Investor, Nov 29, 2015.

  1. Investor

    Investor Well-Known Member

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    Potential home buyers and home owners, what are some of the financial ways that you utilized in getting a home? was it through a mortgage? was it some money given to you by your parents? I am aiming to buy a home within the next three years, this for me is a big move. After all, this for anyone would be a big move. Also, how long will it take, or did it take you to pay off fully for your house?
     
  2. JR Ewing

    JR Ewing Super Moderator Staff Member

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    It helps to have a credit score that is well into the 700+ range in order to get a very low rate and a low down payment.

    Negotiate. Don't let on like you're excited or that any home you look at is a must-have. Do a little more homework and make an offer that is at least a little lower than asking price, and have several homes that you're looking at at any given time. Don't ever walk into any deal that you're not perfectly willing to walk away from even at the last minute if a seller, realtor, or lender tries to screw you at the last minute. Try to keep emotions out of it as much as possible.

    I'd do a little homework and try to make sure you're buying in a good area that is likely to stay that way and hopefully get even better in the future. All else more or less equal, you're probably going to be better off paying $240k for that 1600 square foot home in a nicer area that was built around equally nice or even fancier homes that tend to be a little larger... rather than buying another one that is virtually identical that is in a less desirable area that is selling for $160k or less. The cheaper home built in a less desirable area that is about the same or better than most homes around it is likely to have a hard time holding it's value, and may even depreciate.

    Besides the appraisal and title work, I'd also pay to have the home inspected to make sure it's well built and in good shape - even if it's a new home.
     
  3. JR Ewing

    JR Ewing Super Moderator Staff Member

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    If you can get a good low fixed rate mortgage, I wouldn't worry excessively about trying to pay it off too soon. Here in the US, you can generally write off the interest paid on a first mortgage on the first $1 million of the cost of the primary/secondary residence.

    https://www.irs.gov/publications/p936/ar02.html#en_US_2014_publink1000229890

    You can take advantage of a low fixed rate mortgage giving you a relatively low monthly payment and a tax deduction, and use extra money the low note and the tax break free up to invest in retirement plans or whatever.
     
  4. crimsonghost747

    crimsonghost747 Senior Investor

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    With the property prices being what they are, I'm sure that over 90% of first time home buyers are getting a mortgage. Other than inheritance or the very exceptional cases of people striking it rich through their business or the lottery or whatever, I don't think most people can afford to buy a home without one.

    I'll be running into this situation in the next few years (hopefully). I've got quite a bit of money saved for the downpayment but the other extra cash that I have go towards investments.. and I won't be selling the investments when I get my home. Mortgage rates are so low that I'd rather pay it back slow and steady.
     
  5. Corzhens

    Corzhens Senior Investor

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    Our home was acquired thru a bank loan. Since it is a privilege of employees so the interest rate is lower than the commercial rate. That was in 2001. We will be fully paid with the mortgage next year (2016) and we can get the title. By the way, the loan application took about 4 months to process since there were too many required documents. Fortunately, some people in the bank helped us.
     
  6. gracer

    gracer Senior Investor

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    I personally haven't bought a real estate property yet but I have been a long time member of a cooperative which also offers big loans which can be used for buying properties or starting up a business. My dad has acquired a couple of properties through loaning from them and so far everything is working out fine. They offer lower interests rates than bank so paying a very big amount for interests was never a problem for my dad.
     
  7. anders

    anders Well-Known Member

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    Getting a mortgage in the UK is a lot more difficult now since the financial crash circa 2008. What you really need is to be able to put down a substantial deposit - usually 10% - which means a good many years of saving-up. Even then you don't always get the best rates, which is dependent on a lot of other factors. But really, that initial hurdle is the deposit, which many people find problematic for obvious reasons.
     
  8. Corzhens

    Corzhens Senior Investor

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    That required deposit is what's making life difficult for the middle class who are buying a house. For those coming from rich families, they can borrow from their parents or families but for the real middle class like us, it is difficult to get that amount to fund a housing loan. It took use more than 10 years to save money for the down payment of a housing mortgage. Now we have our own home and nearing full payment in a year or two.
     
  9. Kate

    Kate Senior Investor

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    My case is a little different and I doubt that we could do it the same way with today's market/environment, but I'll tell you anyhow, for what it's worth.

    First of all, the credit score was excellent. We wouldn't have gotten too far if it hadn't been because the plan was to go as low with the down-payment as possible.

    Something that really helped was getting the bi-weekly plan. It pays a home off considerably sooner than monthly and knocks a lot of the interest off.

    What else? Well at that point, we poured everything we had into paying that mortgage and made as many extra payments as possible, always earmarking it for "principal payment only."

    How long it will take you depends on what kind of mortgage you choose. Back with our first home, the norm seemed to be 30 year mortgages... that thought just upset me to no end. I'd surely go for something a lot less now. But it didn't really matter because we had it paid off in 8 years. The longer term, now that I'm thinking of it, helped to keep the payments smaller for the times there *couldn't* be those extra payments.
     
  10. kgord

    kgord Senior Investor

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    Well, We just had a mortgage with our first home, and second home as well. This house I have now was the same thing. Sadly, as this is a community where a lot of people buy second homes...I don't think I am going to get close to what I paid for it. I will be lucky to get somewhere near the ballpark in terms of a sale.
     

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