Mortgage insurance

[IlPadrino]

you know I dont necessarily think that making people put something down is a bad idea though, 100% financing is probably what got a lot of people into trouble.

Except on a $500k house, there's not much real down payment you can make people reasonably pay... I couldn't have afforded much more than 2% at the time. Granted, I could have continued to rent and try and save for a down payment (not sure how much progress I would have made), but hey, isn't home ownership the American Dream?!?

 

[DVINNY]

We've got 1600 SF on 0.25 acres. It was built in the 50s but has been modernized over time (kitchen, bathrooms, fixtures, etc.) and shows pride of ownership. For $2000 a month, I'm getting a pretty fair deal I think given what else we looked at.

That's smaller and less land than the one I mentioned above for $85k. Sometimes its nice to be a redneck.

Mortgage with insurance and taxes escrowed in was $608 / mo. <- I remember it worrying me.

 

[IlPadrino]

RW hit the nail on the head with that. Another caveat to what RW noted is that, in a foreclosure situation the 1st lien holder (the mortgage company) gets paid first, and if there's any left, the 2nd lien holder (the company that holds the HELOC or 2nd mortgage) gets paid, and on and on until anyone who holds a lien on the property get's paid. In a lot of these cases there isn't enough money after the foreclosure to even cover the 1st lien holder, the 2nd gets nothing, etc. Additionally, and I've seen this a lot down here, people that bought houses before the real estate boom and only took out 1 mortgage soon saw that their property was worth a lot more than the balance of their mortgage, so they took out HELOCs and did cash out refinances, also avoiding PMI.

Though with Short Sales this doesn't exactly hold. As I understand it, all lienholders need to agree to the terms of the shortsale, so there's a fair amount of room for negotiation. I haven't seen any numbers, but I wonder what the ratio of Short Sales to Foreclosures is doing...

 

[Chucktown PE]

Though with Short Sales this doesn't exactly hold. As I understand it, all lienholders need to agree to the terms of the shortsale, so there's a fair amount of room for negotiation. I haven't seen any numbers, but I wonder what the ratio of Short Sales to Foreclosures is doing...

Both have to agree to the sale but the 1st won't take less at the expense of the 2nd because if they wait for foreclosure then the 1st will get a better deal. Sometimes the 2nd will realize they aren't getting anything regardless and write down the entire loan and consider it a total loss, other times they'll sue the owner for the debt.

 

[Capt Worley PE]

How the hell can anyone afford to put 20% down on a house in the first place.
When did you folks buy your first place?

Easy where we live. We put 20% down and the payments are less than 450/month. Of course that was eleven years ago, but prices are still very reasonable.

I couldn't loive in Boston. I'd freak over how costly stuff is.

 

[RIP - VTEnviro]

^ It was a bit of a shock because of how cheap VT was, but where I grew up is noticably more expensive than here.

Housing and auto insurance are the big things that are really expensive here. Dining out is too but we basically never do that.

Cost of living will definitely factor into where we ultimately end up.

That's smaller and less land than the one I mentioned above for $85k. Sometimes its nice to be a redneck.

If I picked up a supermarket real estate flyer in your neck of the woods if would probably excite me more than a good porno mag.

 

[OSUguy98]

That's smaller and less land than the one I mentioned above for $85k. Sometimes its nice to be a redneck. Mortgage with insurance and taxes escrowed in was $608 / mo. <- I remember it worrying me.

I paid $86k for my 1300 sq ft house with a full, unfinished basement (appraised for $95k)... through WVHDF's first-time home buyer program... they gave me 2 loans... one for "closing costs", and one for the house... 100% financing... the 1st mortgage is for a hair over $83k... and the other is for $3.5k loan with a 3-year interest free grace period... So I ended up with a $500/mo mortgage, and the other loan will be roughly $50/mo come this Nov. if I don't pay it off before then (which is the plan)... Add in some escrow for Taxes and Insurance and of course the $50/mo for PMI and I'm looking at a $600-650/mo house payment...

Sometimes it's nice to live in a place where housing costs/insurance/taxes are "cheap" and reasonable...

 

[DVINNY]

^^ I agree.

Then I bought my house in BPort, and now pay $2100/mo.

It's a 15 yr. loan and I only have 10 years left, so I'll be happy then

 

[Capt Worley PE]

Then I bought my house in BPort, and now pay $2100/mo.

HFS!!!

I could not handle that emotionally.

 

[Chucktown PE]

Here's a question for anyone out there. I am thinking about possibly building a house myself (me as the GC). I have a couple of friends who have done this who have very little knowledge of construction. I consider myself to be an advanced do-it-yourselfer and know a good bit about residential construction.

Right now I'm thinking I can buy a decent lot (around 0.25 acre) for $100k and then build a 2200-2400 square foot house for $200k. I think it would probably appraise for between $450k and $500k when I'm done. My questions are 1) are builders making that great a profit on houses 2) does $90 to $100 per square foot sound like a reasonable estimate for construction cost?

 

[RIP - VTEnviro]

^A former manager of mine built his own house over the course of a year and a half. He was an experienced civil engineer and pretty handy, but had never built a house. He read up on it and hired a buddy who knew what he was doing and the house turned out nicely.

As for your specific questions, I don't have an answer.

 

[Road Guy]

my mother in law has "built" the last three houses they lived in, all in the $500K range. She basically acted as the GC and hired out all the subs for the work. I think she would paid a contractor to help her through the bigger decisions, but they shaved a lot of money off their house cost because she would nag the crap out of the subs and such.

So I figure if she can do it almost anyone can, but she doesnt work and really enjoys nagging... so I think that helps, but having to do it while working full time might be more of a challenge.

And they have built some really nice houses doing it this way....

 

[snickerd3]

Here's a question for anyone out there. I am thinking about possibly building a house myself (me as the GC). I have a couple of friends who have done this who have very little knowledge of construction. I consider myself to be an advanced do-it-yourselfer and know a good bit about residential construction.
Right now I'm thinking I can buy a decent lot (around 0.25 acre) for $100k and then build a 2200-2400 square foot house for $200k. I think it would probably appraise for between $450k and $500k when I'm done. My questions are 1) are builders making that great a profit on houses 2) does $90 to $100 per square foot sound like a reasonable estimate for construction cost?

Wow 100k for only a 1/4 acre...land prices are high by you. When we looked into building .25-.5 acre plots were 20k-45K. The prices we were getting for construction were within that range, if not slightly more. rural small town so everything would have to be brought in.

My FIL did exactly what you are thinking about doing i believe about the same size too. They live in the Chicago burbs. they spilt the lot they already owned to build their "retirement" home. He had no construction knowledge but like yourself an advanced do-it-yourselfer.

The county required him to have an architect draw up the plans. If you are not on city water/sewer the local county may have size limit on the house for proper sizing of septic system. (FIL could only have 3 bedrooms due to the size of the lot). He hired contractors to do the foundation, the roof, and eventually the drywall as time on his permit was running out. (took almost 3 yrs) Everything else he did himself, literally. He built a wooden crane, to lift the LDLs to the second story and to hoist up the walls. he occassionally brought in day laborers through a local job placement office because he needed the extra hands. He just finished the fireplace this past fall.

I think he said he spent a little over $250K. Insurance value is closer to 375K I believe. He has said he will never do it again. He'll pay someone next time.

 

[dastuff]

You guys are all lucky.... If you look under 300k$ in socal you're likely to end up in a very sketchy neighborhood... Which is sad for all those people buying starter homes...

That's why, as horrible as it sounds, I am hoping that CA real estate becomes more reasonable with this crash. I just can't feel all that guilty for the guy making half what me and the gf make thinking he can afford double what we're looking at. Right now we're looking at the 350k$ range and hoping that we can find something decent and have about 10% down for it.

 

[Supe]

You guys are all lucky.... If you look under 300k$ in socal you're likely to end up in a very sketchy neighborhood... Which is sad for all those people buying starter homes...
That's why, as horrible as it sounds, I am hoping that CA real estate becomes more reasonable with this crash. I just can't feel all that guilty for the guy making half what me and the gf make thinking he can afford double what we're looking at. Right now we're looking at the 350k$ range and hoping that we can find something decent and have about 10% down for it.

The northeast isn't much better. Down the street from where I used to live in Southwestern CT (Fairfield County), the prices were absolutely outrageous. A small, hideous turquoise colored ranch with a one car detached garage and a narrow backyard went for $475k I believe. This is on the outskirts of a suburb that borders a horrendous section of Bridgeport, CT. My old next door neighbor sold his house about 3 months ago for $375k, almost the same style as the one described above. These are homes which wouldn't even touch $200k just about anywhere else. My parents' home is nothing spectacular, has no garage but does have an in-ground pool, and that was appraised in the $450k range.

But what amazes me though, and a perfect example of the crisis we're in today, is that ALL of the people moving into the neighborhood are young couples with 2-3 kids who both work either low paying jobs, or only one person in the house has a job. I'm talking prison security guards, guys who work for a landscaping company, etc, not even middle of the road admin or office jobs. I have no clue how the hell they can pay the mortgages on these things.

 

[Chucktown PE]

Wow 100k for only a 1/4 acre...land prices are high by you. When we looked into building .25-.5 acre plots were 20k-45K. The prices we were getting for construction were within that range, if not slightly more. rural small town so everything would have to be brought in.
My FIL did exactly what you are thinking about doing i believe about the same size too. They live in the Chicago burbs. they spilt the lot they already owned to build their "retirement" home. He had no construction knowledge but like yourself an advanced do-it-yourselfer.

The county required him to have an architect draw up the plans. If you are not on city water/sewer the local county may have size limit on the house for proper sizing of septic system. (FIL could only have 3 bedrooms due to the size of the lot). He hired contractors to do the foundation, the roof, and eventually the drywall as time on his permit was running out. (took almost 3 yrs) Everything else he did himself, literally. He built a wooden crane, to lift the LDLs to the second story and to hoist up the walls. he occassionally brought in day laborers through a local job placement office because he needed the extra hands. He just finished the fireplace this past fall.

I think he said he spent a little over $250K. Insurance value is closer to 375K I believe. He has said he will never do it again. He'll pay someone next time.

It's definitely expensive down on the coast. The community does have a nice boat landing, pool, tennis courts, etc. so that is a nice perk.

I'm not planning on doing the hammering and nailing myself. I'm going to sub everything out.

I'll be on public water/sewer but the community we are looking into has $12000 in impact fees.

 

[chaosiscash]

Does the community have requirements for the house you want to build (min square footage, plans to be approved by committee, etc)? If you're going to be the GC, you might want to check it out, I know a lot of neighborhoods around here do.

If you don't mind me asking, where around C-town are you looking. Mt. Pleasant, West Ashley, etc? Just curious.

 

[snickerd3]

Does the community have requirements for the house you want to build (min square footage, plans to be approved by committee, etc)? If you're going to be the GC, you might want to check it out, I know a lot of neighborhoods around here do.
If you don't mind me asking, where around C-town are you looking. Mt. Pleasant, West Ashley, etc? Just curious.

Got to love the community covanents...the reasons we didn't build.

don't forget about things like some % of the house fascade has to be brick or you can't build a fence or plant hedges no commerical class vehicles can be parked overnight, no boats on driveway/yard. no sheds...the list can go one forever.

 

[Chucktown PE]

We're looking in Mount P. and yes the list goes on and on. There are some very stringent requirements and everything (down to the types of shrubbery) have to be approved by the architectural review board. One of the big problems I'm having is that a lot of communities require a contractor's license. In SC you don't need a contractor's license if you're building your own home. And it's pretty hard for anyone off the street to get a contractor's license.

 

[dastuff]

But what amazes me though, and a perfect example of the crisis we're in today, is that ALL of the people moving into the neighborhood are young couples with 2-3 kids who both work either low paying jobs, or only one person in the house has a job. I'm talking prison security guards, guys who work for a landscaping company, etc, not even middle of the road admin or office jobs. I have no clue how the hell they can pay the mortgages on these things.

I agree completely, it's hard to feel bad for all the people out here right now who can't afford their mortgages when they planned on making a quick buck at the economies expense.

Whatever happened to buying @ three times the household income? There are articles in the paper out here now showing people having bought at 10 times their income levels. I understand that it isn't completely their fault but people should be held responsible for their actions.