Buying again after short sale

[Anonymous]

Anonymous wrote:Where did yo move from, op?

I'm guessing CA or FL.

[Anonymous]

Please DO NOT get a 10 year ARM in this environment. Just save your money until you are able to go conventional.

[Anonymous]

Why would I not get a 10 year ARM, knowing that I can easily pay off the mortgage within 10 years?

[Anonymous]

Anonymous wrote:Why would I not get a 10 year ARM, knowing that I can easily pay off the mortgage within 10 years?

There is no guarantee you can pay off the house in 10 years. Didn't you say a move is what got you into this position? What if there is another move and you are stuck with a house you don't want to waste money paying for? Sure the market is strong in this area (although I'm not sure you have said where you would buy), but there could be another drop in the market. Or, one of you could lose your job, or decide it is no longer a job you wish to have. How much money are you going to spend? If you say $500,000 with 20% down that is one thing, but if you are looking to spend $1.5 million, then I don't think you are being very wise.

[Anonymous]

House in is FL. We no longer reside in DC. Purchase price is $600K so loan would be $480. Approximate monthly payment of $2,200 (less than the $3,200 it is costing us to rent initially). Totally reasonable, even if we were to move. Plus it is in a location where it is very very easy to rent out.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Why would I not get a 10 year ARM, knowing that I can easily pay off the mortgage within 10 years?

There is no guarantee you can pay off the house in 10 years. Didn't you say a move is what got you into this position? What if there is another move and you are stuck with a house you don't want to waste money paying for? Sure the market is strong in this area (although I'm not sure you have said where you would buy), but there could be another drop in the market. Or, one of you could lose your job, or decide it is no longer a job you wish to have. How much money are you going to spend? If you say $500,000 with 20% down that is one thing, but if you are looking to spend $1.5 million, then I don't think you are being very wise.

NP here. By this reasoning, why would anyone ever buy anything? There's always the possibility of job loss, transfer, etc.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Why would I not get a 10 year ARM, knowing that I can easily pay off the mortgage within 10 years?

There is no guarantee you can pay off the house in 10 years. Didn't you say a move is what got you into this position? What if there is another move and you are stuck with a house you don't want to waste money paying for? Sure the market is strong in this area (although I'm not sure you have said where you would buy), but there could be another drop in the market. Or, one of you could lose your job, or decide it is no longer a job you wish to have. How much money are you going to spend? If you say $500,000 with 20% down that is one thing, but if you are looking to spend $1.5 million, then I don't think you are being very wise.

NP here. By this reasoning, why would anyone ever buy anything? There's always the possibility of job loss, transfer, etc.

It's called buying within your means and with some thought about the future. Not just going in blindly and buying as much house as the lender tells you you can afford (like what happened in the mid 2000s.)

OP, based on what you have revealed concerning price, I'd say go for it, assuming you plan to stay in Florida. Although, I think you could probably spend less and have more in the bank.

[Anonymous]

Anonymous wrote:House in is FL. We no longer reside in DC. Purchase price is $600K so loan would be $480. Approximate monthly payment of $2,200 (less than the $3,200 it is costing us to rent initially). Totally reasonable, even if we were to move. Plus it is in a location where it is very very easy to rent out.

Have you considered putting 25% down to see if that gets you a better interest rate? Or enough to get you below the $417,000 threshold, which would likely get you a better rate?

We purchased recently and made sure to put down enough to get us below the $417,000 threshold, which was also more than the now standard 20%.

[Anonymous]

Anonymous wrote:

Anonymous wrote:House in is FL. We no longer reside in DC. Purchase price is $600K so loan would be $480. Approximate monthly payment of $2,200 (less than the $3,200 it is costing us to rent initially). Totally reasonable, even if we were to move. Plus it is in a location where it is very very easy to rent out.

Have you considered putting 25% down to see if that gets you a better interest rate? Or enough to get you below the $417,000 threshold, which would likely get you a better rate?

We purchased recently and made sure to put down enough to get us below the $417,000 threshold, which was also more than the now standard 20%.

We are in an area where the threshold is above the $417K. I believe it is $625K.

[Anonymous]

Anonymous wrote:

Anonymous wrote:House in is FL. We no longer reside in DC. Purchase price is $600K so loan would be $480. Approximate monthly payment of $2,200 (less than the $3,200 it is costing us to rent initially). Totally reasonable, even if we were to move. Plus it is in a location where it is very very easy to rent out.

Have you considered putting 25% down to see if that gets you a better interest rate? Or enough to get you below the $417,000 threshold, which would likely get you a better rate?

We purchased recently and made sure to put down enough to get us below the $417,000 threshold, which was also more than the now standard 20%.

We can't get a conventional loan until 24 months from our short sale. The house we are trying to purchase is also a short sale. It is on the market for 50% of it original appraised value. A great deal that we are not going to let go.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:House in is FL. We no longer reside in DC. Purchase price is $600K so loan would be $480. Approximate monthly payment of $2,200 (less than the $3,200 it is costing us to rent initially). Totally reasonable, even if we were to move. Plus it is in a location where it is very very easy to rent out.

Have you considered putting 25% down to see if that gets you a better interest rate? Or enough to get you below the $417,000 threshold, which would likely get you a better rate?

We purchased recently and made sure to put down enough to get us below the $417,000 threshold, which was also more than the now standard 20%.

We are in an area where the threshold is above the $417K. I believe it is $625K.

I too am in an area with a $625,000 threshold, but I still believe there are multiple levels within the threshold, below $417,000 gets you the best rate, between $417,000 and $625,000 is slightly higher, and above $625,000 is higher. If you have not heard of this, ask your lender for more details. But this was the case for us in NoVA.

[Anonymous]

Anonymous wrote:OP here again. They're offering me a 10 year ARM, so fixed rate for 10 years. We can refinance to a conventional fixed rate, 30 year loan in 8 months, so even a 1 or 3 year ARM would work well for us.

And for those who think I gamed the system, you have no idea what our situation was. The short sale was due to a job transfer. We held on to the property (paying about $5K mortgage plus $2500 rent in DC) for 3 years with ZERO offers. At some point we had to start thinking about our own financial future and our childrens' and disregard the bank, other homeowners, etc. It was crazy to throw $5K down the drain each month, knowing that we would never be returning to the property and it would take years to recover its value (if ever).

While I think you're pretty casual with your responsibilities, I can't really blame you for taking advantage of a short sale. I'm shocked that the bank agreed to it, though, with your income. (I know you said it wasn't $600k a year ago, but is was enough to afford a $5K per month mortgage.)

I hope you had enough sense to make sure they can't come after you for the balance in the short sale agreement. Actually, I hope you didn't - you are exactly the type of people who make others crazy about the short sale process.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP here again. They're offering me a 10 year ARM, so fixed rate for 10 years. We can refinance to a conventional fixed rate, 30 year loan in 8 months, so even a 1 or 3 year ARM would work well for us.

And for those who think I gamed the system, you have no idea what our situation was. The short sale was due to a job transfer. We held on to the property (paying about $5K mortgage plus $2500 rent in DC) for 3 years with ZERO offers. At some point we had to start thinking about our own financial future and our childrens' and disregard the bank, other homeowners, etc. It was crazy to throw $5K down the drain each month, knowing that we would never be returning to the property and it would take years to recover its value (if ever).

While I think you're pretty casual with your responsibilities, I can't really blame you for taking advantage of a short sale. I'm shocked that the bank agreed to it, though, with your income. (I know you said it wasn't $600k a year ago, but is was enough to afford a $5K per month mortgage.)

I hope you had enough sense to make sure they can't come after you for the balance in the short sale agreement. Actually, I hope you didn't - you are exactly the type of people who make others crazy about the short sale process.

Of course I made sure the deficiency was waived. Congress was also smart enough to pass a law making the forgiven amount non-taxable. Now that I know I can buy again, I can say it was a win-win-win for us. I should have done the short sale 3 years prior and saved thousands of dollars. If you want to blame someone for the short sale mess, blame the banks. We were responsible enough never to have missed a payment. We simply had no choice in the end.

[Anonymous]

Blame the banks? You are delusional.

[Anonymous]

OP, as someone who has also been paying for an underwater property in another state for years (and losing thousands of dollars a year for the privilege), all I have to say is CONGRATS. Three years of paying for an empty house is more than enough loss for you. We're still 2 and 1/2 years from having enough equity to sell, and even though it's rented, we can't rent for anywhere near what we owe. We just bleed money and have no hope of ever fully recovering from the loss. Every year we're stuck in that place just adds to the loss. I count the days until we're paid down enough to be able to get out and am thankful that we weren't so underwater that paying our way out would never be possible. A business that took a 50+% loss on an investment would bail too, so no shame in that.

So, I think you did the right thing and 4% on a ten year ARM is awesome. Get yourself paid down on that loan as fast as you can and get on with your life.