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Selling a house when you still have a mortgage on it



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amother
Brown


 

Post Tue, Nov 24 2015, 6:06 pm
We're looking to buy a house but very unsure about certain aspects of it. As such we're trying to make sure we don't get stuck with it. If we buy a house and decide it's not for us after, say, 5 years, how much more than our purchase price would we need to sell it for in order to not lose money? What are the calculations for us to figure this out?
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imasinger




 
 
    
 

Post Tue, Nov 24 2015, 7:30 pm
It depends on the interest rate for your mortgage, the amount of your down payment, the costs of selling (realtor, etc), buying a new home, and more. Here is an online calculator. You can see it may be difficult to make it useful, but you can ask a realtor to give you some conservative estimates to get an idea.

http://www.regions.com/Insight.....-home
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amother
Brown


 

Post Tue, Nov 24 2015, 9:38 pm
I couldn't make heads or tails of that calculator. embarrassed

The current interest rate is 4.125%. We would put down 40K which is 10% of the purchase price. Annual taxes are 13K. I have no idea how much the realtor makes; I assumed it's included in the purchase price. Closing costs are in the 20-30K range.
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amother
Mistyrose


 

Post Tue, Nov 24 2015, 9:41 pm
I didn't know they still give mortgages with only 10% down. Or are you outside US?
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amother
Rose


 

Post Tue, Nov 24 2015, 11:49 pm
amother wrote:
I didn't know they still give mortgages with only 10% down. Or are you outsidet US?

My dh is in the mortgage business, he is doing 3.5% down for buyers every day in NY and all over the usa, pm me for details,
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MagentaYenta




 
 
    
 

Post Tue, Nov 24 2015, 11:54 pm
amother wrote:
My dh is in the mortgage business, he is doing 3.5% down for buyers every day in NY and all over the usa, pm me for details,


Is is offering a fixed or variable rate? What kind of points?
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Rubber Ducky




 
 
    
 

Post Wed, Nov 25 2015, 9:30 am
amother wrote:
My dh is in the mortgage business, he is doing 3.5% down for buyers every day in NY and all over the usa, pm me for details,

It's really hard to pm an amother...
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Liveandlearn




 
 
    
 

Post Wed, Nov 25 2015, 11:15 am
amother wrote:
I couldn't make heads or tails of that calculator. embarrassed

The current interest rate is 4.125%. We would put down 40K which is 10% of the purchase price. Annual taxes are 13K. I have no idea how much the realtor makes; I assumed it's included in the purchase price. Closing costs are in the 20-30K range.


20-30k for closing costs sounds way too high
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Amarante




 
 
    
 

Post Wed, Nov 25 2015, 11:21 am
Some things are difficult to predict so this is a "fuzzy" post.

In general, in my experience, five years is the minimum in which it makes sense for a person to stay in a house.

You can calculate certain hard costs like broker commission; closing costs and even moving costs.

However, there are benefits including tax deduction (which can be considerable depending on tax bracket) as well as value of a home appreciating. No one can predict the housing market of course but after the bubble burst, it really came back in most areas and there doesn't seem to be a bubble especially in frum areas where demand remains consistently high because of limited supply.

And of course, there is the ability to add sweat equity. Although one is never going to get back 100% unless one does the work oneself certain things like updating kitchens and bathrooms realize a very significant rate of return - of course depending on the individual house and its location. Better to have the worst house in a great block than the best house in a poorer block (in general).
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self-actualization




 
 
    
 

Post Wed, Nov 25 2015, 12:20 pm
First of all you are going to lose the 20-30k that you spend on closing costs.

The number is high but in NY and some other places you need to buy title insurance which can be up to 15k. So you buy that but you don't take it with you to the next house.

What you gain (as opposed to living in an apartment) is the fact that the principal part of your mortgage payment goes to build equity in your home and the interest part is tax deductible. Your property taxes are also tax deductible.

So you need to see if the gain is more than 20-30k. Also you can think about whether property in this area usually appreciates in value over time.

When I was looking for a house, my husband and I had a strong need to "fall in love" with the house or at least find some parts of it charming. We knew that we wouldn't have enough emotional energy to do it all over again with another house, and that we would be staying put for IY"H many years.
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Rubber Ducky




 
 
    
 

Post Wed, Nov 25 2015, 12:29 pm
Housing prices go up and down. Neighborhoods change. No guarantees that your home will retain or increase its value.

If you can afford a 15-year mortgage you'll end up paying a lot less in interest and will start having significant equity much more quickly.
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amother
Sienna


 

Post Wed, Nov 25 2015, 1:42 pm
Agree that there is not guarantee houses retain their value.

We purchased in 2007 in the center of a very large growing Jewish community at the height of the market. Everyone was convinced this was the new price norm. a year after buying our house the market crashed. Our home probably lost a good part of its value - in scale with the rest of the market. Houses stayed low for a very long time. Our house is now worth what it was then, maybe a drop more.

Had we sold 5 years after buying it would have been a huge loss, BUT buying another house would have been significantly cheaper as well.

In the meantime a lot of land in the area was rezoned and traffic pattern changed so that has also kept the price of our home from increasing as houses on other blocks have.
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rf347




 
 
    
 

Post Wed, Nov 25 2015, 2:36 pm
MagentaYenta wrote:
Is is offering a fixed or variable rate? What kind of points?


30 year Fixed rate, 0 Points,

its special for 1st time home buyers with low cash or not the best credit score, The only down side is that the payment is higher since you have to pay extra for mortgage insurance every month, But I my self bought my house using this loan, Its amazing,
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amother
Ecru


 

Post Wed, Nov 25 2015, 5:52 pm
FHA loans, are what rf347 is referring to. We bought our house 3 years ago, we put ten percent down, and our mortgage is 3% interest for a fixed 30 year loan. The additional pmi, mortgage insurance, goes away after five years.
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amother
Brown


 

Post Wed, Nov 25 2015, 11:36 pm
amother wrote:
Agree that there is not guarantee houses retain their value.

We purchased in 2007 in the center of a very large growing Jewish community at the height of the market. Everyone was convinced this was the new price norm. a year after buying our house the market crashed. Our home probably lost a good part of its value - in scale with the rest of the market. Houses stayed low for a very long time. Our house is now worth what it was then, maybe a drop more.

Had we sold 5 years after buying it would have been a huge loss, BUT buying another house would have been significantly cheaper as well.

In the meantime a lot of land in the area was rezoned and traffic pattern changed so that has also kept the price of our home from increasing as houses on other blocks have.

The market crash of 4 years ago happens once in 15-20 years. I ain't gonna wait that long.
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amother
Brown


 

Post Wed, Nov 25 2015, 11:37 pm
Rubber Ducky wrote:
Housing prices go up and down. Neighborhoods change. No guarantees that your home will retain or increase its value.

If you can afford a 15-year mortgage you'll end up paying a lot less in interest and will start having significant equity much more quickly.
There are some neighborhoods that are pretty much guaranteed (like Brooklyn).
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