Buying your first home in US. Headache or super fun time?

[silvana.toma 15]

Silvana, if the deal on the house is so great, why are the other costs so unpleasant to you? Especially given the fact that you yourself say you could not have purchased a house in your home country, let alone a house like the one you describe.

Your home loan deal actually sounds pretty sweet to me. If I read you correctly, you are paying about $1200 out of pocket for this house. That's nearly unheard of.

Right..the deal is great BUT i am not talking about that, i am talking about the whole system, and everything else i just mentioned.

I am paying out of pocket almost 3k, and no...it's not unheard of, most people are smart these days and don't liquidate their bank accounts to buy a house. After so many forclosures we all(hopefully)learned a lesson.

Anyway..i think i missed your point completly ...like always.

[웃 910]

Right..the deal is great BUT i am not talking about that, i am talking about the whole system, and everything else i just mentioned.

I am paying out of pocket almost 3k, and no...it's not unheard of, most people are smart these days and don't liquidate their bank accounts to buy a house. After so many forclosures we all(hopefully)learned a lesson.

Anyway..i think i missed your point completly ...like always.

I think the system is pretty good. There are a lot of people involved and they each get their cut during the process. You can always whip out $200,000 and pay cash if you don't want the banks to be so kind to give you a 30 year loan with your very small down payment (used to have to be around 20%...now 3%?)...Without the banks you would not have a home....You'd be a life-long renter

Think about it...if I give you $3,000 today will you lend me $200,000 bucks and let me pay you a few hundred dollars a month for the next 3 decades? Probably not....If so it would be very kind of you and I would love to write the paperwork up tonight!

[Rebecca Jo 1,962]

Right..the deal is great BUT i am not talking about that, i am talking about the whole system, and everything else i just mentioned.

I am paying out of pocket almost 3k, and no...it's not unheard of, most people are smart these days and don't liquidate their bank accounts to buy a house. After so many forclosures we all(hopefully)learned a lesson.

Anyway..i think i missed your point completly ...like always.

I just don't understand what you are complaining about.

Even if you are putting 3K out of your pocket into the deal, that's practically nothing. Historically, those are exactly the kind of home loan transactions that lead to today's crisis. People with little or no money in a house have less bother with walking away from the property than people who "emptied their bank account" to buy a house.

Do you know what the process is for buying a home in your home country? Is it different than here in the US?

[Nich-Nick 3,354]

The next frustration is property taxes and escrow added to your house payment. The mortgage company will collect in advance. Have you been given (or looked up) yearly property taxes for that house? Will your county be taxing you based on the $300,000+ value you said the house is worth?

[silvana.toma 15]

I just don't understand what you are complaining about.

Even if you are putting 3K out of your pocket into the deal, that's practically nothing. Historically, those are exactly the kind of home loan transactions that lead to today's crisis. People with little or no money in a house have less bother with walking away from the property than people who "emptied their bank account" to buy a house.

Do you know what the process is for buying a home in your home country? Is it different than here in the US?

Times have changed, and people are not willing to "empty their bank account" as jobs are not as secure as they used to be. And i'm pretty sure that people who put 20%-40% down lost their homes just like people who came empty handed. The "empty handed" is just one aspect that lead to the crisis, the reasons are multimple, and i am not going to mention them as we all know what they are(e.g. maxed out credit cards...spending like there is no more tomorrow..and no savings) But this is just how i feel about it ...so let's just agree to disagree here.

In romania very few people buy homes, mostly because the senior citizens work their entire life and buy their home to pass it down to their kids, and their kids are doing the same, etc...for example my parents house is in my name

But to answer your question, yes, banks in romania are just as greedy as evey bank in the world, they are all governed by the same people anyway.

Why do you need to understand why i am complaining?. This is how i feel about this, and everyone is free to speak their mind, correct?

Just because we have different views dosen't mean i am right or you are right, just means we are two different people with 2 different views...

You have complained in the past that you don't understand what i writte, you have complained about several things in regards to my posts...and i just don't know why are you even reading my posts...it's not mandatory to read what i have to say...

Edited April 17, 2011 by silvana.toma

[silvana.toma 15]

The next frustration is property taxes and escrow added to your house payment. The mortgage company will collect in advance. Have you been given (or looked up) yearly property taxes for that house? Will your county be taxing you based on the $300,000+ value you said the house is worth?

Thank you....finally someone who speaks my language!

Yes it is frustrating, the frustrations are quite a few when you become a home owner, and of course the path of becoming a home owner is full of surprises. as well.

We are waiting for the apraiser to give us a number, but they were saying that it's based on the home market value which is around 220k.

I was actually wondering about that, let's say if in the future this house will be worth 300k or more will we be paying taxes based on what's worth or what we bought it for...

[Rebecca Jo 1,962]

Times have changed, and people are not willing to "empty their bank account" as jobs are not as secure as they used to be. And i'm pretty sure that people who put 20%-40% down lost their homes just like people who came empty handed. The "empty handed" is just one aspect that lead to the crisis, the reasons are multimple, and i am not going to mention them as we all know what they are(e.g. maxed out credit cards...spending like there is no more tomorrow..and no savings) But this is just how i feel about it ...so let's just agree to disagree here.

In romania very few people buy homes, mostly because the senior citizens work their entire life and buy their home to pass it down to their kids, and their kids are doing the same, etc...for example my parents house is in my name

But to answer your question, yes, banks in romania are just as greedy as evey bank in the world, they are all governed by the same people anyway.

Why do you need to understand why i am complaining?. This is how i feel about this, and everyone is free to speak their mind, correct?

Just because we have different views dosen't mean i am right or you are right, just means we are two different people with 2 different views...

You have complained in the past that you don't understand what i writte, you have complained about several things in regards to my posts...and i just don't know why are you even reading my posts...it's not mandatory to read what i have to say...

Silvana, I am just trying to understand. And (I hope) that by asking you my questions you'll think a bit about what you have said and maybe realize that this is just the way things are if you want to own a home. You indicate to me that the process would be just as cumbersome in Romania. If this is so, then I guess we can say that buying a home anywhere involves a bit of hassle? As they say, you can't get something for nothing.

And just as an aside and to help you understand our system even better, I would point you to this 2009 article from the Wall Street Journal which discusses how negative equity and low equity contributed to the housing crisis. The data should not be startling to anyone - nearly everyone knows that the more money you have down, the lower your mortgage insurance premium will be. Or there may be no mortgage insurance at all. Banks only skip mortgage insurance is the chance of default is low. Borrowers with large down payments historically have a very low rate of foreclosure.

http://online.wsj.com/article/SB124657539489189043.html

The analysis indicates that, by far, the most important factor related to foreclosures is the extent to which the homeowner now has or ever had positive equity in a home. The accompanying figure shows how important negative equity or a low Loan-To-Value ratio is in explaining foreclosures (homes in foreclosure during December of 2008 generally entered foreclosure in the second half of 2008). A simple statistic can help make the point: although only 12% of homes had negative equity, they comprised 47% of all foreclosures.

Further, because it is difficult to account for second mortgages in this data, my measurement of negative equity and its impact on foreclosures is probably too low, making my estimates conservative.

What about upward resets in mortgage interest rates? I found that interest rate resets did not measurably increase foreclosures until the reset was greater than four percentage points. Only 8% of foreclosures had an interest rate increase of that much. Thus the overall impact of upward interest rate resets is much smaller than the impact from equity.

To be sure, many other variables -- such as FICO scores (a measure of creditworthiness), income levels, unemployment rates and whether the house was purchased for speculation -- are related to foreclosures. But liar loans and loans with initial teaser rates had virtually no impact on foreclosures, in spite of the dubious nature of these financial instruments.

Instead, the important factor is whether or not the homeowner currently has or ever had an important financial stake in the house. Yet merely because an individual has a home with negative equity does not imply that he or she cannot make mortgage payments so much as it implies that the borrower is more willing to walk away from the loan.

[Rebecca Jo 1,962]

And Silvana, just to make you feel a little better and realize that I am NOT picking on you, when I was young and bought my first house I had only 5% down. There was mortgage insurance on the loan. And the taxes and property insurance were escrowed each month as part of the mortgage.

I got older, sold that house, and used the money to put down on my second house. This time I had more than 20% down. I have no mortgage insurance. I pay my taxes and homeowners insurance myself rather than paying them monthly with the mortgage payment.

Everybody has to start somewhere!

[Nich-Nick 3,354]

Thank you....finally someone who speaks my language!

Yes it is frustrating, the frustrations are quite a few when you become a home owner, and of course the path of becoming a home owner is full of surprises. as well.

We are waiting for the apraiser to give us a number, but they were saying that it's based on the home market value which is around 220k.

I was actually wondering about that, let's say if in the future this house will be worth 300k or more will we be paying taxes based on what's worth or what we bought it for...

I can't really speak for Virginia, but I think you probably have an appraisal office for your county government. The county will appraise all houses for what they think they are "worth" as far as taxing. That is far different than a real estate appraisal which will take into consideration size, location and maybe if it's painted really pretty and has new appliances. The county appraisal may be more about what is the land worth, how big is the house, how many bathrooms. They won't be considering paint, new roof, new carpet, stainless steel and granite. So a real estate appraisal could come out higher than a tax appraisal.

Counties can change their appraisals every year if they like. Just got my proposed appraisal in the mail. They have increased my house 17%. There is some kind of law saying they can't increase you more than 10% in a year, so I will only be taxed next year on a 10% increase and the rest of it goes into affect for sure the following year. So in one year my taxes are up $800 (at the 10% cap) and will be up more next year. They will continue to go up (or down) based on tax appraisal, not what you paid for the house.

Another thing you need to do is call somebody about homeowner's insurance. That will normally also be collected by the mortage company in an escrow account in advance so you've put in enough when the insurance is due. Maybe that's what you were talking about when you said you give them $1200 and only $200 goes toward your loan balance. You have a large amount collected for taxes and insurance. And a large portion is the interest on that huge loan. That's why people try to negotiate a low interest rate. The part that applies to your debt is very small at the beginning of a loan. 25 years from now, the interest will be small and the part going to your loan will be big. And your taxes and insurance (escrow) will probably go up every year, meaning a higher house payment every year if those items are escrowed (collected in advance) as part of your monthly payment.

Edited April 17, 2011 by Nich-Nick

[silvana.toma 15]

I can't really speak for Virginia, but I think you probably have an appraisal office for your county government. The county will appraise all houses for what they think they are "worth" as far as taxing. That is far different than a real estate appraisal which will take into consideration size, location and maybe if it's painted really pretty and has new appliances. The county appraisal may be more about what is the land worth, how big is the house, how many bathrooms. They won't be considering paint, new roof, new carpet, stainless steel and granite. So a real estate appraisal could come out higher than a tax appraisal.

Counties can change their appraisals every year if they like. Just got my proposed appraisal in the mail. They have increased my house 17%. There is some kind of law saying they can't increase you more than 10% in a year, so I will only be taxed next year on a 10% increase and the rest of it goes into affect for sure the following year. So in one year my taxes are up $800 (at the 10% cap) and will be up more next year. They will continue to go up (or down) based on tax appraisal, not what you paid for the house.

Another thing you need to do is call somebody about homeowner's insurance. That will normally also be collected by the mortage company in an escrow account in advance so you've put in enough when the insurance is due. Maybe that's what you were talking about when you said you give them $1200 and only $200 goes toward your loan balance. You have a large amount collected for taxes and insurance. And a large portion is the interest on that huge loan. That's why people try to negotiate a low interest rate. The part that applies to your debt is very small at the beginning of a loan. 25 years from now, the interest will be small and the part going to your loan will be big. And your taxes and insurance (escrow) will probably go up every year, meaning a higher house payment every year if those items are escrowed (collected in advance) as part of your monthly payment.

Yes, i was talking about the county apraiser. We have to hope and cross fingers they will do it(the apraiser on the house) until the 6th of may otherwise we are beeing charged 100 a day as penalty.

So i looked at the breakdown of the monthly mortgage payment and 200 goes towards the house, almost 800 towards the bank(and as the years go by it reverses , you are right), and the rest is insurance and something else(and another hundred will go towards the waranty and home owner asociation). Really i am a bit dizzy with all the insuracces :home insurance, mortgage insurance, house waranty..

We are actually shopping for a home insurance, geico told us 75 dollars a month..so we are still shopping to see if we can get a better deal.

they have increased the value of your house? That sounds strange when homes are still going down in value. SO they take 7%more from you, and X% from millions of home owners, then by next year when they adjust the numbers well...they used your money a little bit...

Sometimes i think there is nothing random, and everything happens because it was supose to happen, but it seems random in our eyes...

[Nich-Nick 3,354]

they have increased the value of your house? That sounds strange when homes are still going down in value. SO they take 7%more from you, and X% from millions of home owners, then by next year when they adjust the numbers well...they used your money a little bit...

Sometimes i think there is nothing random, and everything happens because it was supose to happen, but it seems random in our eyes...

Yes, the county increased the taxation value of my home. And I am going to protest it and try to get it lower. I've been printing up the valuations of some others near me to show mine is higher than two others of the exact same house. You should be able to look up online the history of the tax evaluation on your property. It would be public record. The tax value is used for all the taxing agencies---the county (roads, courthouse, jail, sherriff), hospital district, emergency services, community college, public schools, and the utility district. Our property taxes help fund a lot of services. Maybe it's different because we have no state income tax. I don't know how the total amount collected compares to property taxes in other states.

I like what RJ said--everybody has to start somewhere.

[Krikit 1,164]

We are suposed to close by 6th of may, so if the apraiser for some reason doesn't do it by then we are beeing charged everyday $100. Why we were so rushed to close i have no ideea.

Don't worry about that. If the closing looks as though it's going to go beyond that date, just have your realtor push back the date. We had to deal with that too.

Also he gave us the list of what closing costs are...oh boy...the bigest BS you ever seen in your life...one that made me laugh was $250 for survey-meaning some guy will come and say your land is from here to there...first of -the house contract should have all the details regarding your property...with how big your land is and everything else. WHY do i need to pay $250 for someone to come and tell me something that is already in my contract???

The survey is not mandatory. If you really need to cut costs, this is one that can go if you believe there are no issues.

Right..the deal is great BUT i am not talking about that, i am talking about the whole system, and everything else i just mentioned.

I am paying out of pocket almost 3k, and no...it's not unheard of, most people are smart these days and don't liquidate their bank accounts to buy a house. After so many forclosures we all(hopefully)learned a lesson.

The American banking system, and the whole house purchase system in the US is unbelievably ridiculous and usurious. The costs to close on a house here are mind boggling. I still get ticked thinking about it.

[silvana.toma 15]

Don't worry about that. If the closing looks as though it's going to go beyond that date, just have your realtor push back the date. We had to deal with that too.

The survey is not mandatory. If you really need to cut costs, this is one that can go if you believe there are no issues.

The American banking system, and the whole house purchase system in the US is unbelievably ridiculous and usurious. The costs to close on a house here are mind boggling. I still get ticked thinking about it.

Tx Krikit,

At least now i know i am not the only one noticing thses things. Buying a house is by far a headache, The only super fun time was actually the shopping part-that's about it. Then once you find a house then the nightmare starts happeneing, and i have feeling beeing a home owner is not so hunky dory as it seems either.

For starters we have: 1700 property tax, 500 home owner association fee(where they don't do anything for that money, except take the little snow out of the way in the winter-but hey this is virginia, not the rocky mountains), mortgage insurance, hazard insurance or home insurance, home waranty...jesus...i'm actually there is something else but i can't think of right now.

The sneakiest part that even now is unbelievable to me it's the VHDA loan. We were told with this loan we have no mortgage insurance this way we are saving around $100 a month, so our mortgage will be less every month. we went on the official website to double check and it says NO MI(mortgage insurance). Then we get the bomb, the MI that we supose to pay every month is actually a big lump sum added to ths cost of the house. So your house was 175, so now it's 181 because they aded the MI as a lump sum instead of doing it every month. OMG..i told my husband let's get this over with before i change my mind and stay in the nice, stress free rental apartment.

what kind of bull s## is that? So you are telling me no MI when in fact there is a MI. Banks love to play with you, especially the friking fine lines, they always get you, somehow they always do. Sometimes i feel like here you need a lawyer for just about anything you do...

[juliava 80]

We are actually shopping for a home insurance, geico told us 75 dollars a month..so we are still shopping to see if we can get a better deal.

Check with Allstate. I know we have a good deal with them and it was much less, my husband paid it in advance for the whole year.

[웃 910]

Check with Allstate. I know we have a good deal with them and it was much less, my husband paid it in advance for the whole year.

I'll have to check but I am pretty sure we have All State and it is $500 for the entire year. And the funny thing is after we paid I got a surprise check in the mail for $500 from them about a month later. It was amazing. I am pretty sure it is because it is rolled into the mortgage...