To Dave and Mortgage Experts..

Discussion in 'Credit Talk' started by roni, Mar 15, 2001.

  1. roni

    roni Well-Known Member

    The other day, I was asking about the cost of me buying this home that I want. Dave, you mentioned that I should beware of hidden expenses. I went over things today with the people and I got a estimate. Besides the items listed on the good faith estimate below is there anything else I should be worried about before I settle and move into this place. Please tell me about other house upkeep expenses also, that you brief mentioned. Share the knowledge.

    title insurance
    endorsement of title
    environmental endorsement
    title exam
    misc. searches
    recording of deed
    title closing/settlement fee
    tax adjustment
    attorney fee

    homeowners insurance
    assoc fees

    application fee
    origination fees
    lender inspection fee
    interest on mortgage to end of month
    flood certification fee


    real estate tax escrow
    fha mortgage insurance premium


    What else should I worry about. ARe there any surprises in other. Please forgive my ignorance.

  2. Nave

    Nave Well-Known Member

    Re: To Dave and Mortgage Exper

    There certainly are alot of fees in there - alot more than mine but I was not buying a condo and I am unfamiliar with NJ housing laws so I can not tell you whether something like "flood certification fee" is needed. I am sorry to be of little help here other than I would DEFINITELY find out whether these fees are needed or warranted without just paying them because they seem standard, they are not.

    My point was addressed at your "free" cash. To restate my point (and my downfall from my 1st mortgage experience) make sure when all the initial payments are made, you still have a "buffer" of cash, don't ***use it all*** during the settlement phase.

    So if I examine your post I find that there are "ambiguous" items that may or may not be required to pay for under the obligations of NJ or the Condo assn, but I would at least inquire as to what they are and why you are paying them. in particular:

    environmental endorsement
    assoc fees
    flood certification fee

    Mine was not FHA so maybe these are requirements of FHA loans I do not know. My taxes and insurance were in my monthly payment and REQUIRED by my mortgage company so that is somewhat standard and actually helpful in the long run since you "forced" to pay them with your mortgage, you don't lapse.

    BOTTOM LINE: You will spend some money down and you will have some monthly payments...I know you have decided on the monthly payments and whether you can afford them or you must work on keeping as much "free cash" as possible. work down the "down payment" as much as you can without jacking those monthlys up. Give up a point for a % of interest, or whatever you can to keep some cash for the unforeseen expenses.

    I don't mean to sound gloom and doom so please don't take it that way...I think you will have a wonderful home owning experience if you make certain that you have $$$ to make all payments on time every month and it will be the best time of your life! Equity is a VERY cool thing!!!

    Congratulations on everything...let me know how things go. I am totally behind you.

  3. roni

    roni Well-Known Member

    Re: To Dave and Mortgage Exper

    Thanks Dave,
    My good faith estimate so far has my payments within my budget right now. She did include mortgage payment, taxes and mortgage insurance premium at $1,318. I pay $900 in rent right now. That's an extra $418 or more a month that I think I can swing. I think the tax break will be well work it. Besides student loan payments, not Very little debt.

    By my math I an afford it. I haven't forgotton that I have to eat and furniture the thing. LOL. I was happy that she included the taxes now for me so I can sort of see the entire picture.

    Thanks again for you help. I will have to ask them about all the fees. Somehow I think they will have a good answer. lol.

  4. me

    me Well-Known Member

    Re: To Dave and Mortgage Exper

    In my experience FYI, the good faith estimate has always been underestimated. So always keep that in mind - its only an estimate.
  5. kim

    kim Well-Known Member

    Re: To Dave and Mortgage Exper

    Hi Roni ~

    I'm very happy to see that you are going ahead with a home purchase. I'm no expert, but the points that I definitely agree with Dave on are:

    1) Have some "just in case" money left after closing. In my personal experience with closing, the lawyers ended up cutting me a check because I brought too much money to the closing table.

    2)Have someone explain each and every fee that you are not absolutely positive you know what it is and if it is required.


    3) Have your lender give you different estimates based on how many points you are buying down, meaning how much would my payment be if my interest rate is 6%, 6 1/4%, 6 1/2%, etc. In my opinion, sometimes it's better to have the cash in the bank rather than buy down the interest rate, sometimes it only makes a $20/month difference in your monthly payments. Meanwhile you've spent $1k or more upfront that you could use for unforeseen expenses.

    Good Luck & GO GIRL!!!
  6. ShyGuy

    ShyGuy Well-Known Member

    money left after closing?

    I read somewhere -- perhaps on the Bayhouse board -- that lenders liked to see you have money left in the bank (or at least in a 401(k) or IRA) in case you have an emergency. Not sure if that is a requirement or just a guideline and if it applies to FHA loans.

    Congrats, Roni. My wife and I would be thrilled to find something nice up here in the northern part of the state with a mortgage payment that low. We hope to be homeowners in a year.
  7. Newcomer

    Newcomer Well-Known Member

    Re: money left after closing?

    Roni, if you factor in what you pay extra in taxes by renting, you'll probably break even. Remember, you get to change your deductions, so that should lessen the hit on your take home pay. My good faith estimate was right on the money. So if you have a good lender, you should deviate "too" much from what you were given.
  8. Momof3

    Momof3 Well-Known Member


    Shyguy is referring to reserves, although FHA does not require this , it is always a good idea to have them. If you go the conventonal route they require you to have 2 months worth of mortgage payments in the bank (reserves).
  9. the other

    the other Well-Known Member

    Re: Good Faith estimate

    My Good Faith estimate was over estimated. The actual amount I had to pay at the closing was a fair amount less (It was a pleasant surprise)

    Bring your checkbook with you to the closing. There is usually some sort of unexpected expense. There is a home owners assoc. where I bought my house, but noone told me about it. I had to write a check for the first month ($25, but I would have been screwed if I didn't have my checkbook)
  10. roni

    roni Well-Known Member

    To everyone

    I read everyone's comment. Thank you all the comments on my situtation. I have another point to add. I think I mentioned before that the seller is paying closing cost. I am putting down 3% of the sell price. They are paying 3% of the base price and the extra options I put on the place puts me at the higher mortgage payment. I am gonna redo the estimate and try to bring the sell price down $2-3K. With that in mind, does that make a difference.
    Also, I make a descent living. I thought that was a save ratio. My debt is low and undercontrol also. Well, that is how I see it. But I could be dreaming in this little 'homeowner fantasy that I am having. LOL. I take home over 6 times my mortgage,taxes and insurance payment each month. I have a little car loan of $365/mo and student loans payments of about $800/mo. The army is footing the rest of my student loan debt in my loan redemption program.

    The lender did put down my estimated payments on for each year at the different rates. It was $1318 at 5.75% the 1st year, 6.75 at 6.75% the 2nd year and $1468 at 7.25% fixed thereafter.

    Well, I thought it was ok to add that info. Thanks again for everyones insight. If you have anything else to add please do.

  11. Thomas

    Thomas Guest

    Re: To everyone

    If you are taking home 6X your mortgage payment, you will be in excellent shape. No problem.
  12. Shelly

    Shelly Guest

    Re: To everyone

    >>If you are taking home 6X your mortgage payment, you will be in excellent shape. No problem.<<

    Good Lord, Thomas! Of course you'd be in excellent shape.. but that's impossible!

    Didn't Roni say her payments were $1300 a month? Times that by six and that's $93,600 a year AFTER TAXES! That translates to around $132,000 before taxes.

    That's unrealistic!
  13. other me

    other me Guest

    Re: To everyone

    Who are you kidding Shelly?

    That's not unrealistic!
  14. Shelly

    Shelly Guest

    Re: To everyone

    >>Who are you kidding Shelly?
    That's not unrealistic!>>

    I'm afraid everyone misunderstood what I was talking about here....I thought that Thomas was making a blanket statement saying "if a person brings home 6x their mortgage payment they would be fine" apparently he was referring to Roni's specific statement that she already does bring home 6x her mortgage payment, which I missed in one of her posts.

    I was just commenting on the fact that many, many people exist and pay their bills on way less than 6x their mortgage payments.. that's all.

    I'm sorry for the confusion. Guess I'll be looking for another board to comment on from here on out.

    everyone jumps to conclusions around here.
  15. other me

    other me Guest

    Re: To everyone

    No need to go elsewhere.

    A simple reordering of what you posted would have made it clear that you were referring to a different paragraph in your post as unrealistic, that being in response to Thomas.

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