House Purchasing

[TrishAFSpouse]

Did you put 20% down? Or do an 80/10 or similar loan split? Just curious because my understanding is that any non-VA loan where there isn't 20% down needs PMI. If that's not correct, I'd love to know the details, just for my own education on the matter.

Nope. No down payment, no 80/10.. just a regular loan. We did not require PMI or a down payment. We only had to get homeowners insurance, which is different than PMI.

[DakotaCowgirl]

Thank you so much! I may ask more questions as it gets closer. The house we are actually looking at was $134,000. There was a lot of work done to it and we liked the layout and the location. Just trying to get our ducks in a row.

Do you know if you can get a loan that would include the property taxes? My mom mentioned that some companies do that; but, I don't want to get my hopes up.

We are looking at what we get for bah and using only that for the house, insurance, and all the extras; but, are expecting each month to put some of our pay into it. It is nice to know that we don't have much CC for that. Our only issue is, we are also going to have our first car payment in 8 years when we move back. Gotta love going into a life of that.

[TrishAFSpouse]

TBH.. I haven't ever had a mortgage that didn't include Escrow. Its basically a separate payment.
You have your mortgage loan amount (say $134,000) with say payment of $800. You then have an escrow payment (let's say $200). That means your 'mortgage' payment is $1000.. $800 of which is mortgage loan and $200 that is escrow.

They will ask you if you want an escrow account, you simply tell them yes, and they will set it up. They will get an estimate of taxes based on the last tax year and add that amount to the amount of your loan payment.

The pre-approval is for the amount of home you can afford. It has little to do with escrow, insurance, utilities, or any extras. If your pre-approval max is say $140K.. I would look for houses below $130K.. to cover the costs for escrow, insurance, etc.

[villanelle]

website freakout and weird double post

[villanelle]

Interesting about not needing PMI. Super weird, as it contradicts everything I've ever read. Was it a foreclosure you got at well under market value, so that in since you had 20% in equity already, or some unusual situation like that? You've given me something to research, which allows me to procrastinate from the writing I'm supposed to be doing! My procrastinating side thanks you!
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You can not get a loan that includes property taxes, if what you are asking is whether you can basically finance the taxes somehow. Your loan will almost certainly offer you the option to escrow them (more on this below). But that just means your monthly check includes the mortgage payment on the $134k loan, plus a guess at what 1/12 of the property taxes will be, and then the lender uses the money you've sent them to pay the taxes for you. Basically, escrowing is just you giving them the money in small chunks, and then them holding that until the bill is due and using it to pay the taxes on our behalf.

It is so important to remember that they can be wrong on the estimate, depending on how taxes are calculated in that area. If they are, they will come to you at tax time and tell you you owe an additional $xxx. And you have to pay that, in addition to the money you've sent them every month.

TBH.. I haven't ever had a mortgage that didn't include Escrow. Its basically a separate payment.
You have your mortgage loan amount (say $134,000) with say payment of $800. You then have an escrow payment (let's say $200). That means your 'mortgage' payment is $1000.. $800 of which is mortgage loan and $200 that is escrow.

They will ask you if you want an escrow account, you simply tell them yes, and they will set it up. They will get an estimate of taxes based on the last tax year and add that amount to the amount of your loan payment.

The pre-approval is for the amount of home you can afford. It has little to do with escrow, insurance, utilities, or any extras. If your pre-approval max is say $140K.. I would look for houses below $130K.. to cover the costs for escrow, insurance, etc.

We don't escrow our property taxes or pay our homeowner's via the mortgage. They gave us the option to do both and we declined. Our property taxes are roughly $6000 per year, and I'd much rather have that money sitting in my account earning a bit of interest than having it be earning interest for someone else.

Of course if someone doesn't trust themselves to remember to pay the property tax bill when it is due, or if they don't trust themselves to not spend them property tax money if it is still in their control, then escrow makes sense. Bit financially, it couldn't be more clear that escrowing is a bad choice. I can earn $20 (totally made up number as I'm too lazy to do the math) on that money during the year, or the mortgage company that holds my money in escrow can make that $20. Of course it it a smarter move for me to get the $20 myself, especially when the only thing I have to do to earn that money is make a payment twice a year and not spend the money I need to use to pay the taxes.

Again, some people can't trust themselves not to spend that $6000 unless they hand it over to someone else for safekeeping. Or they can't trust themselves to pay the bill when it coms in the mail. For them, escrow is the smart move. But if you can force yourself to be responsible, and if your lender gives you the option, don't escrow as you come out ahead financially that way.

[TrishAFSpouse]

No... it wasn't a foreclosure or way below market value. All we paid was the $1000 earnest money.. which had nothing to do with the home loan really.

And yes.. escrow is more for those who either a) don't want to bother paying the taxes themselves or b) aren't discplined enough to remember.

I would much rather not have to deal with it, so we chose to let the mortgage company pay it for us. It was much simpler that way for us. And yes... every couple years the escrow has to get adjusted (sometimes more, sometimes less) due to the change in taxes.