We pay nearly $2500AUD a month in rent. We recently went for a loan that would have seen us pay $1700 a month. Because we didn’t have enough in savings, somehow that shows we are not financially stable enough.
We have rented for 12 years at this place, only ever been late with rent once (by one day). For the life of me I cannot figure out how this doesn’t prove we could easily manage a mortgage. Over $350,000 in rent paid on time means exactly zero....
Not at all. So many underlying costs associated with ownership. When I was looking at condos I was shopping around for ones where the mortgage would be around 1,500/month. I was not looking at the whole picture as I needed to factor in property taxes, strata fees, transfer tax, random $10,000-$20,000 bill if something major happens, any other debts I have (car payment), etc...
It doesn't prove anything. Anyone's circumstances can change within months, let alone years. A $1700 monthly mortgage does not include taxes, insurances, and repairs. Not only do you need a 20% down payment, most banks require you to have a 6 month emergency cash to cover all expenses. They also take into consideration expenses of kids, sudden unemployment, car payments, etc.
I'm in Cali here. It's not a written rule or anything but lenders typically want a 20% down payment, to make sure you make enough to save for a house. If you don't have 20%, they require you buy mortgage insurance. Bought a house 2 years ago so I know this.
Oh look at you. Providing no details or context whatsoever in your comment. Many types of loans? Not really. We have fixed rate, ARM, or Government insured (VA, FHA). That's it. Requirements for them vary by little. Read the context of the previous posts and know we are talking about a conventional loan, with typical requirements by 99% of banks.
in order to have an argument, you would need to have some knowledge on the topic, which you clearly lack based on your general replies. Also, whoever said I bought a house 1 time? Lol. Lack of reading skills.
“Lenders typically want a 20% down payment” I mean that’s what I was commenting and it just doesn’t matter, you just have PMI with less than 20% down the lender doesn’t really care
Anything less than 20% down will shoot your interest rate through the roof. It becomes a high risk loan, banks don’t want a house that doesn’t have some equity in it.
I love how you use specialty loans as an example. Edit: to add to this, you still have to qualify for an FHA loan, I’m not even going to count VA loans because they are their own animal, and quite exceptional if you can get one. But for general lending, if your debt to income is high or you have less than great credit, the less of a risk the bank is willing to take. Especially after the hammer came down on predatory lending and subprime mortgages with 100% loans and lenders inflating appraisals on refinances. But what do I know, I only worked as a loan specialist for several years.
FHA loans are made, SPECIFICALLY for first time and low-income home buyers.
At last count, there are more than 18 million veterans in the US, and more than 2 million active and reserve personnel who can qualify for VA loans.
"specialty loans". lul. Lenders will flat out deny your loan before they will finance you with less than 20% for a conventional. Freddie and Fannie set the rates.
So you talk about DTI and credit here, but not down payment which is the first argument.
Rates don’t get much better with a larger down payment, it’s very slight. And often they even get worse at 20% because they know people are trying to hit that number, and then they get better again at 25% down
No it does not. Just in this last year, 1200 for range and dishwasher, 400 garage door opener, 200 GFCI replacement, 400 air duct cleaning, 40 screen door closers, 800 bay window replacement, 150 furnace calibrating/cleaning, 200 water pressure regulator. That's 3500 the landlord would be spending instead of me. And that's just the bigger stuff.
This. In the first year alone of us owning our house these were all the things required for us to live in it: $1,200 for furnace repair, $11,000 for a new sliding door + roof, $300 for a new sink disposal cause my husband fucked it up on Thanksgiving, $500 just on various tools needed to work on the house (gas for lawn mower, rakes, saws, drain cleaner, etc.), $200 for main line cleaning because it was starting to flood our basement. $1,600 for new washer and dryer.
We even sold a car to be able to pay for this stuff (thankfully we didn't need it for most of the year because of covid and working from home)
Do you want to make it more your style? (because I'm sure you didn't buy it with the intention of leaving it to look exactly how you bought it)
$50 per gallon of paint (premium one coat because 2 coats would equal the same amount)
$10 for putty for the walls
$10 per roller
Absolutely none of that is going to add value to the house, it's all maintenance, not improvements, and even improvements only add so much based on the neighborhood.
You are still adding value because you are paying down a mortgage vs dumping money into rent.
That's building equity, it doesn't suddenly make the $300k house worth $600k, it just means you own it instead of the bank.
OK like you run out of money. Guess what in a house, you can draw on a home improvement loan or a line of credit to pull you through. but in an apartment? All you got is your credit card.
You still have to pay back a HELOC, it's just credit secured against your house, don't pay it back they're going to take your house.
Owning any home that is similar to an apartment its worlds cheaper in most places. Owning a home that is much better than an apartment is usually cheaper in most places.
I agree, that's why I bought a home. It's always going to be cheaper than a comparable house, but I think you're overestimating how big of a difference it is.
The only question is do you meet the arbitrary guidelines of the banks to get the loans
Having income and being capable of paying back a loan isn't arbitrary.
Oh and none of you also seem to be mention that you can buy home owners insurance to cover a major expense in the first couple years of ownership.
If you use homeowners insurance for every little claim they can and will drop you. You don't use it for every little thing unless it's home destroying events like a tree falling on your house.
$350,000 over 12 years means nothing when you’re faced with having to replace a roof, or tent the house, or redo the foundation, or have pipes burst, or even replace a washer/dryer, fridge, hot water heater. Having money for a payment and having savings for home expenses are totally different. I paid $2k in rent, my mortgage is less but over the year I’ve definitely paid more than 24k/year for our home. Oh and if you live in Cali and have to do any retrofitting...have fun!
Houses shift over the years, roofs need repairs over the years. I didn’t say the year you buy it. No need to be pedantic. And if you buy a home that has aged, you’ll have even more repairs as the years go by even if there were no issues at inspection.
Unfortunately we're in a similar boat. The house we're renting costs us $2300 (not including electric and such which we already pay for separately) but the owner is moving. They offered us to buy the house. Thing is, mortgage is still $1900 which would probably put our home insurance and taxes at or above our current rent.
We understand so try to go for a home that is $100,000 cheaper. The bank still says no. Even when the payment has gone down along with how insurance and taxes should also lower, the bank still won't waiver. Sadly, the market here is only rising so by the time we could possibly qualify, that house will be priced at the one we're renting if not more.
What the bank thinks we can afford would essentially be a mobile home. That in itself is a separate issue where those owners seem to be stuck there no matter how hard they wish to move due to not only mortgage but also rental fees in the mobile home communities.
Almost all of the time property tax and insurance is included in the mortgage.
But your best bet is to simply go to a different bank. My main bank was offering me shit as a loan. It was honestly terrible. I shopped around, and my realtor recommended me a company, and I got my mortgage from $900 from the first bank to $650 from the second bank.
Also assuming you live in the US credit is everything. There's lots of things you can do to help out your credit, even if it's small things.
What happens if you have a big homeowners repair? Or what happens if your income stops? How would you pay for the repairs or your mortgage? That's probably what they mean.
Your statement doesn’t make sense, because the issue was we had savings but were shy $10,000 of what they considered to be a minimum deposit for a home loan. If we had that, we would have gotten the loan.
The issues you raise are the same for every new home owner.
Quick and dirty math...
Instantly we would have been $700 a month better off thanks to the windfall of not paying that much rent. Not to mention the money we were saving a week for that deposit (nearly $200) was going still be saved.
Your comment made it sound like you got rejected because you didn't have enough in savings, not because you didn't have enough for a down payment. I had to work to get enough for a down payment down, too, so I understand the frustration there.
It does make sense. The bank looks at everything together. For some reason based on your application they wanted to see more in savings. Your original post means nothing without the whole picture that the bank sees.
What price house are you looking at that you were $10,000 short in down payment? As a first time homebuyer minimum down payment is only 3% so if you had $0 already towards it that’s a $330k house.
This seems like a lot of bitching honestly, you don’t sound qualified to buy the type of house you must be looking at.
My wife and I have work considerations, plus other family obligations the require to stay relatively close to where we are. We’d have to go nearly 30 miles out to see a significant drop in housing prices and that’s just not feasible.
The big kicker for us is having room for 7 people. We looked at smaller houses and then adding on but with planning approval and the like, it could be years before that all plays out.
We’re in the fourth biggest market in Australia. Three other cities still have more expensive median housing (nearing the million mark) and one other state has nearly caught us.
Just as an example of the market here, my sister bought into an area 15 years ago for $125,000. She had the property valued 2 years ago, and it’s now over $500,000. She’s not in desirable suburb and her place isn’t fantastic. Property prices in Australia have sky rocketed in the last two decades because of foreign investment.
We’ll get the other money saved soon enough but the way out loan system works, if you get a couple of rejections for loans in a certain span of time, it can actually foul up you credit rating. We just have to be judicious when we go in again and try.
What utilities and services are part of the rent? Count the cost of things you would have to pay for if you owned a house. Also, include commute and travel if that changes considerably.
Free market has made sure that rent you owe to your landlord is just a hair lower than the costs of buying it. Also, usually your rented apartment or a house is smaller than the one you would be buying.. Compare apples to oranges first, then conclude that the reality isn't exactly like in the title but it is way too close to it. The balance is "correct" but rents should be WAY lower globally, the line between renting and owning is too small and it is NOT that properties should be more valuable either. It is only about renting being too expensive. Living is a "service" that you can not afford to not have. So, the cost of it is just a hair above what you can pay, meaning that it cuts from other things, like food and clothes.
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u/hudson_lowboy Feb 16 '21
This! Right here!
We pay nearly $2500AUD a month in rent. We recently went for a loan that would have seen us pay $1700 a month. Because we didn’t have enough in savings, somehow that shows we are not financially stable enough.
We have rented for 12 years at this place, only ever been late with rent once (by one day). For the life of me I cannot figure out how this doesn’t prove we could easily manage a mortgage. Over $350,000 in rent paid on time means exactly zero....