How's your non-conforming loan after BK? Having fun?

[moneytree]

Lender or Landlord does = paying someone elses mortgage!

The difference though (where we live) is that A. we can do whatever the heck we want with our house (if we own) B. won't have to worry about moving every 2-3 years when 'investors/landlords' may want to sell their home for profit!

That's exactly what happens out here. We are renting a beautiful 4 BR home (brand new) and are quite comfortable, but thinking (it's been talked about in the past) that the landlord would eventually sell. It is obvious from day 1 in this house that our $1450/mo. in rent doesn't cover his mortgage, but he's still making one heck of a profit! His projected mortgage would be about $2200/mo. on a 30 yr. loan (or less), but I am sure he was able to put a chunk of change down. Must be nice!

We did hear back from the tax guy and because our tax deductions were set higher the last few years, that's why we were getting back $7k+/yr. And at that time we were paying over $6K/yr. in property tax. We now are 'getting our money' paycheck to paycheck so we'll probably have to pay in $500 or maybe get back $1500. If we owned a home and paid $2400/mo. in interest, the tax guy projected a $2500 refund. We were surprised to hear that after being used to larger refunds, but again, everything is factored in throughout the year.

We keep hearing that the prices on homes will be dropping in our area and could remain that way for at least 2 years. It's hearsay. Builders have too much inventory now and sales are flying. We are not willing to move further South due to commuting time. Five years ago was a great time to buy a home around here, but the reality is, one has to jump in at some point! I have NO PROBLEM picking up and moving closer to the development where we'd like to buy in (to keep our kids in a certain school) and RENTING for 2 more years. I should have mentioned in my original post about not wanting to move--or worry about having to move--every 2+ yrs. It's taking a toll and it's not cheap! Newer homes are appreciating out here, even with the buyers market. It's definitely not that 'white hot market' that someone mentioned, but it's a growing area.

I do appreciate all the feedback and for those who took the time to run numbers, thank you! Btw, I found a few nice homes today marked down to $225 (new) so that's another option. It's a smaller house, but new and nice/good area. Projected mortgage pymts. would be about $1800-1900/mo, saving us $350/mo. Due to the appreciating market, the landlords in this area are raising the rent. New homes, similar to ours now, are renting for $200/mo. more! It's nuts! If we are forced to move due to landlord selling, then we'll be paying more. Buying a home is downsizing, but not horrible because of all the beautiful new homes. Renting another home would be downsizing, paying more, and no equity.

For those who replied, how is renting life for you? Everyone sounds pretty happy renting. Do you live in housing markets where the homes are not appreciating at all? And are any of you in a lease to own option? Our landlord offered that from day one, but wanted $12K to hold the price of the home for 2 yrs. I am glad we never committed to that because even though our house here has appreciated $30-40K in less than 2 yrs, we would never buy this house for various reasons. The landlord has upped the deposit to $15K. He's nuts! Other properties have offered $5K money down, but was warned of nightmare situations where if you are late on the rent, it automatically throws you out of the deal and they keep the money. Never been late, but no thanks! Landlords could lie too easily about that one!

Looking forward to your replies...

-moneytree

[HHM]

Thank you for responding.

I think your missing the point to some degree, no one is saying that renting is better than home ownership or that there are not some nice benefits to home ownership, all were saying is don't make a bad financial decision based on non-financial factors. After all, you're in BK. Now that you have the real numbers from your tax guy, I think you can see that there is NO benefit to doing an interest only loan and that vis-a-vis renting, doing an interest only loan will cost you more money, or in your words, you will "throw" more money away (on useless interest) than you would on rent in a given year.

The advice here has been, all along, wait until you can really afford a house in a traditional manner. i.e. (1) be able to put at least 5% down, (2) when you don't fall into the sub-prime lending category, and (3) that your TOTAL mortgage payment does not exceed 25% of your gross monthly income. Given that your just out of BK, to satisfy those 3 factors will probably take a minimum of 2 years from the day your discharged.

It appears that you have already, emotionally, committed to buying a house, so I doubt there is much anyone here can say to dissuade you from your decision. At the very least, don't do an interest only loan...your tax guys numbers should be fairly sobering and even you can probably see past your emotional commitment to see that it will cost you money in the long run.

Look at it this way. I'd like to own a 2007 Lexus GS Hybrid.
1. The car will last a long time.
2. That leather is far better than cloth
3. Its a hybrid, so its cleaner
4. That parking assist gadget and navigation system are pretty cool.
5. Collision warning is a nice saftey feature
6. Run flat tires...
7. 330 watt Mark Levinson Surroud Sound Audio system,
8. Right now is the "December to Remember Event", the best time to buy a lexus...
But, its a $67,000 car. Thus, no matter how many benefits there are to owning the Lexus over a cheapter car, and the fact that now is the best time to buy, the simple fact is, I can't afford it right now.
Notice, none of those factors about the car I liked, have anything to do with the financial impact of the purchase...and that is the same thing you have done with the way your thinking about buying a house. Of course, there are all kinds of benefits, but the most basic question is, can you "really" afford it right now?

Basically, on you trying to buy a house now, you are wanting a Lexus GS on a Camry LE budget. Just because you think you can afford the payment, doesn't mean you can afford the house.

No one is saying you have to rent forever, just wait until the purchase makes "financial" sense, not just emotional sense.

In any event, good luck on your decision, and I hope it works out. But again, don't do interst only, why shoot yourself in the foot right out of BK.

[BassBoy]

As for the interest only.......I've seeen a number of new homes in our area go up for foreclosure because the owners built it, probably couldn't really afford it, went with the interest only (or balloon mortgage), and a few years later, couldn't make the new payments and lost their home. In fact, it happened to 2 homes across the street from my parents. Anyways, those interest only home loans are a complete crock and someone should step in a put an end to it. But that's my opinion. You flush 2 years worth of payments down the toilet and not one cent comes off the principle balance, thus most likely forcing you into another 30 year mortgage because your refinacing the balance you started with 2 years ago. Do the math anyway you wish, you still lose that money.

[moneytree]

update

HHM:

I guess I should mention that 'I' am not the one filing a ch 7 and there are better loans out there for our situation.

Like I had mentioned before, we had an 80/20 loan years ago (which let me clarify--and a few assumed--that loan led us into BK--HARDLY the case!!!) I think that will clear up a few questions!

So before this goes on too long (but it is a good read) no one needs to be 'dissuaded'. Our decision to continue renting vs. buying (and getting the best loan) is purely financial, not an emotional decision! I guess if one does not share all the details here, it's easy for someone so wrapped up in the BK process to get over-emotional and start judging. To compare our financial decisions to you wanting a Lexus is ridiculous. Whatever we choose to do, we are making an intelligent decision for the long haul. Your comparison (as silly as it is) was flawed because the car lender wouldn't be asking for the car back every 1-2-3 years, whenever they see fit. As I had explained before, renting is temporary. And it costs thousands to move every few years. Homes also appreciate, whereas cars do not.

But good luck to you!

;)

[LostOne0069]

Well, I guess I'm going to go against the "wisdom" of the masses here... I say go for it.

I am in a somewhat similar situation... and I am planning on purchasing a home as soon as I can. My reasons for bankruptcy were reasons that are not likely to come back and bite me again... and there are more benefits to buying a house than the appreciation.

I would not buy a house if you're planning on selling it any time in the next 5+ years... it's just too hard to do it and not end up with a ton of debt... I also would not do it if you're going to be struggling to make the payments. Pick a home value that you can afford the payments on and go for that. Then, down the road, if you can afford bigger, better... and your current house has appreciated enough... then get the bigger one.

Bottom line is that you need to look at your finances, decide what is important to you and be as honest as possible with yourself about if you can REALLY afford to do it.

Good luck!

[HHM]

Bottom line is that you need to look at your finances, decide what is important to you and be as honest as possible with yourself about if you can REALLY afford to do it.

That is what we have been saying all along. With the extra point that if you can only buy with an interest only 80/20 mortgaeg loan, then you REALLY can't afford. it right now. Aside from Mortgage Brokers, I can't think of any impartial person who would recommend such a loan for a family who will be living in the house. (Interest only loans are really only for real estate investors who are buying in an obviously appreciating market, or for flips).

[moneytree]

'Obvious' appreciation...5+ years...

We are lucky enough to live in areas (on each coast) that have obvious appreciation. It couldn't be more obvious around here. But again, I'll make my point about renting--it's great here--brand new homes everywhere for rent, so whichever we decide to do, it's a win-win situation (due to appreciation, price of home as well as rent in the new homes is still in our price range) BUT as I said, the landlords are charging more. Investors are everywhere. They want to rent for 2 yrs. and then sell, and they love it if one makes a 'lease to own offer'. We'd never ever do that.

Landlords=slumlords in most situations. And HHM is really neglecting to notice what I have been saying about only being able to rent for 2 yrs (or less or maybe a year more--depending on when the landlord wants to make his profit) If the market continues to stay a buyers market, we could get notice in the spring that he is selling. If the loan makes sense, then why would we uproot our family to ANOTHER rental only to have to move AGAIN in just 12-24 mos. We have the W&D, bunk beds, heavy tool bench--you name it. We are talking thousands here to move if we hire a company (not an option) but it will cost a few hundred for the truck rental and for a few guys to move the heavier items. Wherever we move to again, we'll have to do it more ourselves. Not looking forward to that and it would be for a long term move.

Still watching the market, scores, doing our research--and still undecided!

[LostOne0069]

moneytree... I would say that an interest only loan is a very scary option... I've had several people I know here on the east coast who had those... and got bit in the ass on them. See they're only interest free for a few years... then your payment jumps and becomes really hard.

I would recommend that if you do decide to buy... only buy something that you can afford the payments on... no ARMS as they end up going up every year or so... no interest only... try to get plain ordinary 30 year loans. Stick with what you can afford, don't streatch yourself so that you can't make the payment if you have an extra few hundred in expenses all of a sudden show up... like you need a new car or a kid needs braces something like that. If you can't make the payment AND put at least a few hundred away each month... then you're asking for trouble.

[BassBoy]

Good points LostOne0069. I can agree with you that if one can get an ordinary 30-year loan, and have an affordable payment, then yes, it can be a very good thing. Knowing that your payment is not going to change (other than the escrow when property taxes go up) is the best way to go.

Good discussion folks!

[moneytree]

It wasn't meant to be!

The listing agent & sellers agent pulled a fast one today and sold our 'reserved' home to someone else (long story, but we had mutual acceptance & earnest $ wasn't due until 1/5). Obviously they used our situation to their advantage and took someone with an earlier close. So it wasn't meant to be! I am not interested in any other homes w/ this builder either.

We'll be watching to see if the prices continue to drop and if we can find a great deal, then we'll consider it.

Tired of WA anyway. All it takes is a little wind storm to knock out power for a week. For now, I guess we'll be renting and moving every few years!

[LostOne0069]

The listing agent & sellers agent pulled a fast one today and sold our 'reserved' home to someone else (long story, but we had mutual acceptance & earnest $ wasn't due until 1/5). Obviously they used our situation to their advantage and took someone with an earlier close. So it wasn't meant to be! I am not interested in any other homes w/ this builder either.

We'll be watching to see if the prices continue to drop and if we can find a great deal, then we'll consider it.

Tired of WA anyway. All it takes is a little wind storm to knock out power for a week. For now, I guess we'll be renting and moving every few years!

LOL, I'm from WA and my family still lives there... I wouldn't call hurricane force winds a "little wind" and it's actually not the wind per se that did it... it's the fact that there are so many TREES in W. WA... and none of them are used to hurricane force winds.

Take heart, the last time the power was out even CLOSE to this long in WA was about 25 years ago when I was a kid. Happened over Thanksgiving too... made for an interesting turkeyday!

My parents just got their power back a couple days ago,, 7 days with no power. ugh. I feel for you.

[onlineuse]

Moneytree the point people are trying to make here is the risks are potentially much greater than the rewards in buying at this stage. For one reason or another you are bankrupt at this point. I realize "you" aren't bankrupt but as a family group you got into a position where one member is, so something went wrong.

Like you I did not want to uproot my family ever year or two so we worked out a three year lease with the OPTION to purchase the home during the lease at a negotiated price. The house is far more than we were comfortable with financing right now, but the rent is less than any mortgage we'd ever had. I agree with everyone else here, if I can't afford to put down 10% I shouldn't be buying the house as I really cannot afford it.

We just moved everything, all sorts of heavy items for about $300 which included paying neighborhood kids to help with the move.

Out here the market is bad enough I even had owners offer to finance the home purchases direct at a higher rate, but obviously we refused.

One thing lost, I know WA is a liberal state like MA and taxes are very high. Not only did we drop our mortgage $600 by renting, but we walked away from $8000 a year in taxes and insurance.

[moneytree]

I know WA is a liberal state like MA and taxes are very high.

Actually, the taxes for a new home are around $2500-3500/yr. You get a lot less land (they're trying to 'save the trees') unless you want to add $25K on top of the mortgage for a lucky lot that has more yard--or buy an older home that comes with a yard and lots of work to be done on the house.

So compared to where we lived on the east coast, the taxes are nothing here. We were paying $6200+/yr. in property taxes.

As far as 'getting the point', what more can I say? I believe from the original title on my post "how's that non-conforming loan going for ya" pretty much explained my disdain for the fresh out of BK loans.

Also, if you were able to get a landlord to agree to selling the house to you at a negotiated price is beyond me. Any landlord is out for their best interest. They aren't renting for their health! The only perk of buying the $330K home that we are renting is (which on the east coast would be a $750K home) is that the landlord would deduct a $5K? fee since he wouldn't have to list the home. He wanted $11K to hold the price of the home last year at $305 and to agree to buy in 2 yrs. Glad we didn't do that! Most people who commit to a lease to own option walk away because they decide they do not like the home and the landlord keeps the $. Landlord would now want about $15K to hold the price of the home at $330K. If we continue to rent here for 2 more years (if he doesn't sell before that) then there is a slight chance that the market will drop enough to bring this house back down to earth around the $310K mark. But we have other neighborhoods we'd rather be living in.

And even still, moving every 3 years is a pain and a financial strain--but that's the reality here if we choose to wait 2 more years for a 30 yr. loan.

Hope your landlord comes through for you! My parents were promised (verbally) that they could buy their home they've been renting in for around $245K in the spring and once my father got a better job (they relocated here too) and explained to the landlord that they were approved for $245k, the landlord said "HUH? we're not selling now and even if we did, the house would be around $265K" (LOL---all in a 6 mo. time frame) But their landlord also gave them a $35 gift card for Christmas. I find that HILARIOUS. How many landlords would do that. So their landlord is a little a**-backwards, but what does one expect--they can all be like that.