If you're paying PMI...

EdFred said:
I guess other people's definition of starter house, and my definition are vastly different.
Click to expand...

I suppose there are lots of factors that go into it. Location of course. My wife and I are gone a lot, so we didn't want a fixer, etc etc...
 
EdFred said:
How does a mortgage payer not know this?

When I was getting ready to buy my first place it was strongly emphasized by my parents to not pay escrow for taxes, and to avoid PMI if at all possible. I was able to do both. I pass along that info to anyone I know that's getting ready for the first time buy. Of course, in today's financial thought process, it's tough for people to put 20% down on anything anymore.

Also - when you signed your mortgage papers did you read the limitations on what you can and cant do with your property? On one of mine they had a statement that I could not store more than 5 gallons of gasoline on the entire property. There were some other interesting provisions they tried to slip in there as well.
Click to expand...

In many of today's housing markets, you need $70k to come up with 20% down. For most people that is not a financial reality.
 
kayoh190 said:
I suppose there are lots of factors that go into it. Location of course. My wife and I are gone a lot, so we didn't want a fixer, etc etc...
Click to expand...

When I think starter house, I think 2BR/1BA 1000sf range.
 
I guess I was lucky, my bank paid a bit of interest to me for my tax escrow payment, so that was nice of them.

Of course, I also find the whole '$175k house' amusing... here a starter house is $350k and an hour+ commute. And, no, salaries aren't that much higher.
 
SixPapaCharlie said:
I just bought too much house back when I bought this one so I didn't put 20% down.
I knew I would be paying PMI at the time and was fine w/ it because it got me into the house.
Click to expand...

This is exactly why PMI exists. It allows buyers to leverage into a modestly more expensive home with a smaller down. You used it right, you got what you wanted, when you wanted it and now that you're on the high side of equity, you can dump it.

Also a good reminder to those who have it to check there debt/equity ratio after making improvements, or as the market changes.

I had to pay PMI once in SoCal because my wife and I just found the perfect place, which was out of our budget a bit. We made do, and as soon as the 20% equity stake was reached, I called them and advised I was going to stop paying it. Since it was in the contract that way, we had no trouble. However, some contracts leave it up to the bank to decide, and that can go badly if your credit score is lousy.
 
PMI is just another charge they get to bill you with when they have you over a financial barrel. It could be worse, you could be in a position where a bank won't give you an account and you have to cash your pay checks down the street for 10%. At least the EBT system took care of them taking from the welfare system directly.
 
Henning said:
PMI is just another charge they get to bill you with when they have you over a financial barrel.
Click to expand...

Like I said before - I was happy to pay it. I'm guessing I spent about $3K in PMI while I had it, but it allowed me to buy at a time that increased my equity in the house by ~$70K above where I'd be had I waited. Interest rates never rose as I had predicted, but that was another thing I was thinking of too.
 
chartbundle said:
I guess I was lucky, my bank paid a bit of interest to me for my tax escrow payment, so that was nice of them.

Of course, I also find the whole '$175k house' amusing... here a starter house is $350k and an hour+ commute. And, no, salaries aren't that much higher.
Click to expand...

And I find an hour plus commute while living in a $350k starter hour asinine.

Here's what 350k gets you around here with a commute time of 25 mins max:
http://www.grar.com/homes#homes/search-type/resi/price-min/350000/county/Kent
 
Gerhardt said:
I respectfully disagree. 20% is a lot. Here's an example.

A young professional couple just starting out, let's say they make a combined $70K/year. They want a modest but nice starter house at $175K. That's a fairly typical scenario in my area at least.

20% down is $35K...an incredible amount to come up with up front. Made even more difficult if they're paying rent until they can save up enough. Add to that $35K the closing costs and furnishings for the house and I can easily see where your scenario would be impossible for most people starting out. Add in some real-life expenses like student loans, car payments and typical expenses we all face...I think 5-10% skin in the game for people like this is reasonable.

The only thing is that there are far too many people who never have any intention of keeping their promise of making their mortgage payments and trash the house on their way out. People like that hurt us all.
Click to expand...

What "profession" only pays $35K a year out of school? That's like sixteen bucks an hour. You can get that working at McDougles in San Fran...
 
EdFred said:
$175k isn't a starter house for a $70k income couple. They are over buying.
Click to expand...

Find me a home in Denver for less than $150k that will house a family of 2 or 3.

For the older folk, 20% meant coming up with $15K or so. That's a lot more doable than coming up with $30k.

BTW - I just did the search myself. The homes exist, but they are in very high crime areas with long commutes to anywhere worthwhile.
 
Last edited:
paflyer said:
What "profession" only pays $35K a year out of school? That's like sixteen bucks an hour. You can get that working at McDougles in San Fran...
Click to expand...

Even line guys can make that.

Maybe they got their degree in English or Feminine Studies.
 
paflyer said:
What "profession" only pays $35K a year out of school? That's like sixteen bucks an hour. You can get that working at McDougles in San Fran...
Click to expand...

You can't touch a refrigerator box in an alley for $175k in San Fran either.:lol: Rents have gotten worse than Manhattan, $2100 to rent a tiny apartment in SF is a reality, and if you want to buy, where are you buying anything for <$750k?
 
Here
attachment.php


In a metro area with millions and millions of homes, you'll find a handful of homes for less than $150k. All in very shoddy condition, and all but a few of them with more than an hour commute to jobs.
 

Attachments

  • homes.JPG
    homes.JPG
    48.7 KB · Views: 93
SkyHog said:
Find me a home in Denver for less than $150k that will house a family of 2 or 3.

For the older folk, 20% meant coming up with $15K or so. That's a lot more doable than coming up with $30k.

BTW - I just did the search myself. The homes exist, but they are in very high crime areas with long commutes to anywhere worthwhile.
Click to expand...

How many listing do you want?

http://www.zillow.com/homes/for_sal...755689,-104.958745_rect/11_zm/0_mmm/?view=map

http://www.zillow.com/homes/for_sal...755689,-104.958745_rect/11_zm/0_mmm/?view=map

You start putting restrictions on where you'll live, like 'only in the Manitou area' and you are SOL. But, that's the way the entry level market is. You don't move to CA and start shopping in Westwood as a college grad.

<edit: I believe you did the edit while I was shopping. Orig you asked for the Springs. So here ya go.>
 
paflyer said:
What "profession" only pays $35K a year out of school? That's like sixteen bucks an hour. You can get that working at McDougles in San Fran...
Click to expand...

Yeah, try being a teacher. That's going to be starting salary with a four year degree in a lot of places. I started at around $31K.
 
woodchucker said:
Yeah, try being a teacher. That's going to be starting salary with a four year degree in a lot of places. I started at around $31K.
Click to expand...

You need to move. My son just started as a teacher last year in Katy TX. He's an asst music director, teaches theory, pedagogy, sight reading, and subs for math, alg, and trig. He started over $50k, and is getting a bump this year.
 
In my opinion, Brian with a Y :)D) has it right.

I've bought several houses, always with massive down payments to minimize mortgage payments. I like equity.

By being careful with money, and not spending on useless things like PMI (or consumer interest), I ended up with enough cash in the bank to buy a really nice airplane.
 
This all comes down to the shrinking middle class, IMO. Take a look at median incomes in a given area, and then the median home value. It's gotten pretty crazy. In my zip code, the median household income is $88K. The median home value is $574K.
 
docmirror said:
You need to move. My son just started as a teacher last year in Katy TX. He's an asst music director, teaches theory, pedagogy, sight reading, and subs for math, alg, and trig. He started over $50k, and is getting a bump this year.
Click to expand...

But he has to live in Katy TX...:lol:
 
docmirror said:
You need to move. My son just started as a teacher last year in Katy TX. He's an asst music director, teaches theory, pedagogy, sight reading, and subs for math, alg, and trig. He started over $50k, and is getting a bump this year.
Click to expand...

Yeah, walk away from friends family and everything you know for more money. The american way...
 
paflyer said:
What "profession" only pays $35K a year out of school? That's like sixteen bucks an hour. You can get that working at McDougles in San Fran...
Click to expand...

A more realistic place is where I started with my family -

First professional level job, making $50,000. Fiance in a non-professional job, making $30,000 or so. That's a family income of $80k.

At that point, we opted to rent because buying was so inaccessible. Thankfully, my career took off, and we got to a point where my wife makes $0, and I make enough to be comfortable for the both of us. After dumping tons of money into someone else's mortgage, we finally bought a home. But, the home we bought in North Carolina was only $130k, mostly because the down payment requirement was insane - to put 20% down, I'd have to come up with $26,000, even with that inexpensive of a home.

But we found the one we wanted - had a big ol' yard, and tiny bedrooms. Loved that home. After having kids, we outgrew it, but stayed until we moved.

Anyway - tell me, for a home that inexpensive - $130,000. How is a new family supposed to come up with 20% down? Using FHA and coming up with 3-4% ($3,900 - $5,200) is a lot more doable.

So much so, that even with a much larger income, that's what we chose to do. PMI requirements were only until you got 20% equity, or 5 years, whichever was sooner. No brainer.

Last house we bought, we bought for $250k or so. We did the same thing. Even at a pretty good income, dumping $50,000 in cash is insane. We put 3% down instead. Luckily, we got in before FHA changed the PMI requirements, so same deal as before. But now, with the requirement to keep PMI for the life of the loan or upon re-financing, I think FHA is ripping people off.

But what choice do young couples have?
 
docmirror said:
How many listing do you want?

http://www.zillow.com/homes/for_sal...755689,-104.958745_rect/11_zm/0_mmm/?view=map

http://www.zillow.com/homes/for_sal...755689,-104.958745_rect/11_zm/0_mmm/?view=map

You start putting restrictions on where you'll live, like 'only in the Manitou area' and you are SOL. But, that's the way the entry level market is. You don't move to CA and start shopping in Westwood as a college grad.

<edit: I believe you did the edit while I was shopping. Orig you asked for the Springs. So here ya go.>
Click to expand...

Yep - I edited from the Springs to Denver since the jobs are all in Denver right now. No one is moving to the Springs and taking a job in the Springs - and all of those homes you refer to are 1.5 hours or more from the jobs in Denver.
 
Last edited:
Stewartb said:
Serial renters never achieve equity. Owners do. Young guys think boomers had everything handed to them. They never considered that most older guys worked really hard and took decades to accumulate their worth. The notion that real estate investment is no longer beneficial is silly. What's his name should ask his landlord about that!
Click to expand...

I'm not saying boomers had it all handed to them, I'm saying the benefits of home financing are hinged upon the notion of homesteading. THAT is a labor construct that you damn right was afforded to boomers in leaps and bounds over the labor construct millennials face. Absent a fundamental ability to homestead, home loanership becomes a series of expensive transaction-cost-laden moves that do not provide much in the way of a sizeable nest egg.

I don't envy my father's real estate positions. He is unable to relocate primarily due to his multiple mortgages/refis on real estate that stagnated in valuation from the mid 2000s bubble. Now he feels trapped and waiting for sunshine. What I do envy is his 75% pension, that allows him and my mother, with her 75% pension, to live life with dignity and security in spite of tanked real estate dealings, many of which date more than 30 years in ownership length. I won't have that safety net, and real estate is just as likely to be but a mere shelter utility as it was effectively for them. That's all I'm saying. I'm not making a blanket statement against ownership. I'm just dispelling the myth there's retirement windfalls to be made out of slaving under houses, especially when you move for jobs every 10 years like the numbers clearly paint our post-millennial society.
I'll get off your lawn now....:rolleyes2:
 
Stewartb said:
Serial renters never achieve equity. Owners do. Young guys think boomers had everything handed to them. They never considered that most older guys worked really hard and took decades to accumulate their worth.
Click to expand...

Sorry, but boomers had everything handed to them - the following is from the US Census or other places around the net:

New Home Price in 1970: $23,600
New Car Price in 1970: $3,542
Average income in 1970: $10,000 (or so - varied by state, but within $1k or so)

New Home Price in 2010: $272,900
New Car Price in 2010: $27,950
Average income in 2010: $49,445

So - to the boomers, they could buy a new house and a new car for a little less than 3 years' worth of income. To those in my generation, we can buy a new house and a new car, and it would take more than 6 years income to do so.

edit: also - putting 20% down on a $23,600 home meant saving up a whopping $4,720 down. And in return, once they make a few years of payments on the home, the value increased SIGNIFICANTLY, to the point where the equity alone could drive wealth. That is not true anymore.
 
Last edited:
KSCessnaDriver said:
Yeah, walk away from friends family and everything you know for more money. The american way...
Click to expand...

You're barking up the wrong tree. It's not walking away for MORE money, it's walking away for GOOD ENOUGH money. 35K is barely solvent money for a single person in middle Earth, let alone a head of household or coastal zip codes. That's how pathetic our middle class existence has become. Trust me, I'm as a champion of homesteading and single income earning as anyone. I tried, but it's untenable, we can't afford it. So we begrudgingly acquiesce to the pill of job nomadism. The alternative is to wither away in economic dispossession cuz grandma won't get to see me as often? Come on now, let's be reasonable. I think if given the opportunity, most people would stick around their filial and cultural connections if the math was solvent.
 
SkyHog said:
So - to the boomers, they could buy a new house and a new car for a little less than 3 years' worth of income. To those in my generation, we can buy a new house and a new car, and it would take more than 6 years income to do so.
Click to expand...

True but.....

Starting boomers mostly had basic cars. Power windows, locks, seats, upgraded stereo? Most cars didn't have stuff like that. Heck, my Dad was 42 before he bought his 1st "nice" car with that kind of stuff. Now, everybody has to have all this and more....Bluetooth, voice recognition, etc.

Same with what was in the home, one single phone and a single B&W TV with rabbit ears.

Cars and homes today, even "starter" ones, have far FAR more content than the old days.

EDIT: And, the auto manufacturers have discovered the same scam as colleges and universities, as long as consumers have access to long term loans they'll continue to pay ever increasing prices for the products.

Recent article from USATODAY:

http://www.usatoday.com/story/money/cars/2015/06/01/new-car-loans-term-length/28303991/

Average car loans are now 67 months. That's frickin' nuts, yet people do it all the time. Hey, what's another few years or an extra $150/mo to get that bling car?
 
Last edited:
Bill Jennings said:
True but.....

Starting boomers mostly had basic cars. Power windows, locks, seats, upgraded stereo? Most cars didn't have stuff like that. Heck, my Dad was 42 before he bought his 1st "nice" car with that kind of stuff. Now, everybody has to have all this and more....Bluetooth, voice recognition, etc.

Same with what was in the home, one single phone and a single B&W TV with rabbit ears.

Cars and homes today, even "starter" ones, have far FAR more content than the old days.

EDIT: And, the auto manufacturers have discovered the same scam as colleges and universities, as long as consumers have access to long term loans they'll continue to pay ever increasing prices for the products.

Recent article from USATODAY:

http://www.usatoday.com/story/money/cars/2015/06/01/new-car-loans-term-length/28303991/

Average car loans are now 67 months. That's frickin' nuts, yet people do it all the time. Hey, what's another few years or an extra $150/mo to get that bling car?
Click to expand...

The definition of "starter" is not set by the consumer. I would kill to have had the opportunity to buy my first car as a new car, but without any of the bells and whistles that wound up being in my first car.
 
SkyHog said:
Sorry, but boomers had everything handed to them - the following is from the US Census or other places around the net:

New Home Price in 1970: $23,600
New Car Price in 1970: $3,542
Average income in 1970: $10,000 (or so - varied by state, but within $1k or so)

New Home Price in 2010: $272,900
New Car Price in 2010: $27,950
Average income in 2010: $49,445

So - to the boomers, they could buy a new house and a new car for a little less than 3 years' worth of income. To those in my generation, we can buy a new house and a new car, and it would take more than 6 years income to do so.

edit: also - putting 20% down on a $23,600 home meant saving up a whopping $4,720 down. And in return, once they make a few years of payments on the home, the value increased SIGNIFICANTLY, to the point where the equity alone could drive wealth. That is not true anymore.
Click to expand...

The new home price is skewed because everyone overbuilds/overbuys. Back in 1970 they weren't throwing up McMansions like crazy. Houses were bought based on need, not what you need to keep up with Chris and Rachael. Build a new house based on a 60's/70's mindset and you won't be anywhere near 273k. Kids shared bedrooms, the guest bedroom was a fold out couch, the office was the kitchen table while it wasn't being used. All of those things are considered "needs" by today's standards, that's why your new home price ratio is 6:1 rather than 3:1

Cars are more of the same.
 
Bill Jennings said:
True but.....

Starting boomers mostly had basic cars. Power windows, locks, seats, upgraded stereo? Most cars didn't have stuff like that. Heck, my Dad was 42 before he bought his 1st "nice" car with that kind of stuff. Now, everybody has to have all this and more....Bluetooth, voice recognition, etc.

Same with what was in the home, one single phone and a single B&W TV with rabbit ears.

Cars and homes today, even "starter" ones, have far FAR more content than the old days.

EDIT: And, the auto manufacturers have discovered the same scam as colleges and universities, as long as consumers have access to long term loans they'll continue to pay ever increasing prices for the products.

Recent article from USATODAY:

http://www.usatoday.com/story/money/cars/2015/06/01/new-car-loans-term-length/28303991/

Average car loans are now 67 months. That's frickin' nuts, yet people do it all the time. Hey, what's another few years or an extra $150/mo to get that bling car?
Click to expand...

To your edit - I have determined that I will forever have a car payment. For that reason, I always pick 72 months for the term. My next car might be a lease instead, for that exact same reason.
 
SkyHog said:
The definition of "starter" is not set by the consumer. I would kill to have had the opportunity to buy my first car as a new car, but without any of the bells and whistles that wound up being in my first car.
Click to expand...

Yeah, but see my edit. Car manufacturers have realized they can increase prices and force bells and whistles and consumers will just get longer and longer loans. If people had to pay cash, I'd bet there would be many more lower cost vehicles out there.
 
EdFred said:
The new home price is skewed because everyone overbuilds/overbuys. Back in 1970 they weren't throwing up McMansions like crazy. Houses were bought based on need, not what you need to keep up with Chris and Rachael. Build a new house based on a 60's/70's mindset and you won't be anywhere near 273k. Kids shared bedrooms, the guest bedroom was a fold out couch, the office was the kitchen table while it wasn't being used. All of those things are considered "needs" by today's standards, that's why your new home price ratio is 6:1 rather than 3:1

Cars are more of the same.
Click to expand...

Lets assume that is true (it's not, at least, not since 1970. You are describing the 1930s).

So I want to build a minimalist house. Call it a 3 bedroom, 1 bathroom home to house my 3 children (two of them can share a room). I don't need a home office, or a garage (a car port is fine - or if that is too extravagant, lets just do a concrete driveway).

Where do I go about getting such a home, and what does it cost me to build?
 
SkyHog said:
Lets assume that is true (it's not, at least, not since 1970. You are describing the 1930s).

So I want to build a minimalist house. Call it a 3 bedroom, 1 bathroom home to house my 3 children (two of them can share a room). I don't need a home office, or a garage (a car port is fine - or if that is too extravagant, lets just do a concrete driveway).

Where do I go about getting such a home, and what does it cost me to build?
Click to expand...

It was true around here. Almost every kid I went to elementary school with shared a bedroom with a same-sex sibling. Those houses were bought in the 70s.

I can't answer that, because it varies on where you are at. Around here, there's a metric crap ton of 'em under 120k...

http://www.grar.com/homes#homes/sea...ce-max/120000/beds/3/bathstotal/1/county/Kent
http://www.grar.com/homes#homes/search-type/resi/beds/3/bathstotal/1/county/Kent
 
I try not to trash-talk people making $16.50/hr. Like most parents, I want my kids to have good jobs when they exit college, but more important, I want them to work at something they enjoy. The last thing on earth I want them to do is spend their lives making lots of $ if they hate what they're doing half their waking hours. My brother does that...beautiful home at the country club, nice cars and money to throw around, but he works 80 hours a week and hates what he does. Such a waste of life.

$35K/year around here is about average starting out of college. New teachers, police, nurses, office jobs begin, give or take, at that. And these are very competitive jobs to land. This is an average city of 130,000 with three major colleges, a couple of minor ones, three major hospitals and some national and regional employers. Most clerical type jobs are around $12-$14/hr and we have a lot of those. Maybe 1/4 of the houses here are over $400K and another 1/4 under $125K.

Good luck finding a 1K sq. ft. house to start with because they haven't built those around here in 45 years. Most houses in our town with less than 1,400 sq. ft. are in neighborhoods you don't want to live in.
 
I built my first house in 1980. Wife and I were making good wages. Construction financing was 23%. My lender called me towards the project completion to tell me that if I didn't close by end of day the following Tuesday the interest rates would go up and I wouldn't be able to qualify to finance the home I just built (I don't miss Jimmy Carter). So for the next week I worked pretty much 24 hours a day to finish the house and close the long term loan at 17.9%. Yes, we older guys had all the advantages. :rolleyes2: Being upside down in a house is not unique to the younger generation. I ended up losing everything I had and starting over. Ate popcorn for every meal. Lived in a dump. Wife and I smile at the memories because we found a way to enjoy life as we dug out from a mountain of debt. Live and learn. This is still the land of opportunity.
 
SkyHog said:
Lets assume that is true (it's not, at least, not since 1970. You are describing the 1930s).

So I want to build a minimalist house. Call it a 3 bedroom, 1 bathroom home to house my 3 children (two of them can share a room). I don't need a home office, or a garage (a car port is fine - or if that is too extravagant, lets just do a concrete driveway).

Where do I go about getting such a home, and what does it cost me to build?
Click to expand...

$75 sq/ft most places for a simple house appropriate in today's market.
 
EdFred said:
It was true around here. Almost every kid I went to elementary school with shared a bedroom with a same-sex sibling. Those houses were bought in the 70s.

I can't answer that, because it varies on where you are at. Around here, there's a metric crap ton of 'em under 120k...

http://www.grar.com/homes#homes/sea...ce-max/120000/beds/3/bathstotal/1/county/Kent
Click to expand...

I picked the first one, googlemapped the street view. Doesn't look like a bad place and the prices are astounding. Most people spend more on a new car than that house costs. You don't find buys like that around here.
 
EdFred said:
The new home price is skewed because everyone overbuilds/overbuys. Back in 1970 they weren't throwing up McMansions like crazy. Houses were bought based on need, not what you need to keep up with Chris and Rachael. Build a new house based on a 60's/70's mindset and you won't be anywhere near 273k. Kids shared bedrooms, the guest bedroom was a fold out couch, the office was the kitchen table while it wasn't being used. All of those things are considered "needs" by today's standards, that's why your new home price ratio is 6:1 rather than 3:1

Cars are more of the same.
Click to expand...


FWIW Chris and Rachael are dicks.
 
You must log in or register to reply here.
Back
Top