First Time Home Buyer!!!

[cbl117]

Hey Guys,

I'm really excited and wanted to share that I just put my first offer ever on a home. The offer goes in this morning and I have until friday to hear back from the seller. The house is in mount washington in LA. Its a 20's cottage. There are so many things happening at once and I don't even know how to fully pay for closing costs!:o

[zombie boy 2000]

Congrats! We just bought our first home last year. See if you can get the seller to incur the closing costs. That's what we did.

[Shizelbs]

Congrats. Its quite an experience!

[strider]

Great news! We bought our first house last year as well, it was a process but I'm so glad that we did it. I (almost) can't wait to see what tax time brings this year!

[nadams]

I just bought my first house this year, too. Things will be tight the first few months... they still are for me. I still don't know how I managed to pay for closing and my first month's bills... perhaps that has something to do with why my CC's are all maxed out :). But, I'm working my way back, and it feels good to be putting money into something that's getting me more equity every payment I make. Plus, I can do whatever the hell I want with it.

[engtaz]

Congrats and good luck

[zombie boy 2000]

But, I'm working my way back, and it feels good to be putting money into something that's getting me more equity every payment I make.

I think that was the biggest shock -- looking at the amortization schedule. Absolutely nothing has been going toward the principal. We've been paying an $850 mortgage for about a year and a half, and have only amassed about $500 in equity. C'est la vie blah blah sera.

[mhardy6647]

I think that was the biggest shock -- looking at the amortization schedule. Absolutely nothing has been going toward the principal. We've been paying an $850 mortgage for about a year and a half, and have only amassed about $500 in equity.
There's an easy fix to that. Most mortgages allow you to pay extra at any time towards the principal. If you pay an extra $50 or 100 a month (or whatever you can afford) beyond your "payment due" amount, it goes towards the principal of the loan. You can knock years off the term of a loan doing this. We paid off a 15 year mortgage in about 1/2 that time by doing this.

There are probably on-line calculators to let you do this sort of "what if" analysis. Since the math on interest is pretty straightforward, I wrote an Excel spreadsheet to do it (back, like, 15 years ago). I must still have an e-copy of it someplace...

[zombie boy 2000]

Thanks for the tip. I just figured paying extra would work in the same way as paying extra on car payments -- in that it was simply substracted from your next month's bill. At least, that's the way my first car's loan was set-up...

[nadams]

I pay $408 a month... about $40 goes towards the principal. I've got a 5.75% interest loan, taxes are included in that payment, and I'm paying mortgage insurance because I only put 3% down on the house.

Once the PMI comes off and I can afford to start paying a little more on the principle alone, it should go quicker. Of course, my mortgage also only started at $42,100.

[nadams]

And, zombie boy, mhardy is correct, most mortgages allow you to pay extra on the principle alone without penalties. I know mine does...

[zombie boy 2000]

Then that's the way I'll roll from here on out. Thanks nadams and mhardy and congrats CBL. Any possibility you were able to swing a dedicated audio room?

[strider]

There's an easy fix to that. Most mortgages allow you to pay extra at any time towards the principal. If you pay an extra $50 or 100 a month (or whatever you can afford) beyond your "payment due" amount, it goes towards the principal of the loan. You can knock years off the term of a loan doing this. We paid off a 15 year mortgage in about 1/2 that time by doing this.

There are probably on-line calculators to let you do this sort of "what if" analysis. Since the math on interest is pretty straightforward, I wrote an Excel spreadsheet to do it (back, like, 15 years ago). I must still have an e-copy of it someplace...

That is something to think about, thanks for the tip!

[mhardy6647]

Here's a calculator, by the way.
http://money.ninemsn.com.au/property/tools/principal-and-interest-calculator.aspx

[phuz]

I pay $408 a month... about $40 goes towards the principal. I've got a 5.75% interest loan, taxes are included in that payment, and I'm paying mortgage insurance because I only put 3% down on the house.

Once the PMI comes off and I can afford to start paying a little more on the principle alone, it should go quicker. Of course, my mortgage also only started at $42,100.

Jeeez I want that kind of mortgage.

My taxes alone are $600 a month in escrow, NO PMI.

Congrats cbl117!

[krabby5]

Hey Guys,

I'm really excited and wanted to share that I just put my first offer ever on a home. The offer goes in this morning and I have until friday to hear back from the seller. The house is in mount washington in LA. Its a 20's cottage. There are so many things happening at once and I don't even know how to fully pay for closing costs!:o

good job!!

now all your weekends will be busy..

There's always something to do...whether you like it or not...lol

[daboyz]

Congrats!! Good luck on the offer. When it's accepted is when the fun starts;)

[Maurice]

Congrats. Mt. Washington is a nice little area. Lots of well kept homes and long time residents. Just for future reference, if your closing costs are a problem you can always increase your offer by the amount of your estimated closing costs, then ask the seller to pay your costs for you. It wont cost the seller anything and basically you just financed the cost. Although, most lenders will limit the amount of non-recurring costs the seller can pay, but in most cases you can fit all or most of the closing cost in. Again, congrats, you big balla you!:cool:

[cbl117]

UPDATE: My realtor spoke with the seller's realtor and it looks promising. 80/20 in our favor as he put it! :eek: I'll find out for sure tomorrow evening.

[jflail2]

Good luck/ congrats! I am hoping to join you in just a few months, so I'm starting to feel the bubble gut a little bit. Can't imagine how you're feeling right now :)

[markmarc]

Congratulations:
Beyond on my fourth home, may I offer a piece or two of advice that has served us well. Each year do one major improvement to the home. This will allow you to leave it in better shape than when you bought it. Don't neglect the yard, curb appeal is a big part of the home as an investment.
Enjoy

[cbl117]

The sellers accepted the offer!!! Escrow closes in 30 days!!!

Some interesting info...After figuring out next years tax return with purchasing this home, it will only cost an extra $180 dollars a month to go from renting to owning a home. And thats conservative considering I'm still going to get half of my property taxes in tax returns.

[wallstreet]

Good luck with homes in LA. I really don't know how you guys do it out there. Yea, the taxes are high in Texas, but the houses are cheap.

[Silverti]

The statistic was something like this: Pay 1 extra payment a year (directly to principle) and you will cut 12 years off the life of a 30 year mortgage.

[George Grand]

See if your mortgage company will allow you to make bi-weekly payments instead of a monthly payment. There is your one extra payment a year. It's a system that works well for folks that are PAID bi-weekly.

I also believe if along with your first mortgage payment, you make an equivalent principal payment, it'll knock a 30 year mortgage down to about 23 years.

[daboyz]

Owning is soooooo much better than renting. Congrats on the offer being accepted! Take a few days to let things calm down and then we'll talk about where to go from here.