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  1. #11
    Registered User Semi Pro Member
    One more option: What if you bought the house today to keep it as in income property later?

    I am not saying do this. But it can be an option, especially if you have access to a great deal.

    Because if your plan is to sell it in a few years and move on with your life, and you don't have other plans for the house (hold forever, fix and flip, whatever), then it would be easier on your life to just rent. Especially if you can buy something for cash in 2 years...that will be less of a headache.

  2. #12
    Wow - super interesting thread! Good luck to BeachLover in making a decision on what to do.

    Just want to point out that if your loan has PMI, that cost/obligation will go away when you hit 20% equity. This can be both from paying down principal or an appraisal. So doing the improvements may make this your forever house and help get rid of the PMI!

    But if your insurance is via the FHA (their program is called mortgage insurance protection, or MIP), you will need to refinance to get rid of the insurance cost. So I would definitely want to make sure you qualify for a conventional loan and get private mortgage insurance.
    Current Fico Scores: 710 TU, 732 EQ
    My Goal for 2016: 750+

  3. #13
    Registered User Junior Member
    I feel a little overhead with information. But to clarify things:

    1. Our loan will be confirming, and have PMI.

    2. As of now, we have no plans on investment properties.

    3. We had not considered the buy and improve scenario. But are now working through it. It is possible we really can make this into a house we love.

    4. We took off the table buy and live there temporarily. We just don't like the house enough to even want to live in it temporarily, except for the advantage of really reducing monthly overhead costs.

  4. #14
    Just want to interject and point out why I do not recommend short term buying and selling of homes:

    First, the transaction costs on purchase and sale are very high. Just the 6% commission to brokers is hard to make on a home value over a 2 year period. At least by historical precedent.

    Which leads to the second point: home prices can drop. And drop sharply. Which means taking a big loss or not selling. Of course, you can choose to just walk away when you have no equity in the home. But that will destroy your credit for at least the next 7 years.

    Third, owning a home is not a cure all way to reduce costs. Homeownership still means property taxes, interest payments, repair and maintenance expenses, and tying up your money in an asset that should really only appreciate at about the rate of inflation.

    It may very well be possible that your equity portion would do better being invested in more productive assets. (Yes, stocks go up and down. But if you are buying consistently over time, month in and month out, your dollar cost averaging should help you out there.)

    My long term advice is to spend much less than you make, save for a rainy day, make investments, and buy a house that is less than you can "afford" at the time when you have the money saved for a big down payment. And then keep on saving and keep on slowly trying to whittle down that mortgage balance.

    Slow and steady wins the race in this game of life.

  5. #15
    Registered User Senior Member
    I gotta agree with CD about the transaction costs. Rent for now, and then pay cash (or at least a significant down payment) for your forever house down the road.

    Now, I'm not against doing the improvements to make the "deal house" into your "forever house". But the work and cost sounds like it will be significant. Do you want to put that much time and effort into improving this house? And will it detract from your ability to make money from work?

    Whatever you choose: Good luck!

  6. #16
    Registered User Senior Member
    i like the idea of getting the house today - even with pmi - and doing the improvements so in one year you get an appraisel and the pmi drops off. you will not even need to refinance.

  7. #17
    Registered User Senior Member
    Quote Originally Posted by Joanne View Post
    i like the idea of getting the house today - even with pmi - and doing the improvements so in one year you get an appraisel and the pmi drops off. you will not even need to refinance.
    Unless it's FHA, right? Can't drop PMI on an FHA loan anymore.

  8. #18
    Registered User Junior Member
    If it's a FHA loan and issued after 2013, the insurance doesn't fall off after you hit 20% equity. before than it does

    Yeah we jut figured this out. Usually I had just paid the PMI off with a higher rate because I thought it was till you had paid off 20%. Come to find out it's also when you get an appraisal (if you have a conforming/non-FHA mortgage). We just put an offer on a house to do this right now.

    PS: none of these houses are our forever homes. My husband is active duty so we move every 3ish years. So I am always looking at our exit plan

    Hope that helps.

    PPS: I don't like putting ANY money into a house. lol!

  9. #19
    Registered User Semi Pro Member
    I'm not a fan of buying a house for less than 3 years. You've got a lot of fees and 'unexpected' stuff that can cost you. It's really only a good investment if you can buy it for 5 years or more (preferably 10 years). Why do you want the house so bad if it's not a long-term thing?

    And in case it matters... We own a house that my wife bought prior to meeting me that lost 100k in the bubble burst. We have a good renter. But there is a huge cost of being saddled with a house under water that you hate

    If it were a longer-term decision, I would say wait a couple of months so you've got a down payment large enough to avoid PMI. Then get a low 30-year loan and don't worry about paying it off. Rates at 3.65% are tough to beat.

  10. #20
    Registered User Junior Member
    We don't really want a house all that badly.

    We have about 14k for a down payment now, but my freelancing work has really taken off. The time limit is that I'm self employeed and my husband is quitting his job in two months to start a business. So, we're in a weird situation where we'll have tons of money but be unable to buy a house for two years after he leaves his current job.

    We can buy a house just based on his income right now, but because of the area, it wouldn't be a house we would want to spend 5 years in.

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