I purchased a home with my GF who is now my wife…That being said I wouldn’t buy a house with someone unless I was planning on getting married.
yeah, exactly… just not the right product for a person with less than 20% down. Of course it all depends on income and price of the home. However, OP would be much better off borrowing money at sub-4% and investing any extra monthly income, since it’s likely that greater than 4% return can be made on investments in most cases.
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I did the same. We knew where it was going, though.
I’ve never heard of this, and would just refinance once I hit 20% to get rid of it if this law existed. (which is why I don’t think it exists).
I put 5% down maybe 7 years ago, refinance maybe 2 years ago putting in enough cash to get me to 20% and so I don’t have it anymore.
off topic: the other thing I forgot to mention in my last post was DONT BUY POINTS. if you look at the statistics that say you’ll sell or refinance within 10 years its foolish to pay money up front to lower the rate unless you’re staying the 30 years which is very unlikely.
But if you get a loan today at 4% and you re-finance 5-7 years from now (when you’re at 20% equity), then rates might be significantly higher. And at that point, you may be better off just keeping the PMI.
It worked for you because we were in a recession that entire time. Now that the economy is recovering, it’s a roll of the dice.
http://www.quickenloans.com/blog/coming-fha-mip-june-3
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When refinancing you also have to pay another set of closing costs so you are better off to avoid that all together if you can.
@theblue probably used penfed when they were offering 0 closing costs. But again, that’s a product of the recession. I doubt once rates start going up that zero-cost refi’s are going to continue.
I did (3.125 w/ no closing)… I know penfed sucks now… people on here are getting 3.75 on 30 at credit unions I think I saw.
if the rates go up in the future it means the economy is doing great so you can sell and buy a better house then refi that later when the economy tanks again. 
What lesson was that? To build a home with a decent builder like Forbes or Tesmer?
Not to trust the run of the mill builder. He has remodeled and rented/flipped numerous homes but his wife didn’t want to have projects going on with the new baby so she pushed him into building. They liked a Ryan neighborhood in OP and it has been more headaches and problems than his last remodel project.
They are going to market building custom homes with a very transparent cost/resell model. They are allowing clients to determine complete custom options and not just the standard upgrades that are 200% over cost. I have drawn one of their models and it was a pretty blank slate. I think that they are mostly trying to compete on the level of Thomas Johnson but I do not know all of the specifics of this venture.
we had deposits down on a new build with a very reputable builder in our neighbourhood back in the summer and backed out as they started to run their games on us… agent / rep ballparks a price for custom work, you put your money down, that work comes in $30k more… lot premium included then it isnt… that kind of crud… noooooo thanks.
the more experience the builder has the better they are at the squeeze 
New PMI rules were put out June 3, 2013 that made the PMI permanent on the FHA loans processed going forward.
First, let’s talk about homeowners with an FHA mortgage pre-dating June 3, 2013. For these homeowner, their FHA MIP will automatically cancel when the following conditions are met :
- For a 30-year loan term : Annual MIP cancels once the loan reaches 78% loan-to-value and annual MIP has been paid for at least 60 months.
- For a 15-year loan term : Annual MIP cancels once the loan reaches 78% loan-to-value. There is no requirement for MIP to be paid for at least 60 months.
Typically, a 30-year FHA mortgage with 3.5 percent downpayment will reach 78% LTV in around 11 years. A 15-year fixed with 3.5 percent down would reach 78% LTV in around two years.
For me, I bought prior to that date, so I’m still eligible to drop my PMI when once I hit the 78% or 5 years, which is the preferred. Basically, you just have to do the math and see where you are at in your loan. Is it worth it to pay the money to refi or pay the PMI until you hit 5 years on the loan and be at at least 78% LTV. For me, it’s more costly at this point to refi vs wait it out, I’m 3 years into it.
If your current FHA loan was endorsed on, or before, May 31, 2009, you can refinance for cheap.
For such “grandfathered” borrowers, upfront mortgage insurance premiums drop for 1.75 percent to just 0.01%, or $10 per $100,000 borrowed.
Furthermore, for eligible borrowers, annual MIP rates are just 0.55%, which can lower the “effective” mortgage rate of an FHA loan by as much as 100 basis points (1.0%).
For grandfathered loans, premiums are the same across all 15-year and 30-year mortgages, regardless of LTV.
Quick breakdown- FHA loan prior to May 31, 2009= you can refi cheap. upfront PMI= .01% or $10 per $100k borrowed annual PMI= rates are just 0.55%, which can lower the “effective” mortgage rate of an FHA loan by as much as 100 basis points (1.0%).
FHA loan after May 31, 2009, but before June 3, 2013= 5 years min. loan life and must reach 78% LTV. to drop PMI completely.
After June 3, 2013 -
Option 1. Pay upfront PMI= 1.75% of borrowed number, on for life of loan, unless refi
Option 2. Pay 12 pay annual PMI for total life of loan, unless refi
Current & past upfront/annual PMI rates:
- Prior to January 2008 : 0.50% annual MIP
- October 2008 : 0.55% annual MIP
- April 2010 : 0.55% annual MIP
- October 2010 : 0.90% annual MIP
- April 2011 : 1.15% annual MIP
- April 2012 : 1.25% annual MIP
- April 2013 : 1.35% annual MIP
- January 2015 : 0.85% annual MIP
Also:
FHA borrowers can also expect an additional 0.25 percentage point premium on loans which exceed $625,500, but less than $729,750. Such “jumbo FHA loans” are available in high-cost areas only, where the median home sale price handily exceeds the national average; and for refinances.
The maximum FHA loan size for 1-unit homes was reduced to $625,500 in late-2013.
Also, note that first-time homebuyers using the FHA HAWK program get access to FHA MIP discounts of 50 basis points off upfront MIP; and up to 25 basis points on annual MIP should the rumored program get an official release.
I did fha back in 2010 for .55% pmi
How can people get to the point of purchasing a home and still not know what they want in a home? I think if the OP wants to build a home, don’t bother telling him to buy instead. If you can do a large amount of the work yourself then you can save quite a bit of money and be in a home for less than what it would sell for.
I do however agree with not factoring in the gf’s income into paying for the house. That’s got bad idea written all over it. Even if you do get married, paying for a home based on two incomes is a home that is not within your means.
If I was single I would be building one of those tiny houses. I could build one of those for the cost of a down payment and closing costs on an average home here. And a lot of those damn things still have a larger bathroom than in my house. I can do taxes on land and a pole barn with a tiny house next to it…no mortgage payment means more vacations outside on NY lol.
@jay_g If you haven’t already dropped PMI, calculate how much is left to pay in PMI until you hit 78% LTV. If that amount is greater than what you think you can refi for, it might be worth looking into.
If you already dropped PMI, disregard everything I’m saying lol
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I’d like to think that we are speaking from experience of ourselves or others and info that we came across at some point. We obviously wouldn’t tell him this if we didn’t think it was a valuable piece of information. I talk to numerous customers on a daily basis that own homes, many have had them built. It is no secret, lots of people rush to build a house because that’s the American dream, but then realize they wish they could have done something different.
You also say “If you can do a large amount of the work yourself then you can save quite a bit of money”…that could make it worse. If you don’t have a builder who does this everyday, he can’t catch things and make recommendations based on his experience or use the guys he knows will do the proper work. Now I realize alot of builders don’t do this. I don’t think when you build a house, you necessarily want to save as much money as possible, otherwise you would buy someone else’s house, but I get where you’re coming from, it just doesn’t work here.
You build a house because you want it how you want it and you don’t want something that someone else lived in. Unless you do this everyday, you’re probably better off leaving it up to someone who does and let them take on the liability of it.
Also, good luck getting any insurance carrier to insure your own house while you build it. No way will they sign up for that. They want to know they can go after someone when things go south after the build is “completed”.
I will be building my own house in the not so distant future. I have the skills, tools, and experience. I will probably construct it under an already formed property management LLC that has a good history of loans and good credit. I know for a fact that I will be saving a lot of $$. Negotiating directly with sub contractors and people I have relationships with will save some costs, managing the project will save nearly 20% as that is what I would be paying a GC if they were managing. Then you can factor in that I will be doing the land clearing, the framing, the sheathing siding and roofing, the electrical, the painting, some of the flooring, the trim out, etc… Labor on those aspects add up real quick and I would rather be investing my time vs. my money and getting more home for my investment. This also equates to higher initial equity with a reduced initial layout of cash. There are lots of variables in this though and this is definitely not for everyone, or even most. Also as for the going south comment, the inspections still occur and frankly the inspector is sure to be more critical of Mr. Homeowner contractor than they will be of a guy they see building the same shit everyday. You will assuredly get a higher grade of a building with a reduced chance of future issues. That is again if you are doing things correctly.
When we build, some of my savings are going to be invested in a heated driveway… Fuck snow.
I wasn’t disagreeing in anyway saying that you couldn’t save money, I just don’t think that someone says, “Hey. I’m going to build a house and I’m going to do it myself to save money” without having some rather large exposure to that type of work. When you decide to use a GC, a bank is willing to give a loan because he/his subs will carry insurance, should something happen. When joe blow wants to build his own house, good luck. No bank is going to bank roll that without experience/credit. No insurance carrier is going insure that job site/build in progress, because if something goes wrong, there’s nobody to go after. You can go down the line…permits, bonds, supplies, etc…
Unless you are building it on your own, with cash or have a line of experience to back you up, like you’re doing, you won’t get very far into the build.
I’ll have to look into it.
Can you tell me how you prove to a bank that you have construction experience?
You don’t. You hire someone who does and they can provide WC certs, liability certs, licenses, bonds, they have established credit, etc…The bank might be willing to give you a loan, but they are going to make sure that they can get it back if things go south. When the home is built, they have collateral. When you’re building, they might give you the money in portions at a time, but again, they are going to want to know they can get it back.
I know with insurance, they aren’t going to insure something, unless the know they can go after someone. Should something happen, they have collected Certificate’s of Insurance all throughout the process, or at least they should be.
A homeowner is building his house and he forgets to put on the proper roof. 2 years down the road, it starts leaking and said homeowner is now filing a claim, guess who has to pay? If the homeowner was at fault, who can the insurance carrier go after? If it was a GC/sub that didn’t build it right, they at least can try to subrogate from their carrier to get some money back for the repair.
If you’re going to build your own home, form an LLC and get the proper insurance for the type of work you will be doing or better yet, just hire someone, let them take on the liability, pay for the proper insurance, bond, permits, etc and know that they are taking all the risk. You better make sure that you’re getting copies of all of this, so if something goes wrong, you have the means to get back what’s rightfully yours.
Forming a separate entity takes the liability of the work off of yourself and all of your own assets. You’ll also need to provide some sort of insurance proof to get the proper bonds/permits for the job.
^^^its not as difficult as you make it out to be.
I personally know several people who built their own homes without a GC. hell I was on site quite a bit for one of them. you can get a loan but you need to have more $$$ on hand and you should already own the land that the home is being built on. plus when you’re building a home in this manner you don’t need to take out as much because the house will cost you less than a comparable home already on market.
as for problems such as your “if a homeowner forgets to put on a proper roof” um hello, that’s why we have building inspectors. and codes. and licensed professionals to stamp the drawings you’re building off of in order to get the permits in the first place.
obviously you need to be competent in the construction process, or at least have knowledge with the help of others that are.