Needed Advice: Saving First Time Home Buyer

[yster]

Hi all, First i want to say "Hi" to evey one here, and nice founding this forum.

im single, 21yr'sold, i just bought a new house for my family around 400k, the monthly payment around 2k/month b4 tax, the questions i have :

- what is the best way to save money on property tax ( should i pay monthly, 2/yr or 1/yr) which one can save me money ?

- this is my first time buying a house, and so can any one tell me what can i do to save money? and avoid any trap

- i am intersting becoming real estate investor in the future, so can anyone recommend me where can i start ?

please help me help, would be really appreciated.

thanks all

[cicy33]

Can I be your mommy? Seriously though that is alot of house!!! I don't think that it matters when you pay the tax there is no benefit to paying it more frequently. I do know that in my area they mail them out around august and once I called to find out how much they had increased and they didn't know cuz they hadn't went out yet. Only thing I can think of to save or create money is start putting the money in a savings account for the next year and let it accumalate (sp) interest. And make sure to pay on time those penalties are a b*&(^.

[34saving]

Try to avoid PMI if you can. (20% down or a 80-10-10.) If you can't avoid it completely, it's often better to actually pay it up front and make it part of your mortgage. (Surprised me too, but Suze Orman had an article about that a few months ago. . . . at least look into it.) Make sure your property is homesteaded if your state does that kind of thing. Don't know what part of the REI game you're interested in, but I like this site http://reiplace.com/newsgroup/list.php?f=1&ng=FH

My blog (link below) has some stuff on the REI game too. Just look around. . . I probably have 40 or so posts related to REI in one way or another

Oh, I also noticed it looks like you have an interest only loan. I'd be sure to try to pay a half decent chuck of principle on top of the IO payment. Making IO payments are dangerous in the current environment of rising interest rates and possibly stagnating real estate values (depending, of course, a lot on location, but . . .) Just my opinion

[sweeps]

Hi yster,

What you might have heard is if you pay your mortgage every 2 weeks, you can pay it off faster. But the only reason for that is that you end up making 13 months of payments instead of 12. You can pay more toward the principal whenever you want. Most important, DO NOT pay the mortgage company for this "privilege". Simply pay more toward the principal as you come by extra money.

Regarding your real estate tax. Since you own a home now (congratulations, by the way), you will probably be itemizing your deductions on your income tax. You'll have to confirm this, but you can potentially save on taxes by pre-paying your 2006 real estate tax.

[sweeps]

By the way, you will probably not save money by paying your real estate tax monthly. They will probably charge you a transaction or "convenience" fee for the privilege.

[yster]

thanks guys, here r some more info about the mortgage, bcuz i buy a new house, so the company 's giving $7,300 for upgrading, (with requirement: i have to go with their in-house lender, and insurance), so after subtract the upgrading, my loan is now $385,000. with my credit score: 717 and the current job is exactly 1.5 yr. (i also have little cash to put down 5%and told them that i choose the 5yr arm,then the loan prossesor told me that, i have to go with 2 loans, the 1st one for 80%, and 2nd one for 20% of the total loan. and rite now, he locked my rate at (6.375% for the first loan), and (7.6250 for the second one). And after all the Caculation, it's added up: $2100/mon b4 tax . and about 5k yr for the tax.

My question are:

- With the interest rate he offer me? is it high or low ? ( im living in sacramento)
- is the loan prossessor lying to me? or is he trying to put me on traps ( because im just starting my new life, so i don't have any experiance to tell)
- is the mrotgage above appropriated ?
- r there any messages can you guys suugest me to talk to the loan prosessor ?

please help me out asap, my new house is about to close now...

Thanks all.

[yster]

btw, you guys mentioned about PMI (Private Mortgage Insurance) , can you guys tell mw what is that really mean? , in my case above, do i pay PMI (Private Mortgage Insurance ??

[sweeps]

Originally Posted by yster

With the interest rate he offer me? is it high or low ? ( im living in sacramento)

It doesn't seem unreasonable. The rate on a 2nd mortgage is always higher because it is more risky to the lender.

Originally Posted by yster

is the loan prossessor lying to me? or is he trying to put me on traps ( because im just starting my new life, so i don't have any experiance to tell)

It's always possible. I don't see mention of how much you're being charged for closing costs? This is where many lenders can nail you.

Did you shop around for deals from other lenders? Bankrate.com is a good source for finding lenders in your area.

Originally Posted by yster

is the mrotgage above appropriated ?

I won't go so far as to say it's inappropriate, but it's very risky. I don't know how much you make, but have you written up a budget to see if you can afford this? The mortgage payment is $2100/month. The tax bill may be $500/month now, but that can quickly rise. You have to pay for insurance on your house. You have to pay for maintenance and repairs.

With a 5-year ARM, after 5 years, you will have to refinance at the going interest rate which could potentially be much higher than it is now.

Also keep in mind that although real estate prices have been shooting through the roof for several years, they have been leveling off and could potentially drop. If this did happen and you had to sell, you could owe more on the house than you can sell it for. And that's not even counting realtor fees and the like.

Originally Posted by yster

r there any messages can you guys suugest me to talk to the loan prosessor ?

I would encourage you to hold off for a little bit and think before doing this. It seems you're rushing into this without doing the necessary research. Also speak with other mortgage companies to give yourself some comparison.

Originally Posted by yster

btw, you guys mentioned about PMI (Private Mortgage Insurance) , can you guys tell mw what is that really mean? , in my case above, do i pay PMI (Private Mortgage Insurance ??

PMI is insurance that you have to pay to protect a lender in case you default. You have to pay it if you have a loan that exceeds 80% of the house's worth. Your loans are structured in a way so that you don't have to pay PMI. Instead you have to pay a higher interest rate for the 20% loan.

[Tree0164]

Have you done a budget?
Make sure you can afford the $2100 monthly mortgage. A mortgage shouldn't be more than 25% of your income.

Do you have an emergency fund?

I personally do not like ARM. I don't know long you plan on spending in the house. If less than 5 you might be okay with the ARM. Also make sure there isn't a ballon payment at the end.

Can your rent for awhile and then save up for a bigger down payment?

Good luck!