As a 1st time home buyer Having mixed feelings about financing huge amount $
I live in Phoenix,az and currently shopping for my first home/investment, as a total newbie at RE im looking at preferably move in ready with minor repairs if any, single family homes, 1k + sqft homes, 1+ bathroom, 3 + rooms, in average neighborhood, here in Phx and vicinity those start at $280k, I got pre approved , putting down 25k, 9k closing cost, $2k piti, this being my first huge investment i dont want to be tied down to that loan, i wish i had the funds i do now back in the 2008 crisis, could of bought 3 single family houses in decent shape cash lol.
What do you guys think about Town houses, the only drawback with those is the Hoa , some will not even let you rent out your place.
Most Popular Reply
Jimmy, everyone here nailed the HOA angle, so I will stick to the part of your post nobody addressed yet: the financing itself. You said you do not want to be tied down to that loan, and that feeling is normal for a first mortgage, but it helps to know a mortgage is not actually a permanent commitment the way it feels on day one.
A 30 year fixed rate loan locks your principal and interest payment for the life of the loan while rent in your market keeps climbing every year, so the huge number gets easier to carry in real terms over time even if your income stays flat. On top of that you have several exits built in from day one: you can refinance if rates drop, you can recast the loan for a fee if you ever come into extra cash and want to lower the payment without a full refi, and you can sell whenever you want since there is no prepayment penalty on the vast majority of owner occupied loans today.
If FHA is part of your pre-approval, know that the mortgage insurance usually stays for the life of the loan unless you refinance out of it once you hit around 20 percent equity, while conventional mortgage insurance drops off automatically. That difference alone is worth asking your loan officer to model both ways before you pick a program, since it changes your real monthly cost more than single-family versus townhouse does.
- Ray Williams