Questions for the wackbag financial whizards.

Chino Kapone

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Jun 10, 2005
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#1
I am in the process of trying to buy a condo for $75,000. I spoke with my lender the other day, and I had a tax lien of $329. Turns out that $329 was actually $730, and I have another one from the state of Arkansas from 2007 for $1000. He told me to pay it off however I can, as quick as I can. I paid off the $729, and need to pay that other $1000 down. I am thinking of getting a credit card with a 0% APR because I need the cash I have in the bank to go towards my down payment. I am just trying not to fuck up my DTI. He said he can approve me just based on my $2000 a month salary and wont have to figure in my commission.

Should I go with a loan? A credit card witha 0% APR for 12-18 months? Or just pay it off with the cash I have, and save a couple more months? I really want to take advantage of the super low interest rates. My payment would be around $550 a month. I plan to live there 2 years, then rent it out for $800 a month which is what they go for in this neighborhood.
 

Buds Spuckley

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Mar 17, 2008
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#2
Theres not enough info there to help.

Is it a traditional sale? short sale? foreclosure?

Are you working with an agent or lawyer or going alone?

The leans are usually paid just prior to closing and usually by the seller.

Dont get a credit card to pay it, it may screw up you qualifying for the mortgage. Not to mention its just a bad idea in general.
 

Chino Kapone

Yo, whats wrong wit da beer we got?
Jun 10, 2005
16,959
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#3
Theres not enough info there to help.

Is it a traditional sale? short sale? foreclosure?

Are you working with an agent or lawyer or going alone?

The leans are usually paid just prior to closing and usually by the seller.

Dont get a credit card to pay it, it may screw up you qualifying for the mortgage. Not to mention its just a bad idea in general.

FHA, so 3.5% down. Not a foreclosure. Will have a realtor. The tax issue is on me. I owe another $1000 to the state of Arkansas from when I was self employed.
 

Don the Radio Guy

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Mar 30, 2006
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#4
Use of the word "leans" aside, show reference name's advice is solid. Don't go into more debt to pay off $1000. Do whatever is necessary to get it paid ASAP, even if it means selling shit on Craigslist.
 

Buds Spuckley

Registered User
Mar 17, 2008
895
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143
#5
Ohh I thought you meant the lien was on the property.

Use the cash or wait, I wouldnt buy anything without an emergency fund. Once you own it things are bound to break.

Do not use a credit card. More debt and a mortgage is a bad idea thats what caused the meltdown.
 

CousinDave

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Dec 11, 2007
25,297
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Ohio
#6
Regardless of what the lender is telling you, as soon as you pay off the tax liens, send the proof to the 3 credit reporting agencies, then I would consider consulting additional lenders as you might get a better rate because your credit rating will be higher

Do really want to be a landlord?

I can assure you that there is no money in renting out single family homes
 

Chino Kapone

Yo, whats wrong wit da beer we got?
Jun 10, 2005
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#7
Makes sense... I am motivated to sell some stuff on craigslist, the problem is I keep getting only scammers to hit me up. I only have 3 major bills right now. So I am trying to generate as much income as possible in a short amount of time.

I did find a home that is a foreclosure... is it harder to purchase a forclosed home?
 

CousinDave

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Dec 11, 2007
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Ohio
#8
I did find a home that is a foreclosure... is it harder to purchase a forclosed home?

Well some of the old way of thinking is that any property that has been foreclosed on, is more likely to be foreclosed on in the future - I have no idea how accurate this is today
 

Chino Kapone

Yo, whats wrong wit da beer we got?
Jun 10, 2005
16,959
2,196
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#9
Regardless of what the lender is telling you, as soon as you pay off the tax liens, send the proof to the 3 credit reporting agencies, then I would consider consulting additional lenders as you might get a better rate because your credit rating will be higher

Do really want to be a landlord?

I can assure you that there is no money in renting out single family homes

My lender is one I use all the time when I sell homes. He has probably closed 20+homes for me in the past year. I know for a fact he will give me the best deal. He was talking about if in the negotiations the seller wont pay all the closing costs then he can work out some lender credits... I don't like to say too much. He will get me the lowest rate, and help out in any way I can. I paid the one that I had showing on my credit, but when I was talking to the state of Arkansas they said that there was another one that they have yet to send to collections. That was the kick in the balls I didn't need because I could swing the down payment and still have a couple months of mortgage payments in the bank and that is before any of my commission checks start to roll in.

I got the idea because I have been trying to rent out a condo in the community for a few months now. They go so fast, I can't ever get one to rent. Well, the last one I looked at was really nice, and he wanted $750 a month plus another $500 for deposit. I missed out on it, because he rented it out that day. So I looked for one for sale, and saw the one for $75,000. My payment would be around $550 a month to own. It just seems like a smarter way to go. I could live there a couple years then rent it out in the mean time saving up to buy another one in the same community to fix up and rent out.

This is the spot I like. Perfect for me and my dog.

http://www.cbtulsa.com/default.cfm/.../ml_number/1220429/referer/Search Results.htm
 

Chino Kapone

Yo, whats wrong wit da beer we got?
Jun 10, 2005
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#10
Well some of the old way of thinking is that any property that has been foreclosed on, is more likely to be foreclosed on in the future - I have no idea how accurate this is today
The one that I saw that was foreclosed on I could get and my payment would be around $650 a month. I've seen it rent out in the past for $1100 a month. One of the best locations in town right on the river and running trails.
 

Party Rooster

Unleash The Beast
Apr 27, 2005
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#11
I am just trying not to fuck up my DTI. He said he can approve me just based on my $2000 a month salary and wont have to figure in my commission.
How can he approve you for a $75k house on $24k annual income? Are you putting down a sizeable downpayment?

I paid the one that I had showing on my credit, but when I was talking to the state of Arkansas they said that there was another one that they have yet to send to collections. That was the kick in the balls I didn't need because I could swing the down payment and still have a couple months of mortgage payments in the bank and that is before any of my commission checks start to roll in.
I would pay that off as soon as possible. Explaining away one tax lien can be seen as just a simple error, but having two of them starts to look like a pattern of deadbeatedness. If you were to charge it on a CC, it wouldn't even show up on your credit report for a couple of months probably anyway. Did you try making payment arrangements with the state? I don't think that would even show up on your credit report if you did it that way and they'd probably be happy with $100 a month.

My payment would be around $550 a month to own. It just seems like a smarter way to go. I could live there a couple years then rent it out in the mean time saving up to buy another one in the same community to fix up and rent out.
You also need to factor in how much the HOA fees are, and whether things like water, trash and sewer are included too.
 

Chino Kapone

Yo, whats wrong wit da beer we got?
Jun 10, 2005
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#12
How can he approve you for a $75k house on $24k annual income? Are you putting down a sizeable downpayment?

I would pay that off as soon as possible. Explaining away one tax lien can be seen as just a simple error, but having two of them starts to look like a pattern of deadbeatedness. If you were to charge it on a CC, it wouldn't even show up on your credit report for a couple of months probably anyway. Did you try making payment arrangements with the state? I don't think that would even show up on your credit report if you did it that way and they'd probably be happy with $100 a month.

You also need to factor in how much the HOA fees are, and whether things like water, trash and sewer are included too.
Yeah, I am calling the state tomorrow to see what my options are. I could pay it all off, but I am trying to get into a new place asap. I should've done this 3 months ago when the $6,000 checks were coming in. Whatever. Trash is included, HOA's I gotta find out all very good points.

I only have a $311 a month car payment and a $62 a month cc payment. That's how he can approve me, I guess. My DTI isn't that bad I guess, and my credit has jumped 30 points in the past couple months. He said paying off that tax lien will help my score skyrocket. I've seen him work some serious LEGAL magic helping people get approved. I just don't want that other tax lien to report. I really need to get out of my living situation for my mental health.
 

Don the Radio Guy

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#13
Do I have to say the obvious?

Someone making $24k probably shouldn't be buying.

However, the rule of thumb is 2.5 times your yearly salary. $75k is a stretch. Houses are money pits. Unless you have 20% to put down and an emergency fund, I'd back off the buy mentality for a while.
 

Norm Stansfield

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Mar 17, 2009
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#14
Rules of thumb should only be used when we don't feel like figuring out the specifics of a decision for ourselves. If you're investing this much of your income into something, you should forget about following rules of thumb and do the thinking yourself, instead.

Get all the info on how much this will cost you, add your expected (reasonably worst case scenario) other expenses to it, and see if they go over your income. Then you'll know if you can afford it or not. Not by applying some simplistic formula on what the "average buyer" should do. You know more about your own situation than someone who gives advice to the "average buyer", so you can figure out a better answer for yourself.

If you do the math, and you know you can pay more than 2.5 times your income, that just means you have fewer expenses than the average buyer. So you can ignore the rule of thumb, and go above 2.5.
 

lajikal

Registered User
Aug 6, 2009
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#15
Personally, i'd go with the cheapest possible place you'd be willing to live in (at least temporarily, like you plan on) as a first home. Newsflash! you're not gonna rich or have a sizable source of income from being a landlord, learned that the hard way.
 

Don the Radio Guy

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#16
Rules of thumb should only be used when we don't feel like figuring out the specifics of a decision for ourselves. If you're investing this much of your income into something, you should forget about following rules of thumb and do the thinking yourself, instead.

Get all the info on how much this will cost you, add your expected (reasonably worst case scenario) other expenses to it, and see if they go over your income. Then you'll know if you can afford it or not. Not by applying some simplistic formula on what the "average buyer" should do. You know more about your own situation than someone who gives advice to the "average buyer", so you can figure out a better answer for yourself.

If you do the math, and you know you can pay more than 2.5 times your income, that just means you have fewer expenses than the average buyer. So you can ignore the rule of thumb, and go above 2.5.
I dated a girl who made $35k and bought a $210k house. She was so desperate for help within a year that she had to get married to some schmuck based on his salary. Rules of thumb are there for a reason. People telling you to ignore those are the same people who base what they're buying on the payment and nothing else. Houses ALWAYS end up costing more than you think they will. Something will ALWAYS go wrong, and you're on the hook.

If you're going to go against the rule of thumb, err on the side of caution and go lower. And think about this. If you're buying a foreclosure, chances are the reason the prior owner lost that house is because he bought too much house for his salary.
 

whiskeyguy

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Jan 12, 2010
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#17
Personally, i'd go with the cheapest possible place you'd be willing to live in (at least temporarily, like you plan on) as a first home. Newsflash! you're not gonna rich or have a sizable source of income from being a landlord, learned that the hard way.
Yup, these days you're lucky if you break even with the house on a monthly basis and then have an asset that's mostly paid off down the line if you need more equity or decide to sell it.
 

OccupyWackbag

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Dec 12, 2011
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#18
My payment would be around $550 a month.
This is considerable less then it would cost to rent even a one bedroom apartment. Even making 24k if you have the credit wouldn't it make the most sense to pay a 550 a month mortgage on something that is yours or 900-1000 a month for someone elses place.

Even with property tax you are saving thousands a year.


EDIT: Don has a point. Parents just had some plumbing work done on their house. It was $7000. Maybe save 10-20k for repairs before signing that paper.
 

Don the Radio Guy

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#19
This is considerable less then it would cost to rent even a one bedroom apartment.
He doesn't live in the Northeast. 1BR apartments aren't $1000 a month. And for the $500 rent on a 1BR, you get maintenance, sewer and taxes paid.

Owning isn't always the best deal. It's a lifestyle decision.
 

Don the Radio Guy

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#20
Double.

While I'm at it, I'll just say that I wouldn't even THINK of buying a house until I was making more than $50k a year or had kids and needed the room. It's just too damn expensive.
 

OccupyWackbag

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Dec 12, 2011
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#21
He doesn't live in the Northeast. 1BR apartments aren't $1000 a month. And for the $500 rent on a 1BR, you get maintenance, sewer and taxes paid.

Owning isn't always the best deal. It's a lifestyle decision.
Fair enough but I doubt even in the sticks you can find a "decent" apartment for 500.

The best I ever did was an apartment in Silverdale, WA that was 800 a month for a two bedroom w/ fireplace, stainless steel appliances, and washer and dryer. Plus I got free watering for my balcony plants 300 days a year.
 

Chino Kapone

Yo, whats wrong wit da beer we got?
Jun 10, 2005
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#22
Double.

While I'm at it, I'll just say that I wouldn't even THINK of buying a house until I was making more than $50k a year or had kids and needed the room. It's just too damn expensive.
All very good points. Again, my salary is $24k a year... but when added with my commission... It's considerably more. I've made $45k this year, and had the month of June off from getting canned. They are going to change my pay at the beginning of the year to where it is all commission.... but a larger percentage overall. When they do that, then it will be much tougher to buy a place because federal guidelines mandate 2 years of pay... To approve me now, they will be taking the past 18 months salary into consideration instead of my commission. So to approve me the EASIEST they will be using just my salary.

It is impossible to find a decent place with a 'backyard' for under $800 a month around here. Hell, I could find $500 apartments all over the place, but I have a dog. I'm not going to do that to him.
 

Norm Stansfield

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#23
I dated a girl who made $35k and bought a $210k house. She was so desperate for help within a year that she had to get married to some schmuck based on his salary. Rules of thumb are there for a reason.
Yes, they are. I told you the reason, in the post above yours.
 

Don the Radio Guy

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#24
All very good points. Again, my salary is $24k a year... but when added with my commission... It's considerably more. I've made $45k this year, and had the month of June off from getting canned. They are going to change my pay at the beginning of the year to where it is all commission.... but a larger percentage overall. When they do that, then it will be much tougher to buy a place because federal guidelines mandate 2 years of pay... To approve me now, they will be taking the past 18 months salary into consideration instead of my commission. So to approve me the EASIEST they will be using just my salary.

It is impossible to find a decent place with a 'backyard' for under $800 a month around here. Hell, I could find $500 apartments all over the place, but I have a dog. I'm not going to do that to him.
Well if you're making more than what they base your ability to pay on, you should be ok. The part where I said buying was a lifestyle choice includes pets and back yards. If you make $45k a year, you should have no problem with a $550/month mortgage and still have enough left to put away for repairs. Just be ready for the inevitable, and you'll be fine.
 

Mikefrombx

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Jan 13, 2011
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#25
This is depressing for me I am looking in the new york city suburbs in the 400-500k range.

After talking with a few financial advisors the one common thread is get your credit score in good standing and have at least 15k for a repair fund. Just fyu good credit meaning better than 740,