Author Topic: Mortgage Musings  (Read 1634 times)

talltexan

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Mortgage Musings
« on: May 22, 2019, 07:53:36 AM »
My wife and I are looking to move up in house. Our current house is--if we can exercise patience in selling it--worth $300,000, and we owe $176,000 on it.

We're looking at houses in the $450-$550 K range, with there definitely being a premium for schools compared to where we currently live. The market here in Charlotte is pretty strong, and we'd like to exploit our ample savings to lock down the house we're buying without being constrained by selling our current house first.

We do have some other assets available:
1. a small taxable investment account with about $20,000
2. a larger taxable investment account with $250,000 in class-A mutual funds (we'd hate to sell these because of paying the load long ago when we invested the money; this account reliably generates $5000/yr in dividends)

What would you guys suggest for cobbling together the down payment for the new property, but also maximizing the potential for investment returns?

waltworks

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Re: Mortgage Musings
« Reply #1 on: May 22, 2019, 08:30:12 AM »
I'd just sell some stock, assuming the capital gains hit isn't too bad.

You can always do some really low DP loan and refi when your old house sells, of course.

You don't have any other assets available? I mean, if I were looking at half million dollar houses, in your shoes, I'd be hoarding up cash in a boring savings account. And if you can't save up $50-100k pretty fast (a year or two at most) you probably shouldn't be buying a $500k house in the first place.

-W

JLee

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Re: Mortgage Musings
« Reply #2 on: May 22, 2019, 08:36:51 AM »
Have you ran all the numbers for various down payment amounts?  In my case, my mortgage rate was actually lower with 5% down than it was with 20% down (low down payment homebuyer incentives in my state) and PMI was cheap enough ($87/mo) that I would prefer to keep the other $60k+ in the market instead of used as a down payment.

talltexan

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Re: Mortgage Musings
« Reply #3 on: May 22, 2019, 08:39:08 AM »
That's an interesting bit of information.

You may have seen from my other posts that I'm a proud member of the DNPYM group.

Telecaster

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Re: Mortgage Musings
« Reply #4 on: May 22, 2019, 04:48:35 PM »
Sell the mutual funds.  You are only going to be out of the market a short period of time, from the time you need the down payment until your other house is sold.   There may be a slight opportunity cost, but cash is king when it comes to real estate. 

Dicey

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Re: Mortgage Musings
« Reply #5 on: May 27, 2019, 10:49:47 AM »
Is this a trick question?
Re-fi the first property...
Or get the biggest HELOC possible...
Or borrow the money from a relative...
Or just suck it up and sell the first house first if you don't plan on keeping it.

Seems like you're going to have to pay a premium to do it the way you want to. The only question is who's going to get the premium? I'd be very disinclined to give it to the IRS.

SwordGuy

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Re: Mortgage Musings
« Reply #6 on: May 27, 2019, 10:57:21 AM »
Is a house that costs HALF A MILLION DOLLARS, or if you include interest costs THREE QUARTERS OF A MILLION DOLLARS really that much better than the house you have?


That's a lot of money that could be diverted towards FIRE...

Steeze

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Re: Mortgage Musings
« Reply #7 on: May 27, 2019, 12:59:38 PM »
I'd just sell some stock, assuming the capital gains hit isn't too bad.

You can always do some really low DP loan and refi when your old house sells, of course.

You don't have any other assets available? I mean, if I were looking at half million dollar houses, in your shoes, I'd be hoarding up cash in a boring savings account. And if you can't save up $50-100k pretty fast (a year or two at most) you probably shouldn't be buying a $500k house in the first place.

-W

@waltworks - do you have a rule of thumb for this? As in, donít by a house that is more than 5x-10x your annual savings? Would it only include saving outside of retirement accounts?

waltworks

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Re: Mortgage Musings
« Reply #8 on: May 27, 2019, 03:36:21 PM »
I'd just sell some stock, assuming the capital gains hit isn't too bad.

You can always do some really low DP loan and refi when your old house sells, of course.

You don't have any other assets available? I mean, if I were looking at half million dollar houses, in your shoes, I'd be hoarding up cash in a boring savings account. And if you can't save up $50-100k pretty fast (a year or two at most) you probably shouldn't be buying a $500k house in the first place.

-W

@waltworks - do you have a rule of thumb for this? As in, donít by a house that is more than 5x-10x your annual savings? Would it only include saving outside of retirement accounts?

There are a zillion rules of thumb for how much house you can afford, of course. Lending caps out at around 31% of pre-tax income, so if you make $100k a year, you could be spending $31k a year on a mortgage. At current rates, that would be somewhere in the ballpark of $500k (assuming some minimal DP loan).

That's a bit crazy, though, IMO. Post tax you are going to be blowing more like 50% of your take-home on the mortgage. Not a great formula to get to FIRE.

If we assume as 50% savings rate is the baseline FIRE goal, and you can minimize taxes to the extent that you take home $90k of that $100k (so budgeting $45k/year spend), I'd say you want to be spending no more than $1500/mo on your mortgage. Call it a $250k house give or take a bit for property tax and insurance rates. 

So Waltworks rule of thumb, at current interest rates: your maximum is 2.5x your annual pre-tax income. Obviously YMMV and you should run the numbers yourself, though.

-W

Dicey

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Re: Mortgage Musings
« Reply #9 on: May 27, 2019, 03:37:38 PM »
Is a house that costs HALF A MILLION DOLLARS, or if you include interest costs THREE QUARTERS OF A MILLION DOLLARS really that much better than the house you have?


That's a lot of money that could be diverted towards FIRE...
I love ya, SwordGuy, but there's no need to shout at him. $500k isn't the same thing everywhere.

SwordGuy

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Re: Mortgage Musings
« Reply #10 on: May 27, 2019, 08:39:28 PM »
Is a house that costs HALF A MILLION DOLLARS, or if you include interest costs THREE QUARTERS OF A MILLION DOLLARS really that much better than the house you have?


That's a lot of money that could be diverted towards FIRE...
I love ya, SwordGuy, but there's no need to shout at him. $500k isn't the same thing everywhere.

:)  Yeah, when I was in Addis Ababa, Ethiopia, it was worth more!

I put the amount in all caps because I see so many people just blythely commit to a bazillion dollar mortgages as if it was getting a hamburger on the $1 menu.   And it's not, it's a HUGE amount of money!

Dicey

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Re: Mortgage Musings
« Reply #11 on: May 27, 2019, 10:32:05 PM »
Is a house that costs HALF A MILLION DOLLARS, or if you include interest costs THREE QUARTERS OF A MILLION DOLLARS really that much better than the house you have?


That's a lot of money that could be diverted towards FIRE...
I love ya, SwordGuy, but there's no need to shout at him. $500k isn't the same thing everywhere.

:)  Yeah, when I was in Addis Ababa, Ethiopia, it was worth more!

I put the amount in all caps because I see so many people just blythely commit to a bazillion dollar mortgages as if it was getting a hamburger on the $1 menu.   And it's not, it's a HUGE amount of money!
Perspective matters. I literally couldn't buy anything but a very small condo in an older building with underfunded reserves and high HOA dues for that kind of money where I live. Alternatively, where we own our rentals, $500k is more than any of our spacious single family homes are worth. We would happily live in any of them. Does that make us smart in one location and stupid, er, not smart in the other? I don't think so.

Further, @talltexan is a regular over on the DPOYM thread. He strikes me as a reasonable guy. He is also clearly not a newb and doesn't deserve to be yelled at.

JLee

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Re: Mortgage Musings
« Reply #12 on: May 28, 2019, 08:27:10 AM »
Is a house that costs HALF A MILLION DOLLARS, or if you include interest costs THREE QUARTERS OF A MILLION DOLLARS really that much better than the house you have?


That's a lot of money that could be diverted towards FIRE...
I love ya, SwordGuy, but there's no need to shout at him. $500k isn't the same thing everywhere.

:)  Yeah, when I was in Addis Ababa, Ethiopia, it was worth more!

I put the amount in all caps because I see so many people just blythely commit to a bazillion dollar mortgages as if it was getting a hamburger on the $1 menu.   And it's not, it's a HUGE amount of money!

I live in northern NJ...here's a $449k house close to where I live.

https://www.zillow.com/homedetails/650-7th-St-Lyndhurst-NJ-07071/37952138_zpid/

Yes, it's a lot...but depending where you are (and what incomes are), it's a lot less than it seems from the outside.

Dicey

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Re: Mortgage Musings
« Reply #13 on: May 28, 2019, 09:20:13 AM »
Is a house that costs HALF A MILLION DOLLARS, or if you include interest costs THREE QUARTERS OF A MILLION DOLLARS really that much better than the house you have?


That's a lot of money that could be diverted towards FIRE...
I love ya, SwordGuy, but there's no need to shout at him. $500k isn't the same thing everywhere.

:)  Yeah, when I was in Addis Ababa, Ethiopia, it was worth more!

I put the amount in all caps because I see so many people just blythely commit to a bazillion dollar mortgages as if it was getting a hamburger on the $1 menu.   And it's not, it's a HUGE amount of money!

I live in northern NJ...here's a $449k house close to where I live.

https://www.zillow.com/homedetails/650-7th-St-Lyndhurst-NJ-07071/37952138_zpid/

Yes, it's a lot...but depending where you are (and what incomes are), it's a lot less than it seems from the outside.
OMG, the property taxes are nearly $9k on a value of $300k. So the new owner will be paying about $13.5k?? I've heard NJ taxes are killer. And apropos of nothing, oy vey, so much clutter!

JLee

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Re: Mortgage Musings
« Reply #14 on: May 28, 2019, 09:43:37 AM »
Is a house that costs HALF A MILLION DOLLARS, or if you include interest costs THREE QUARTERS OF A MILLION DOLLARS really that much better than the house you have?


That's a lot of money that could be diverted towards FIRE...
I love ya, SwordGuy, but there's no need to shout at him. $500k isn't the same thing everywhere.

:)  Yeah, when I was in Addis Ababa, Ethiopia, it was worth more!

I put the amount in all caps because I see so many people just blythely commit to a bazillion dollar mortgages as if it was getting a hamburger on the $1 menu.   And it's not, it's a HUGE amount of money!

I live in northern NJ...here's a $449k house close to where I live.

https://www.zillow.com/homedetails/650-7th-St-Lyndhurst-NJ-07071/37952138_zpid/

Yes, it's a lot...but depending where you are (and what incomes are), it's a lot less than it seems from the outside.
OMG, the property taxes are nearly $9k on a value of $300k. So the new owner will be paying about $13.5k?? I've heard NJ taxes are killer. And apropos of nothing, oy vey, so much clutter!

Yep. My house ($440k) is nearly $14k.

BlueHouse

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Re: Mortgage Musings
« Reply #15 on: May 28, 2019, 09:47:01 AM »

You can always do some really low DP loan and refi when your old house sells, of course.


This is exactly why most banks offer 1 free re-cast.  Speak with your mortgage banker.  Explain the situation.  You're not the first person to go through this and they make allowances for this. 

Put down what you have now as a downpayment.  Sell First house at leisure.  Use equity from first house to make a payment on new house.  Free recast.  All mortgage terms stay the same (rate and term), they just reamortize so your payments go down. 

waltworks

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Re: Mortgage Musings
« Reply #16 on: May 28, 2019, 09:47:40 AM »
There are places in NJ that pop up all the time that newbie RE investors get really excited about - "ZOMG $80k for a place that rents for $1500 a mo!"

Then they see the property taxes and realize it's a money loser even while smashing the 1% rule. There are places in NJ that basically are impossible to sell because of the property taxes at this point.

-W

talltexan

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Re: Mortgage Musings
« Reply #17 on: May 28, 2019, 02:27:30 PM »
Is a house that costs HALF A MILLION DOLLARS, or if you include interest costs THREE QUARTERS OF A MILLION DOLLARS really that much better than the house you have?


That's a lot of money that could be diverted towards FIRE...
I love ya, SwordGuy, but there's no need to shout at him. $500k isn't the same thing everywhere.

:)  Yeah, when I was in Addis Ababa, Ethiopia, it was worth more!

I put the amount in all caps because I see so many people just blythely commit to a bazillion dollar mortgages as if it was getting a hamburger on the $1 menu.   And it's not, it's a HUGE amount of money!
Perspective matters. I literally couldn't buy anything but a very small condo in an older building with underfunded reserves and high HOA dues for that kind of money where I live. Alternatively, where we own our rentals, $500k is more than any of our spacious single family homes are worth. We would happily live in any of them. Does that make us smart in one location and stupid, er, not smart in the other? I don't think so.

Further, @talltexan is a regular over on the DPOYM thread. He strikes me as a reasonable guy. He is also clearly not a newb and doesn't deserve to be yelled at.

Thank you, apologies for not posting for a couple days.

I will own that I may not need every bit of a $500,000 house. The question is whether I can change housing and improve my family's quality of life:

  • shorter distance to #1 destination for my family's trip, the house where my wife's parents live
  • Superior school to where my daughter attends now (my son still has one more year left of pre-school)
  • Closer to gym, sporting activities, and library
  • access to a bus stop to replace my own car commute downtown

These sound like Mustachian values to me. Less time in a car getting to these things should pay off over time. I will accept that I can have these and spend less than $500,000, but there are also certain house characteristics that will improve my family's utility in the property. You may well take issue with this second part, and I will own that we aren't exactly mustachian with our consumption of home space.

And don't worry, @Dicey, I will be holding true to the DNPYM lifestyle with these new property!

Dicey

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Re: Mortgage Musings
« Reply #18 on: May 28, 2019, 02:49:31 PM »
Is a house that costs HALF A MILLION DOLLARS, or if you include interest costs THREE QUARTERS OF A MILLION DOLLARS really that much better than the house you have?


That's a lot of money that could be diverted towards FIRE...
I love ya, SwordGuy, but there's no need to shout at him. $500k isn't the same thing everywhere.

:)  Yeah, when I was in Addis Ababa, Ethiopia, it was worth more!

I put the amount in all caps because I see so many people just blythely commit to a bazillion dollar mortgages as if it was getting a hamburger on the $1 menu.   And it's not, it's a HUGE amount of money!

I live in northern NJ...here's a $449k house close to where I live.

https://www.zillow.com/homedetails/650-7th-St-Lyndhurst-NJ-07071/37952138_zpid/

Yes, it's a lot...but depending where you are (and what incomes are), it's a lot less than it seems from the outside.
OMG, the property taxes are nearly $9k on a value of $300k. So the new owner will be paying about $13.5k?? I've heard NJ taxes are killer. And apropos of nothing, oy vey, so much clutter!

Yep. My house ($440k) is nearly $14k.
Holy shit! We pay nearly $12k, but our house is worth $1.4M. That's nuts!

waltworks

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Re: Mortgage Musings
« Reply #19 on: May 28, 2019, 03:40:19 PM »
I pay about $3k a year on a house worth $900k. :P

-W

cloudsail

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Re: Mortgage Musings
« Reply #20 on: May 28, 2019, 05:13:07 PM »
There are places in NJ that pop up all the time that newbie RE investors get really excited about - "ZOMG $80k for a place that rents for $1500 a mo!"

Then they see the property taxes and realize it's a money loser even while smashing the 1% rule. There are places in NJ that basically are impossible to sell because of the property taxes at this point.

-W

I don't mean to hijack the thread, but I've noticed this with many places that have high property tax. I mean, I've always only lived in places with a little over 1%, and I wasn't the only one who felt like we were paying rent to the government on property that we supposedly "own". I can't imagine paying double or triple that amount. What is the incentive to even own property at all in those places? On top of the cost of the property and maintenance, you're paying a tax that's almost equal to rent. Also, property taxes also seem to be something that is never up for debate during local elections. Surely if some candidate pledged to lower property taxes, they'd be wildly popular?

SwordGuy

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Re: Mortgage Musings
« Reply #21 on: May 28, 2019, 08:36:34 PM »
Just wanted to make sure you had really thought it thru!   Glad to know you have!

JLee

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Re: Mortgage Musings
« Reply #22 on: May 28, 2019, 09:30:23 PM »
There are places in NJ that pop up all the time that newbie RE investors get really excited about - "ZOMG $80k for a place that rents for $1500 a mo!"

Then they see the property taxes and realize it's a money loser even while smashing the 1% rule. There are places in NJ that basically are impossible to sell because of the property taxes at this point.

-W

I don't mean to hijack the thread, but I've noticed this with many places that have high property tax. I mean, I've always only lived in places with a little over 1%, and I wasn't the only one who felt like we were paying rent to the government on property that we supposedly "own". I can't imagine paying double or triple that amount. What is the incentive to even own property at all in those places? On top of the cost of the property and maintenance, you're paying a tax that's almost equal to rent. Also, property taxes also seem to be something that is never up for debate during local elections. Surely if some candidate pledged to lower property taxes, they'd be wildly popular?

Taxes are high because our school systems cost a fortune ($20k/yr per student).  You still pay it when you rent..it's just obfuscated by the landlord.

talltexan

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Re: Mortgage Musings
« Reply #23 on: May 29, 2019, 08:05:54 AM »
In Ohio, we lived in a really good system, and paid about $5,400 annually on a $340,000 house.

Here in NC, the whole state is basically a bad school system, and we pay about $3,300 annually on a $300,000 house.

Kierun

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Re: Mortgage Musings
« Reply #24 on: May 29, 2019, 10:38:39 AM »
Damn, I'm at about $3.5k on a $950k house.  I hope our property taxes don't rise to those levels.

waltworks

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Re: Mortgage Musings
« Reply #25 on: May 29, 2019, 11:17:27 AM »
Damn, I'm at about $3.5k on a $950k house.  I hope our property taxes don't rise to those levels.

You and I both live in places where tourist money pays for local goverment/services. Unless people stop liking the beach or skiing, we should both be ok.

-W

Kierun

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Re: Mortgage Musings
« Reply #26 on: June 06, 2019, 12:05:08 PM »
Damn, I'm at about $3.5k on a $950k house.  I hope our property taxes don't rise to those levels.

You and I both live in places where tourist money pays for local goverment/services. Unless people stop liking the beach or skiing, we should both be ok.

-W
Honolulu just approved to raise the property tax on hotels and resorts as well as non-owner occupied properties valued >$1M, so spot on. 

robartsd

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Re: Mortgage Musings
« Reply #27 on: June 06, 2019, 12:49:22 PM »
Holy shit! We pay nearly $12k, but our house is worth $1.4M. That's nuts!
Is 1.4M your tax assessment value or your FMV?

My taxes are 2.1K on 182k assessed value. FMV after 3 years of ownership is probably 215k.

affordablehousing

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Re: Mortgage Musings
« Reply #28 on: June 06, 2019, 03:26:07 PM »
Prop 13 baby! Helping keep California housing unaffordable since 1978. This is a big part of what keeps the state divided into the geriatric hippies living for free and the new money millennials that keep the state running.

Dicey

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Re: Mortgage Musings
« Reply #29 on: June 06, 2019, 04:52:42 PM »
Holy shit! We pay nearly $12k, but our house is worth $1.4M. That's nuts!
Is 1.4M your tax assessment value or your FMV?

My taxes are 2.1K on 182k assessed value. FMV after 3 years of ownership is probably 215k.
Prop 13 baby! Helping keep California housing unaffordable since 1978. This is a big part of what keeps the state divided into the geriatric hippies living for free and the new money millennials that keep the state running.
Yup. We paid $928k in 2013. Property tax increases are capped at something like 1.5-2% per year. Current assessment is $999,795. Taxes on that are just shy of $12k. Of course, there's other crap in the tax boll, but that's how big a check we have to write. Thank you, Sam Hiyakawa. If we lived in Texas or NJ, we'd live in a shoebox. Well, maybe not Texas  everything's bigger there. FMV only gets ratcheted up when a property changes hands, unless it's inherited. Then it stays the same, which is nuts.

robartsd

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Re: Mortgage Musings
« Reply #30 on: June 07, 2019, 09:38:41 AM »
FMV only gets ratcheted up when a property changes hands, unless it's inherited. Then it stays the same, which is nuts.
Yep, my dad inherited the house he grew up in free and clear with a 1941 tax basis. He took out a HELOC and died enough underwater that even with the tax advantage (I estimated the NPV of the tax advantage at about $10k) it wasn't worth redeeming. I do think it was probably a good deal for whoever got it at the foreclosure auction. Most of the flooring, kitchen appliances, one window, one interior door, and the back steps/deck needed replacing; but otherwise I believe the house was in excellent shape with a jetted tub in the bathroom and spa in the back yard. If I had access to the capital needed, I might have participated in the foreclosure auction myself. After repairs the house sold for $213k.

Dicey

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Re: Mortgage Musings
« Reply #31 on: June 07, 2019, 07:22:15 PM »
FMV only gets ratcheted up when a property changes hands, unless it's inherited. Then it stays the same, which is nuts.
Yep, my dad inherited the house he grew up in free and clear with a 1941 tax basis. He took out a HELOC and died enough underwater that even with the tax advantage (I estimated the NPV of the tax advantage at about $10k) it wasn't worth redeeming. I do think it was probably a good deal for whoever got it at the foreclosure auction. Most of the flooring, kitchen appliances, one window, one interior door, and the back steps/deck needed replacing; but otherwise I believe the house was in excellent shape with a jetted tub in the bathroom and spa in the back yard. If I had access to the capital needed, I might have participated in the foreclosure auction myself. After repairs the house sold for $213k.
Wow! Where was it?

robartsd

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Re: Mortgage Musings
« Reply #32 on: June 11, 2019, 10:19:31 AM »
FMV only gets ratcheted up when a property changes hands, unless it's inherited. Then it stays the same, which is nuts.
Yep, my dad inherited the house he grew up in free and clear with a 1941 tax basis. He took out a HELOC and died enough underwater that even with the tax advantage (I estimated the NPV of the tax advantage at about $10k) it wasn't worth redeeming. I do think it was probably a good deal for whoever got it at the foreclosure auction. Most of the flooring, kitchen appliances, one window, one interior door, and the back steps/deck needed replacing; but otherwise I believe the house was in excellent shape with a jetted tub in the bathroom and spa in the back yard. If I had access to the capital needed, I might have participated in the foreclosure auction myself. After repairs the house sold for $213k.
Wow! Where was it?
The house is a small 720 sq. ft. 2 bed/1 bath in Sacramento's Ben Ali neighborhood. I believe my grandfather purchased the house when the area was first developed.

Dicey

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Re: Mortgage Musings
« Reply #33 on: June 11, 2019, 02:23:01 PM »
FMV only gets ratcheted up when a property changes hands, unless it's inherited. Then it stays the same, which is nuts.
Yep, my dad inherited the house he grew up in free and clear with a 1941 tax basis. He took out a HELOC and died enough underwater that even with the tax advantage (I estimated the NPV of the tax advantage at about $10k) it wasn't worth redeeming. I do think it was probably a good deal for whoever got it at the foreclosure auction. Most of the flooring, kitchen appliances, one window, one interior door, and the back steps/deck needed replacing; but otherwise I believe the house was in excellent shape with a jetted tub in the bathroom and spa in the back yard. If I had access to the capital needed, I might have participated in the foreclosure auction myself. After repairs the house sold for $213k.
Wow! Where was it?
The house is a small 720 sq. ft. 2 bed/1 bath in Sacramento's Ben Ali neighborhood. I believe my grandfather purchased the house when the area was first developed.
I think I found it. Are the last two digits of the address are the same?

If so, the taxes were $451 under the original owner. Now they've almost quadrupled to $1648. Isn't California great? Also, I think you were wise not to take this project on. There wasn't much meat on that bone.

robartsd

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Re: Mortgage Musings
« Reply #34 on: June 11, 2019, 03:29:53 PM »
FMV only gets ratcheted up when a property changes hands, unless it's inherited. Then it stays the same, which is nuts.
Yep, my dad inherited the house he grew up in free and clear with a 1941 tax basis. He took out a HELOC and died enough underwater that even with the tax advantage (I estimated the NPV of the tax advantage at about $10k) it wasn't worth redeeming. I do think it was probably a good deal for whoever got it at the foreclosure auction. Most of the flooring, kitchen appliances, one window, one interior door, and the back steps/deck needed replacing; but otherwise I believe the house was in excellent shape with a jetted tub in the bathroom and spa in the back yard. If I had access to the capital needed, I might have participated in the foreclosure auction myself. After repairs the house sold for $213k.
Wow! Where was it?
The house is a small 720 sq. ft. 2 bed/1 bath in Sacramento's Ben Ali neighborhood. I believe my grandfather purchased the house when the area was first developed.
I think I found it. Are the last two digits of the address are the same?

If so, the taxes were $451 under the original owner. Now they've almost quadrupled to $1648. Isn't California great? Also, I think you were wise not to take this project on. There wasn't much meat on that bone.
Sounds about right. It did sell for a higher post renovation price than I expected (though foreclosure took longer too). I haven't found out how much the house went for at foreclosure auction.

Zamboni

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Re: Mortgage Musings
« Reply #35 on: June 11, 2019, 03:38:37 PM »
Here in NC, the whole state is basically a bad school system, and we pay about $3,300 annually on a $300,000 house.

Okay, that made me laugh. . . .you have accurately summed up NC public education in one phrase.

Dicey

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Re: Mortgage Musings
« Reply #36 on: June 11, 2019, 03:54:25 PM »
FMV only gets ratcheted up when a property changes hands, unless it's inherited. Then it stays the same, which is nuts.
Yep, my dad inherited the house he grew up in free and clear with a 1941 tax basis. He took out a HELOC and died enough underwater that even with the tax advantage (I estimated the NPV of the tax advantage at about $10k) it wasn't worth redeeming. I do think it was probably a good deal for whoever got it at the foreclosure auction. Most of the flooring, kitchen appliances, one window, one interior door, and the back steps/deck needed replacing; but otherwise I believe the house was in excellent shape with a jetted tub in the bathroom and spa in the back yard. If I had access to the capital needed, I might have participated in the foreclosure auction myself. After repairs the house sold for $213k.
Wow! Where was it?
The house is a small 720 sq. ft. 2 bed/1 bath in Sacramento's Ben Ali neighborhood. I believe my grandfather purchased the house when the area was first developed.
I think I found it. Are the last two digits of the address are the same?

If so, the taxes were $451 under the original owner. Now they've almost quadrupled to $1648. Isn't California great? Also, I think you were wise not to take this project on. There wasn't much meat on that bone.
Sounds about right. It did sell for a higher post renovation price than I expected (though foreclosure took longer too). I haven't found out how much the house went for at foreclosure auction.
If I have the right property, it went for $143,100 on 8/27/18. Subsequently sold for $213K on 1/11/2019.  Again, after costs, not a lot of meat on that bone. If you poke around, there's a site that still has listing pictures. PM me if you can't find it.