Author Topic: First-Time Hombuyer Needs Advice  (Read 1611 times)

joer1212

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First-Time Hombuyer Needs Advice
« on: December 21, 2016, 12:01:34 PM »
What is my best option for purchasing a $50,000 (fifty-thousand) house?

Details:

- I don't want a 15-year mortgage, because I'd like to pay this house off in 3-5 years & save on interest payments

- I have a net worth of over $400,000, but almost all of this money is tied up in retirement accounts (401(k), 457(b), etc) and in taxable brokerage accounts that are invested in the stock market.

- I don't want to liquidate stock shares from my brokerage accounts because of the tax consequences (and I won't sell when my portfolio is down)

- I only have about 12k in liquid cash in a savings account, but I use this money for living expenses and emergencies.


Do low-interest (~5%) short-term mortgages exist?

If not, is it wise to apply for a 50k personal loan from a credit union (most banks don't offer personal loans greater than about 5k)?

Any other options?

Bobberth

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Re: First-Time Hombuyer Needs Advice
« Reply #1 on: December 21, 2016, 02:45:01 PM »
The best way to buy a $50k house is with cash. Most banks won't lend less than $100k on a mortgage but a few will loan down to $50k. That's the loan balance, so you're probably looking at a $56k purchase price to get a $50k loan after down payment. You may be able to find a local bank that will do a small loan for this but it will take phone calls and hitting the pavement and you would probably be looking at 5% minimum if not more like 6% interest rates. I have some commercial loans for around this amount on rental properties. Not sure if you could work with a commercial lender for a place you will live in but mine are 5.5% 5 year balloon with a 20 year amortization which might be right up your alley. 

How big is your taxable account? You may be able to margin your account and take the cash out to purchase the house if your account balance is big enough to facilitate that.

joer1212

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Re: First-Time Hombuyer Needs Advice
« Reply #2 on: December 22, 2016, 12:58:44 AM »
How big is your taxable account? You may be able to margin your account and take the cash out to purchase the house if your account balance is big enough to facilitate that.

My taxable account is about 188k.
How does margining an account work?

waltworks

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Re: First-Time Hombuyer Needs Advice
« Reply #3 on: December 22, 2016, 02:18:12 AM »
Derp, sell some stock from the taxable account. Your portfolio should not be "down" right now anyway. Tax consequences are pretty minimal especially if you're in a low enough bracket to avoid capital gains.

If owning the house is a good move (for financial or other reasons) then it's a good move. If it's not, it's not. But refusing to sell stock is just dumb - that's the whole point of having money (regardless of what form it comes in) - to purchase the things you need.

-W

adamcollin

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Re: First-Time Hombuyer Needs Advice
« Reply #4 on: December 22, 2016, 03:19:55 AM »
Getting a loan through credit union is a good decision.

Metric Mouse

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Re: First-Time Hombuyer Needs Advice
« Reply #5 on: December 22, 2016, 03:27:36 AM »
Getting a loan through credit union is a good decision.

And the longer the term and lower the rate the better.

Drifterrider

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Re: First-Time Hombuyer Needs Advice
« Reply #6 on: December 22, 2016, 05:40:04 AM »
What is my best option for purchasing a $50,000 (fifty-thousand) house?

Details:

- I don't want a 15-year mortgage, because I'd like to pay this house off in 3-5 years & save on interest payments

- I have a net worth of over $400,000, but almost all of this money is tied up in retirement accounts (401(k), 457(b), etc) and in taxable brokerage accounts that are invested in the stock market.

- I don't want to liquidate stock shares from my brokerage accounts because of the tax consequences (and I won't sell when my portfolio is down)

- I only have about 12k in liquid cash in a savings account, but I use this money for living expenses and emergencies.


Do low-interest (~5%) short-term mortgages exist?

If not, is it wise to apply for a 50k personal loan from a credit union (most banks don't offer personal loans greater than about 5k)?

Any other options?

Why do you want a $50K house and not a $40K house (or do you mean, you've found a house you want to buy and it cost $50K?)

Do the math for the best loan terms available (including any points, fees, etc).  If you really can pay the loan in just a few years, look at 5/1 or 7/1 ARMS.  If you don't really understand an ARM (Adjustable Rate Mortgage) STAY AWAY FROM THEM.

Not too long ago I found a 5/1 ARM at 2.5%.  Sounds good right?  Then I looked at the fees.  Not such a good deal.

Do the math.

joer1212

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Re: First-Time Hombuyer Needs Advice
« Reply #7 on: December 22, 2016, 11:59:37 AM »
Why do you want a $50K house and not a $40K house (or do you mean, you've found a house you want to buy and it cost $50K?)

I figured I can get a house for about 30-40k in the area I'm looking, and then use the remaining money do do some fix ups.

joer1212

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Re: First-Time Hombuyer Needs Advice
« Reply #8 on: December 22, 2016, 12:32:19 PM »
Are there personal loans that offer a deferment of, say, 6 mo to 1 yr, or must monthly payments commence immediately after the loan is made?
« Last Edit: December 23, 2016, 09:34:38 AM by joer1212 »