Mortgage Test

I went to my lo­cal 53 branch in Tremont yes­ter­day and sat down with a very nice wom­an who agreed to help me learn about house-buy­ing pro­ce­dures and hoop-jump­ing, the var­i­ous pro­grams that 53 has avail­able and how much I could get a home loan for at my present salary. I learned about orig­i­na­tion fees [fees charged by lenders for pro­cess­ing the loan pa­per­work], clos­ing costs [ap­praisal, ti­tle work, coun­ty record­ing fees, cred­it check, etc] and pre-paids [in­ter­est, prop­er­ty tax­es, homeowner’s in­sur­ance] which are all rolled-in to the mort­gage on top of the cost of the house. I learned that prop­er­ty tax­es are paid in ar­rears and that all in­ter­est on loans is tax de­ductible. Since I on­ly have a stu­dent loan I thought on­ly that in­ter­est was tax de­ductible be­cause I was a stu­dent. I learned about var­i­ous meth­ods of mort­gage pay­ment, in­clud­ing a bi­week­ly half-pay­ment sys­tem that re­sults in an ex­tra house-pay­ment per year and can save up to $30k and 6 years of pay­ments on the life of a 30-year mort­gage. I learned that with most mort­gages you end up pay­ing al­most twice the val­ue of the home over the length of the mort­gage. I learned how ap­prais­ers come up with the val­ue of a home. I learned that if you’re pur­chas­ing a home from a re­al­tor, it is wise to bring your own re­al­tor to the ta­ble to rep­re­sent your best in­ter­ests. As an in­dus­try cour­tesy re­al­tors will split the com­mis­sion on a home and since this com­mis­sion is paid by the sell­er, I would be get­ting some cash for my re­al­tor with­out pay­ing for it my­self.

Then we did the num­ber-crunch­ing. I learned about Dinkytown, a site where you can cal­cu­late mort­gage pay­ments and just about any oth­er type of fi­nan­cial cal­cu­la­tion. Even at my pay-lev­el, un­der $29k a year, I could get a loan from 53 with ze­ro down and 100% fi­nanc­ing with no mort­gage in­sur­ance for $110k. This is cal­cu­lat­ed from my gross year­ly in­come. Calculating from my net in­come, I could get at $70k loan. The $70k loan makes much more sense to me than stretch­ing my­self as thin as I would have to do for the $110k ver­sion. Good luck find­ing a house in Tremont for ei­ther of those prices. But then, I’m go­ing to do my re­search on that as well. I rode my bike around the neigh­bor­hood to­day and made a list of the ad­dress­es of all the homes that are for sale. Then I can go to the Cuyahoga County Auditor’s site and look up the trans­ac­tion in­for­ma­tion for the ad­dress­es of the hous­es for sale. Once I get the parcel num­ber, I can then go to the County Recorder’s site and see the ac­tu­al mort­gage in­for­ma­tion on the home. From this I can es­ti­mate how much they’ll be ask­ing for the house, and can de­ter­mine whether or not it’ll be worth my time to call them. Of course, it would be faster to just call up all the places, but I wouldn’t learn as much.

As it stands I don’t think I can af­ford a house right now any­way. But by the time I get a bet­ter job, I’ll be for­mi­da­bly in­formed.

3 thoughts on “Mortgage Test

  1. Good luck with the house hunt­ing. We took 3 – 4 months to find our house. One of the things I learned in the whole thing is that you can like the out­side of a house, you can like the lo­ca­tion, but if you hate the lay­out or any­thing else about the in­side, don’t both­er.

    My on­ly re­gret in the whole thing was not get­ting a house with a garage. It seems our van has be­come tar­get prac­tice for every bird in the neigh­bor­hood.

  2. It looks like I’m not go­ing to be able to af­ford a damn thing in Tremont. Some of the prop­er­ties have ap­pre­ci­at­ed $120k [×10 the orig­i­nal val­ue] in the last decade.

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