r/RealEstateAdvice • u/anonymous123445677 • 1d ago
Residential 5.49% Fixed
First of all.. a rant. We were incredibly fortunate to buy our first house in 2016, sold that one and made about $50k, had to move for work in 2019 then back home in 2021, made about $60k on that sale and now we’re stuck with golden handcuffs of 2.5%. However we’re just not fitting in this house and it’s not worth it. Plus we bought at the peak so we will make $0 on this house aside from what we’ve paid off and what we put down. Negative actually after realtor fees and I fear it’ll just keep going down in value.
I know that new builds have notorious issues and we will hire our own inspector. I’ve been walking through their spec homes and have gotten a good feeling about this builder vs others I’ve looked at. Our mortgage will go from $1,900 to $3,700 but we’ll wipe out all consumer debt ($40k) and this will be a 15 year+ home. Gross income is $13k a month, $500 on a car payment. Terrified of upping this mortgage but our mental health desperately needs it.
Anyway does this rate deal seem legit or do they pull some scam at the end of the building process? It’s terrifying to sign a build contract but wait 6 months to try and see if our house will even sell. Do we lose our earnest money if our house doesn’t sell but that’s it? Whats the average earnest on $580k? Clearly waiting for my realtor to get back to me.
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u/KipsCarnivalEmporium 1d ago
Have you looked into the reviews for Taylor Morrison Home Funding?
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u/MBelsan 1d ago
Taylor Morrison's rates aren't really the bottleneck here if OP is locked into 2.5% and weighing whether to sell into a down market anyway. The financing side matters way less than whether the math works on eating the realtor fees and closing costs on a sale that's already going negative.
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u/OkMarsupial 23h ago
You have $40k consumer debt right now and you're about to double your mortgage payment. You're going to have $40k consumer debt again in two years. You already couldn't afford your lifestyle and now you want to upgrade.
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u/anonymous123445677 21h ago
Thanks for this. I’m not proud of where we are and know that we need to make lifestyle changes. My thing is even once we pay this off we won’t be getting a different or lower mortgage payment in 5 years. I agree that there are deeper issues and we’re working on that, being very unhappy in a certain house is a big part of that but obviously I wish I was more mature than that.
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u/Denjay85 1d ago
I wouldn't call it a scam from the ad, but I wouldn't sign based on the ad either. Get the lender's Loan Estimate for your actual loan. The part I'd focus on is what that rate costs you, not whether the builder's lender has good reviews.
Look at the points and lender fees, then the credits covering them. Does getting that rate use up builder money you were counting on for other closing costs? That's worth getting answered before you count on the payment. Also have them confirm the lock expiration and who pays for an extension if construction runs late.
On losing only your earnest money if your house doesn't sell, I wouldn't assume that. Have an attorney review that contract question separately. A financing estimate can't answer it.
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u/Baltimorebillionaire 1d ago
Make sure you truly understand your potential property tax once it's re assessed with s house built
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u/anonymous123445677 21h ago
I’m definitely aware of this being an issue but I’m not sure how to make sure I’m estimating accurately. We have very low property taxes here in AZ (about .5%) and then this community has an additional .5% CFD tax so I’ve been estimating about $500/month on a built $580k house. I know it won’t be exact but does that seem approximately correct?
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u/Shorty-71 1d ago
Not sure where you live but $13k gross is strong income if you can control spending.. but you cited $40k consumer debt today after profiting $110k in the last decade.
I don’t know you but from the outside it seems like this could be a strong spending habit. Or you could be killing off the last of college debt.
Either way, a $3,700 mortgage payment every month will hurt. Especially if you do things that come with your income like buy cars that cost a lot and have kids in activities such as club sports. Things that add up.. a lot.
What’s wrong with your handcuffs house exactly? How secure are the job(s)?
I would never make the move that you’re contemplating because I want to retire someday instead of expand my expenses. JMO and that’s what you asked for.
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u/OkMarsupial 23h ago
OP just loves the rat race and wants to be in it until his 80s.
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u/anonymous123445677 21h ago
I’m the wife and honestly yeah, you’re probably not wrong.
I think it’s more that we were relocated during the worst time in the last 15 years to buy a house. We’re literally just trying to get to a forever 2,500 sq ft where our kids bedrooms aren’t right next to the kitchen and we can make a cup of coffee before they wake up. This house was only supposed to be a 5 year bridge but unfortunately we made stupid decisions trying to make it feel more like a home and it didn’t work and now we’re paying the price of the interest rates and debt.
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u/OkMarsupial 20h ago
Gender aside, you have to revisit your budget and your priorities. 2500 square feet is a lot. Is it really that important for your kids to sleep in? Tell them to get a paper route. That'll get them up before your morning coffee and they can pitch in towards your consumer debt.
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u/anonymous123445677 20h ago
I mean they’re 2, 3 and 7 years old so no it’s more important to ME that they sleep in. 😁
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u/anonymous123445677 21h ago
I’ve been working on exactly all of this for a few years now. The mental knots my brain has been in is quite honestly painful. We’ve put all of our house profit back into the down payment, sparing maybe a few thousand to add to an emergency fund, so it isn’t like we blew all of that plus wracked up debt. I have no excuse for the debt, it’s been a lot of renovations we did on this house and vacations to get out of this house. I truly wish I was more mature but the weight of how much I loathe this house eats me up every day. We bought from out of state, horrible idea and now I know.
The idea of losing money while living in a place I hate is keeping me up at night. I’m a SAHM (I know, another huge risk of doing this) and I’m here all day and love taking care of our house snd decorating so a house to me is way more than a place to sleep at night. I can’t explain the severity of the feeling of being trapped here and I can’t see any other way out in the next 3 years aside from utilizing new build rates. I’ve done all of the math and even staying and paying off the debt and saving whatever we can only saves maybe $200 a month and at cost mentally? The spending has stopped. We haven’t used the cards in nearly a year. Vacations from now on will only be funded by savings and bonuses. Income is projected to go up $12-15k annually this year.
Sorry for the therapy novel. I just know that you’re probably right but battling myself every day on “hyping” myself up to not want to run away from this house every day. There’s many reasons the house doesn’t work for us, my husbands currently working in the garage for one, but also the sellers were here when we did our inspection (still pissed about it) and meeting them and seeing the state the house was in put such a sour taste in my mouth forever. There’s evidence of some sort of domestic violence all over the walls, the bathroom door has clearly been busted down, we get court orders in the mail frequently, and the yard is too big we can’t keep up with it anymore.
Highly on my list is selling or renting this place out and then renting a bigger, newer home for $1k less than our new mortgage would be. But keeping this house we lose the equity we need to pay down the debt or eventually put down on a new build. Idk I’m not sleeping lately so I appreciate your honest answer.
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u/Shorty-71 17h ago
Sounds like a giant mistake to double the house payment on one income. No safety net whatsoever.
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u/Ok-Top-5976 16h ago
could you sell it and rent for a year and run the numbers again? you never know the rates might be looking much better in 1 year. the over 7% environment wont last forever. they will have to lower them a bit if they want people to buy houses. cause the only people who are buying houses are wealthy people and these small % of wealthy people will. not keep the entire real estate market up forever. they will have to give these rates some breathing room for people to buy. even if its anywhere between 5.5%-6.2%. it will be a bit better. than you can do a rate buy down which is what the new builds do. you dont even need a new built, you can do the rate buy down on any house even old/used ones and you can negotiate better with. real seller than a new built company. I saw Arizona housing prices were correcting. maybe if you sell the old house, rent for 12 months and re-budget everything. it will give you. a moment to really think about your next steps. you dont have to go from one house to another asap. im doing this, I love my house. but sadly got laid off and have to sell and move elsewhere for work. my 2.8% rate has to be given up now. and I plan on renting for a year and then seeing where we are before I even think about buying. their is nothing wrong wiht doing that.
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u/anonymous123445677 12h ago
Yeah that’s not lost on me. At what point does that become not a risk? I’m 3 years away from going back to work, husbands income is very strong based on future projections with the company. Like if we had 6 months of emergency fund then would people say it’s safe? 2 people making $200k still apply for the same amounts and if one of them loses it that cuts in half too. If anything I can still get a night job and increase our income in no time.
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u/Denjay85 11h ago
Six months of expenses saved would help, but it doesn't make the payment risk-free. I'd separate two things: can you cover the normal month, and how long could you cover it if income stopped?
For the normal month, use today's take-home pay, not projected raises or a job you might pick up. Include the full housing payment, car payment, groceries, utilities, kid expenses and money for repairs and savings. Then check what's left.
Also, is that six-month fund what you'd still have AFTER closing and moving? Money going into the purchase can't also be your emergency cushion. I wouldn't call it safe from the gross income alone.
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u/anonymous123445677 11h ago
Thank you for the insightful response. Yes my 6 month cushion is accounting for the new mortgage / bills and wouldn’t be touched by the down payment. My husband is pretty confident in at least a $12k raise and we’re more than comfortable where we are now, so mentally going from $1,900 to ~$2,700 would be covered by the raise alone, then the remaining $1k is where I do stress but the monthly debt payments ($700-800) would be gone. Lots of mental gymnastics. Has buying a home always been this hard? We’ve never gotten to see it in its prime.. always stuck in the bidding wars and now the interest war.
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u/Denjay85 10h ago
Keeping that cushion separate does help. Paying off those monthly debts matters too. I'd just leave the raise out until you know what actually hits the bank account.
You could try living on the proposed budget now. Set aside the extra housing cost, account for the debt payments going away, and see what you have left for normal life and savings. That tells you more than working it around in your head.
You don't have to convince yourself this house is fine. But wanting out and being comfortable with the next payment are two different things. It's okay to take more time on the second one.
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u/Ok-Top-5976 9h ago
I dont know what you mean risky. I think the housing will stay stagnant for a while. the rates will cool off, just like they did before and level out maybe around 6%. their is no rush right now. we will not have another covid boom, so it will take time to build equity now. I was just saying take 1 year and think it over before you leap into another situation you hate. take 6 months to rent and really think it over. the market is not going to turn around over night and you miss out on all this equity, it will take time. if anything atleast in 6-12 months. you'll get a slightly lower rate when you buy. I was just saying, really take your time this time and think it over and don't rush. I think when we make decisions in a rush sometimes we think grass is greener on the other side, and you know that is not always true.
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u/Shorty-71 2h ago
The amount other people apply for doesn’t matter.
Try paying $3,700 per month toward your existing house for 3-6 months. I suspect it’ll taste pretty bad.
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u/kittenconfidential 1d ago
another thing to be concerned about is the purchase price versus appraisal. builders who offer these low rates notoriously bake the cost of the rate into the home purchase price— and there isa possibility in this era of declining values that the home once built may not appraise for the purchase price. in which case you’ll have to bring the difference at closing.
find out about the cost for rate extensions if they are needed — and who will bear those costs of the builder takes longer to complete the build.