Sep 01 2011

Closing time

Our closing is set for Friday and we’re moving into our house this weekend! Can’t believe we’re finally to this point.

A few years ago when we were kicking around the idea of buying a house, we didn’t have enough to put 20% on anything. The PMI would have been $60 or so per month. I was curious about how much it would have been if we had to pay PMI right now for a similarly priced house, and I was surprised when the lender told me we would have been in the $105-$145/month range depending on the type of loan we obtained (an FHA loan would have had a higher PMI premium).

YIKES. I guess that’s what happens when there are gobs of foreclosures around the country — Private Mortgage Insurance premiums go up for everyone. The whole point of PMI is to protect the lender in case of default, so yeah. There ya go. You can still deduct PMI on your federal taxes I believe, so that takes some of the sting out.

Still, if you’re paying PMI, I think it makes sense to eliminate it as quickly as possible.

Our monthly principle + interest + taxes + insurance + HOA is about $70ish more than our current rent + insurance. We’ll have higher utility costs and more utility items in general, of course.

Oh, and maintenance costs. Yep, already paying those. Getting the driveway sealed next week. Had the deck stained while a paint crew was already out at the house. Getting the HVAC seasonally serviced. Hopefully taking care of these things now will prevent a costlier repair in the future.

We lived in this apartment for a little more than three months. Even though this apartment has plenty of problems and is an annoying place to live, I’m glad we did the month-to-month thing while we got settled in Indy. If we rushed ourselves and tried to buy a place immediately upon showing up in town, I know we would have made a mistake.

We probably would have picked a house in an entirely different part of town. It probably wouldn’t fit our long-term needs as well. I am so thankful that we rented for a short time so we could spend time in various communities and figure out what we wanted here. Some people can make a quick decision and buy a house over a weekend, but we just aren’t able to do it that fast.

 

 



7 Responses to “Closing time”

  1. AMEN!!!

  2. Congratulations! Happy Moving!!!

  3. Yay! Finally, closing! I’m excited for you.

    Need help moving? We’ve got a truck.

  4. “Still, if you’re paying PMI, I think it makes sense to eliminate it as quickly as possible”

    You’re making the mistake of thinking you can get rid of PMI before the clock on it runs out (5 more years in our case). Most banks, ours included now require that you own greater than 20% equity of the value the $600 appraiser you just paid for says your house is worth. So even though we could buy ourselves to own 20% of the purchase price they are now requiring we come up with another 50k or what our house would be worth foreclosed in order to lose the insurance. Google “ditch PMI problems” and you will find many people who comply with these rules and still cannot get the mortgage company to drop it. They’ve even hired lawyers and for some reason the mortgage people are finding it possible to not allow themselves to get rid of PMI. So congrats to you that you can take advantage from the current market conditions but get off your high horse for those of us making the best of getting screwed by those same conditions.

  5. Our closing was suppose to be Aug 23rd, then the 31st, now it’s scheduled for Sept 9th. Exhausting process lol. Kathy – although a bit snippy – has a point about the PMI. I’ve getting an FHA 203K rehab loan. They absolutely will not take more than 3.5% down, even though we had offered 20%. The reasoning is since it’s a rehab loan, we should use our money for the repairs. As a result, we get stuck with PMI that will be removed in 5 years, IF we’ve paid enough to have 20% equity in the property. We are getting our home for $35,000. The appraisal came back at $146,000 – so I feel confident we’ll have instant equity after our repairs. With our current home, we’ve been here 7 years, paid off 34% and the bank still will not remove the PMI. You really have to fight it these days, so avoiding it at all is the best bet, wish we could have. Thankfully it only adds $22/mo.

  6. I didn’t realize PMI was causing more problems to people. That’s pretty ridiculous how PMI works and how hard it is to get rid of. Sorry for my error.

  7. Yay for month-to-month renting. I don’t know how people can find a house in a weekend, we certainly couldn’t! You guys made a great choice and I’m sure will be very happy. Congratulations! When’s the first dinner party? :P

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Hey! I'm Kacie, wife to Shane and mother to Jonathan (7), Vivienne (5) and Amelia (2) . I write about my family's finance: how we save money, improve our spending, and plan for the future.

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