It’s been a while since I started considering the purchase of my own place here in Seattle. In February, I started the process and at the beginning of this week I made an offer for a great condo in West Queen Anne. It was only the second time I went out for viewings with my realtor and I really liked it. I originally offered $1k above the asking price but it became apparent to us that my offer was only the second best. Even after increasing it by $10k (I think it’s worth it), I was still $4k down from the best offer. However, the seller decided to go with me if I agreed to go through the process fast, which I did. As a result, I am going through a week of panic. It’s just crazy crazy crazy. The only reason I have time to blog is because I can’t sleep from being hyper and I can’t concentrate on work due to tireness 🙁
Deciding on the mortgage lender and which type of mortgage is proving quite an adventure. Also, I am trying to research the financing/investing space as best as I can and I am paying the penalty of neglecting to educate myself on such issues all these years. Is an interest-only better than a principal+interest? If I get an interest-only, will I be investing the savings from my montly payment and will it be better? What about the downpayment? How high should it be to balance the lost funds for investements against the lower rate and montly payments.
There are many many more questions I need to answer, plus all the paperwork associated with purchasing a home.
Still, I am very very excited. The place looks great.
4 responses to “Buying a condo”
I’m so glad that everything is working out for you.
Waiting for pictures of your new place 😉
Obviously, I have no idea about the US property market/Escrow. However, if you were still in the UK, a repayment mortgage (i.e. capital & interest) is your best bet IMHO (based on 11 years banking!) as you’re intending this to be your permanent home, aren’t you?
If this is for an investment, i.e. you’re going to rent it out, then an interest-only mortgage is probably a good idea.
Anyway, best of luck, Savas – I know how exciting it is!!
x
Well, US interest rates are low, so the generic advice would be to get a fixed rate, 30 (or 15 if you can afford it) year principal + interest house.
At least that’s true if you have decided on an actual house, and the housing market is kinda soft (which people tell me it is supposed to be, but it sure doesn’t feel like that here in upstate NY).
There is a mutual friend of ours who’s of the opinion that “buy as big a house as you can afford” is the way to go, in which case interest only is your best bet.
If you go for an adjustable rate mortgage, get a 5 year one, rather than 3 or 1, and make sure that there’s a total cap on the adjustment allowed (like: the mortgage can only ever be today’s rate + 5% for example). Also, the benefit of having an adjustable rate mortgage is that in some cases you can sell it with the house: so if the rate goes up to 10% and your adjustable is only 5 for the next 4 years, then buyers may be buy the mortgage of you (or offer a better price – same thing)
Also worthy of note; sometimes, if you’ve lived in the US for < 2 years and if the bank itself is planning to re-sell your mortgage, you have to provide a 20% down payment. If you’re paying less than that, double check that the bank isn’t planning to resell the mortgage (which it will fail to do and then refuse your mortgage at the last minute)
Either way, asking whether they’re likely to sell your mortgage (and what percentage of mortgages they’ve sold in the past) is worth knowing.
What else… Oh yeah: Make sure there’s no lock-in or penalty on re-mortgaging.
Cheers,
Einar
My wife and I bought about 2 years ago, and we bought a house that we plan to be in for at least 10 years (and maybe even longer). Knowing how long we plan to be there greatly affected the mortgage we got.
With US interest rates near historic lows, we opted for the 30-year fixed (we locked in at 5.65%). That included a 5-year lock-in penalty (no selling or remortgaging for the first 5 years). Knowing that we’re staying in the area allowed us to do that, and saved us .25% if I recall correctly.
However, if you don’t plan on being there that long, I think Einar has the right idea: 5 year adjustable, don’t accept penalties.