My Pocket Change

If you are financing more than 80% of the value of a home, lenders require extra risk protection against the possibility of you defaulting. Usually this comes in the form of private mortgage insurance (PMI). Simply stated, PMI is a premium you must pay each month until you are financing less than 80% of the home’s value. I’ve run a few posts recently about PMI (a loan primer and tax deductibility), and this post will focus on how the lender determines how much your PMI will be. Continue Reading »

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If you wondered if I had crawled under a rock for the last couple weeks, then you were right! I’ve mentioned over the last month or so that I have been looking for a house to buy. And, my girl friend and I signed for one last week! Continue Reading »

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If you have a mortgage for more than 80% of the worth of your home then you probably already know what private mortgage insurance (PMI) is. In fact, if you opted for a borrower paid PMI loan, you have to pay it every month. Hopefully you also know that under many circumstances PMI is tax deductible, just like mortgage interest and property taxes. Continue Reading »

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As part of my housing search, I have been bombarded with financing options. And just as soon as I decided I wanted a 30 year fixed mortgage, I was bombarded with yet another set of options: borrower paid PMI, lender paid PMI, or piggyback loan. Despite being independent of the down payment, these options could potentially change my monthly payments by hundreds of dollars a month, and total money paid (in the end) by tens of thousands! So what are the in’s and out’s of each? Continue Reading »

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Being a prospective home buyer, one of the first questions that crossed my mind was how to come up with a down payment. In the post housing bubble age of the Credit Crunch, it is extremely hard to get full financing or other exotic loans. Down payments are, once again, important. The old convention says you need 20% down. Well, how in the world I am going to find 20%? Remember, houses have become harder to buy historically — especially for the younger crowd. Here are some ideas… Continue Reading »

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How many articles have you read over the last six months that use the price to rent ratio (P/R ratio) to establish exactly how over priced the current housing market is? While I am firm believer that housing is currently over priced, I personally have found the predictions of expected drops to be fairly extreme. The predictions are based off price to rent ratios, which (as the claim goes) historically revert to the mean. But I think these articles miss one very important point — cities change! Continue Reading »

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Since I had chronicled my last car accident here, I figure I’ll mention this latest one too that happened last December. The quick and dirty summary is that he made a left turn in front of me in a parking lot without either stopping or looking, coming from my right. The details aren’t terribly important, but I am 100% confident it was completely his fault. Damage wasn’t too bad on either car, but even minor damage these days costs $1k+ to fix. After the accident, we exchanged information, and I got him to admit it was his fault. It occurred in my work parking lot, where we both are employed (though I don’t know him — its a very large company). After he admitted fault to me personally, I trusted him to tell his insurance what happened (oh Miller… what were you thinking?) especially since we work for the same company. You can see this one coming a mile away, right? Continue Reading »

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Conventional wisdom says that when the Feds cut rates, mortgages rates go down. However, it is also possible for mortgage rates to in fact increase! This is exactly what happened last week when the Feds provided a second significant rate cut in as many weeks. Why does this make sense? We must separate the long term and short term effects of rate cuts. Continue Reading »

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One of my goals for the week was to get pre-qualified (pre-approved, pre-authorized) for a mortgage. I’ve read this is the bargaining chip you use to get realtors to take you seriously. Following the review and advise of my friend Jim, I decided to give Lending Tree a shot. When he used Lending Tree a few years back, he got a friendly phone call within hours and numerous hours soon to follow. Unfortunately, I cannot say the same happened for me. Yet I know I have excellent credit, plenty of income, and a reasonable down payment. So what happened? Continue Reading »

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I went and checked out some open houses this last Sunday to try to get some perspective on the Baltimore housing market. I explored my current neighborhood — a place called Locust Point (where Fort McHenry is… you know, War of 1812… France Scott Key… Star Spangled Banner??? No? Well, me neither before I moved here!). Anyway, like much of the country, Baltimore’s housing jumped leaps and bounds over the last five years. Some of that is correcting itself as prices drop and inventory increases. Here’s an example of a place where the owner is getting caught in the cross fire. Continue Reading »

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