first-time home buyer

[Sandra Diaz]

Hi All,

I've listened to several bigger pocket podcast and love them!  

I'm considering purchasing a two family house in Cypress Hill's area in Brooklyn, NY 11208 and am planning to rent one apartment We are approved for an FHA loan with 3.5% down however it includes an Upfront mortgage insurance and a monthly PMI so the APR will be 4.6%. Don't know what the APR will be without these fees but the interest is 3.75%. We can possibly come up with 15%-20% down to avoid these charges by borrowing money from my 401K this way I pay interest to myself instead of someone else. The house is $480k but after 30 year fixed interest interest/fees, it would be $800K plus. The house is fully renovated in move in condition. Would this be a good investment? Any advise would be greatly appreciated. Please feel free to ask questions.

Thank you.

Sandra

First-time home buyer.

[Aaron Montague]

@Sandra Diaz

There are 2 ways of looking at this purchase, well 100s, but 2 simple ones, rentability or appreciation.

Rentability could be 2 stages: house hacking and then full "investment property"

The basic principal behind house hacking is to drive your monthly housing costs as low as possible.  How much rent will the other side bring in?

Your mortgage will be about $2400. Insurance is probably another $150/month. How much are your taxes? Those will combine into the PITI payment. Principle, Interest, Taxes and Insurance.

As any home owner should, you'll also need to put away some money for future repairs.  Eventually you'll need to replace hot water heaters, roofs and furnaces.  This pot of money is called Cap Ex.  Capital Expenditures are all the major items that eventually break.

If you think about turning this into a full scale investment property you need to consider several things.  You need to add up ALL of your expenses and subtract them from probable rents.