unique_boy

Hi,

The US bug has bitten and after one year I am starting to consider planning for a future here. One of those considerations is housing...

I am familiar with UK mortgages and house ownership costs (council tax, rates, land rent etc).

Just from some light reading on the US it seems a bit more complex with property taxes, insurance etc. I will be looking in NY or maybe NJ and essentially I just want to know what other costs go on top of the monthly mortgage cost?

On mortgages are banks pretty flexible on the LTV here?

sir_eccles

Paperwork requirements for mortgage underwriting have tightened up considerably since the crash. Expect to detail where every penny of your deposit comes from.

Standard ltv is 80%, FHA loans can be lower but I think they often have string attached.

Most mortgages tend to be 15 or 30 year fixed rate. Monthly payment goes against interest and principle, also need to factor in home insurance and local state/city taxes. Insurance and taxes often get paid into an escrow account to build up over the year and then be paid out either annually or semi annually.

Quite often your original lender will sell your mortgage (usually to Fannie Mae or Freddie Mac). They may continue to service your mortgage or they may sell that to someone else.

There is not a solicitor that does the conveyancing. Part of that role may be done my your realty agent, some by a title escrow company, some by the lender's underwriter/closer. Finding a good agent is key if you don't know what you're doing as they can help wrangle/find/recommend the other members of the team. I've found the best agents are family friends, that way they know they'll see you again sometime.

unique_boy

Thank you...The whole 30 years fixed I find really interesting compared with the UK market which is generally 30 year mortgages but you fix for t years with t max generally 7 years (in my experience).

I like the idea of being able to lock in my rate today for the next 30 years based on research the rates seems relatively cheap.

Now just to work on finding that 20% deposit.

Pulaski

Who does the "closing" (conveyance) seems to vary from state to state. In NC most of the process is controlled by a lawyer (solicitor), with some of the leg work done by the buyer's realtor and the title company. It is also perfectly possible to close without a buyer's realtor, with the closing lawyer taking up any slack. ..... I do not know what the process is in NJ, but your realtor (buyer's agent) will be able to walk you through the process.

Each month you will have to pay your mortgage payment (1/360 of the total cost, flat rate over 30 years), plus 1/12 of your insurance, plus 1/12 of your property taxes (these naturally go up over time ). The insurance and tax monies are held on trust in an "escrow" account and then paid directly to the insurance company and taxing authority when they fall due for payment.

The costs for you at closing might include a "home inspection", which is supposed to identify any damage or problems in the house structure, plumbing, drains, wiring, heating/AC, etc. In my experience the report is usually incomplete, and major things might be over looked. You can also pay for a "survey", which means identifying where the edges of the land you are buying are, and if anyone has encencroached on them. In town it might be critical, out of town on unfenced semi-rural lots it probably isn't worth paying for. Either way, there should be iron re-bar "pins" in the ground at the corners of the property. They may stick up 3-4 inches and have bright pink ribbon tied to them (out of town), or be hammered down flush with the ground (in town).

unique_boy

Thanks, I was looking for add on monthly costs that would be different to UK. In the UK I currently pay; annual rates, land rent and insurance.

These costs are generally pretty small and add around $100 a month to outgoings. Looking in the US the rates are very low that once you get around the 20% deposit a $800k house is monthly rate is pretty cheap relative the UK.

unique_boy

Ha not so cheap anymore

Overall Full-Value Tax Rates by County (All Taxing Purposes): 2004-2013

29k a year in westchester county?!

On second thoughts I am assuming that it is weighted down by some amount?

Pulaski

There is a reason we left NY (Westchester Co). ..... Long Island and CT were worse, NJ was no better.

BTW I added to my post above.

md95065

These are "average" rates calculated by dividing the total tax revenue by the total property value for each county.

For 2013 it averaged out to a 2.88% tax rate so, yes, $28,800 tax on a property valued at $1 million.

Pulaski

Sounds about right. We were facing around $800-$1,000/mth tax bill for a $400k house in Westchester Co in 2002.

md95065

Indeed ...

Westchester leads nation with $13,842 median property-tax bill

Nutmegger

Is the insurance a "your mileage may vary" item? Although I have had property tax placed in escrow, I have always been left to pay my homeowner's insurance myself, with proof of lien (second insured) on the policy provided to the mortgagor.

md95065

Yes, the question of whether or not an escrow account for property taxes (and insurance) needs to be established depends on the lender and the size of the loan relative to the property value.
My lender never required an escrow account at all.

Pulaski

It varies from state to state, I think, but when we got our first mortgage, the interest rate on the loan was discounted if we accepted an esrow for insurance and property tax. .... The theory being that the risk of the insurance lapsing and the property being destroyed or the local taxing authority foreclosing on the house for unpaid property taxes is significantly reduced.

Tarkak9

... until after one closes and then discovers that the pins were actually messed with and moved; or, the well isn't, infact, actually on the property (therefore is someone else's well on their land and they could cap it off, need to re-drill one on your dime, or down the road, lenders can decide not lend on property without a legal water source for the property). If, found out during the transaction you could address such issues with the owner prior to closing (besides, when you sell and your buyer finds these sort of things, then you have to deal with it with them, probably correct them on your dime).

Nutmegger

There will probably be a survey on file with the town and one can walk the boundaries with compass in hand to get a rough idea if there is anything that needs to be addressed.