Bus Tow Hitch

Today, I covered the install of a tow hitch onto Hapy, (1972 VW Bus), highlighting some of the unique factors about a 1972 VW bus as well as what is special about Hapy that makes this install particular. I am still working on the injectors and getting Hapy running, so this install kept me busy or should I say distracted from that for the weekend.

Slow Go

test fit

Back when I first got Hapy, and for the handful of years I drove him with his original mystery engine, he could barely get much of anywhere if there was more than just me inside. If we added another adult, a couple of kids, gear, food, etc for a weekend of camping every incline presented a new opportunity for my knuckles to whiten, my back to tighten and passersby to wave with a single finger. At the time, I knew of other bus-drivers who had no such problems. In fact, there was a guy from Canada who built a trailer that looked like a small single-axle version of his bus that he towed behind him as he crisscrossed Canada and the US. He called his bus the Red Tomato; sadly, I cannot find a picture, but his set up was amazing. An engine swap, and some other upgrades later, I'm no longer slowing down traffic, and the idea of a small tow-behind or just maybe using one of those tow-hitch bike racks is appealing. Dare I say a ski/board rack?

One Year Only

Of course, 1972 is a transition year for the VW bus. 1971 was the last year of the old "type1" or upright engine, making 1972 the first year of the pancake engine (in the bus). The rear transom was changed so you could no longer remove the bottom section between the tail lights for engine removal, the tail light housings were made larger, etc. On the front, 1972 was the last year of the "low light" turn signals below the headlights. So, 1972 was already a kind of a frankenbus before I got my hands on it. Arguably, if I had left it (or returned it to) stock, it would be worth more.... to some folks. Bear in mind, Hapy did not have his original engine when I got him, so any return-to-stock would not have been to a numbers-matching bus. Besides, a camperbus should be camped in, not just garaged, trailered and car-showed.

dis-assembly

In 1973, the rear bumper was changed, changing the rear end again. This means that much of the design of the engine-to-frame mount, transom, the bumper mount, etc. was unique to 1972. So, getting a rear hitch to fit was not an off-the-shelf thing. Well, it wasn't until this cat in Virginia started making them as a side job a few years ago, and selling them on TheSamba. The reviews of Jeremy's work has been super-high, and his responsiveness to email has been great. It arrived quickly, wrapped with cardboard to protect it (but not boxed, probably for less expensive shipping) and looks exactly like the pictures. You can see what it looked like in the picture on the right, here. What I didn't realize when I ordered it, the tow hitch ships with 6 super-high-strength M10 x 1.5 bolts for mounting. 

These tow hitches include an integrated bumper support, which supplants the old one. So, one of the one-year-only parts is no longer needed. For those who have purchased a bus which had it's rear bumper removed and subsequently lost, with this hitch, you only need to source a bumper (based on my look-around, WestCoastMetric, JBugs, and BusDepot now offer the 1-year-only bumper). That's easier than finding a one-year-only bumper and pair of one-year-only brackets. And, you get a tow hitch. Win-win!

One Bus Only

As unique as the 1972 VW bus rear-end design is, Hapy is more so. Recall, all those years ago when Hal and I (more Hal than I) designed the engine mount for the TDI engine? Rather than leveraging the triangle of mount holes in the frame rail sides that held the original engine mount "moustache bar", we reused the twin holes further to the rear which hold the bumper brackets. This left the triangle mount holes vacant. The tow hitch also mounts to the bus frame through something other than the triangle of holes. Once the install has completed, the engine mount and the bumper mount will each be supported independently.

I will take this opportunity to underscore that our reuse of the bumper bracket holes has been completely without issue. On surface, one could become concerned with whether the holes were designed to support the weight of a TDI engine. Consider that the bellhousing mount to the frame probably holds most of the weight, and is absolutely capable of holding the engine by itself. I say that because I have removed the rear mount and accidentally removed the support (lowered the jack. Doh!) in the past, and the engine has not budged. Also, the bumper mount needs to be capable of holding not just the bumper off the ground, but occasional additional weight of someone stepping on it. Last, it needs some level of hardiness to absorb energy from a rear-end collision. Regardless, I have never felt this design has not been more than capable of supporting the rear-end of the engine. Again, thanks Hal :)

Install Hitch Hampering

bent ear

After some careful examination of the mount, and of the bus frame, I realized that the tow hitch does not reuse the triangle engine mount, it uses a set of otherwise unused holes in the rear of the frame. This means that for a standard 1972 bus, the install does not involve the engine mounting mechanism at all. Nice work, Jeremy! The holes he targeted sit directly above the holes used by the original bumper brackets.... that we are using for our TDI engine mount. In any other 1972 bus, you could just set to tapping those holes with a M10 x 1.5 tap for the supplied bolts. With Hapy, there is always an extra hitch (pardon the pun): the right-angle brackets that are part of the engine mount hung over the outer edge of the frame by about 1/4", and prevented the hitch from setting all the way. Through the use of a cut-off wheel on my angle-grinder, that extra overhang was trimmed off. When I do the install for realsies, I will hit the bracket with the grinder so the edge is smooth. And, of course, I'll shoot the exposed steel with some black paint.

But then, we still were not quite ready. The tow hitch was tweaked partially during shipping. The 2 supports were slightly bent inwards by a 1/2" total so it would not fit around the rails. I pulled out the 3' sledgehammer and encouraged the hitch supports apart. Had the hitch not had a bent ear for the passenger-side bumper support, it could have taken me longer to realize that the shipper was a little rough with the hitch. I advise you to check the measurements and angles when you get yours. These are built on a jig, so it is not a manufacturing issue.

Preparing for the Tow Hitch

Finally, the fun part. With a floor jack, I put upward pressure on the engine support bar so I could remove the bolts on either side. Supporting the bumper with my toolbox, I dropped the last bolts and lowered the bumper. I slid it out of the way and returned the bolts back through the engine support bar. Once the engine mount was tightened back down, I removed the exhaust. I decided that it would be easier to install the hitch with it out of the way. It was at this point that I cut off the extra meat on the brackets and discovered the rough handling during shipping I mentioned above. I decided that the engine was crazy dirty, and I had gotten enough oily yuck in my fingers (I found and re-connected a breach in the compressed air / turbo pipes) that a degrease was overdue.

crazy cleaner

Product shoutout: Oil Eater. I cannot believe how effective this bio-degradeable, enviro-safe degreaser is. I have found this stuff at the dollar store and BiMart, and when I first bought it, I didn't think much about it as I'd never heard of it. Wow, this stuff cleans oily greasy messes fast. My TDI engine was a black-caked oily mess. I shot it with the OilEater, and hosed it off. To get all the little nooks I did this 3 times. No brushing, no scrubbing: just spray it on and hose it off. The engine is incredibly clean now. You can sort of see in the bottom picture. All that silver used to be black, and all that black used to be, well, black, but caked oily gross black.

At some point, the original bumper brackets, and splash pans need to be removed from your bumper. The picture at the top shows the yardsale that ensues when you do. The hitch has the corresponding holes for re-using your splash pans. I recognize that these pans help hold the front edges of the bumper to the side of the bus, but I am not sure that value offsets the cost of the junk that builds up in those pans. Leaves, pine needles, etc sit there and just encourage rust. Washing or cleaning those pans is not easy either. So, for now, I will be omitting my splash pans, and will eventually form a bracket to go from the side of the bus to the front of the bumper. As I worked the bumper, I noticed that the paint needs to be refreshed and the bolts were all rusty again. Fun in the rain-soaked Pacific NorthWest. Finding stainless steel fasteners to replace the zinc-coated or plain steel took some time, but I found them at BelMetric for about $15US delivered.

Installing The Tow Hitch

tapping last M10 hole

With the bumper and exhaust out of the way, and the engine bay clean, the install of the bumper is relatively straight forward. The 6 holes need to be tapped with a M10 x 1.5 tap. I didn't have any, nor had I ever done anything like that, but the tap and driver cost me about $18US at the corner Ace Hardware. The cutting of the threads was pretty easy too. I just took my time, making sure the tap was lined up well, and then slowly twist the tap in 1/4 turn at a time. I found that the first few threads are the most important and that it was easy to mess them up when I was removing the tap. So, my advice is to take extra care during the last few turns on the way out. It is easy to lose concentration, and then you have to do it again.

Jeremy's (the fabricator's) instructions for the install indicate that you must mount the bumper before installing the hitch. I, of course, did not do that, but it was so I could get a test fit. And, as I mentioned above, my bumper bolts have rust appearing on the bolt heads, so I'm going to replace them. The tow hitch is not balanced, wanting to tip down to the rear. I suspect that once the bumper is added, it will want to drop rearward all the more. Considering that at this point I do NOT have my exhaust installed, I expect the final install will end up another post.

note location relative
to engine mount triangle

I set the driver-side end of the bar under it's install location but on top of my toolbox. I went over to the passenger-side, lifted it into position and finger-threaded the upper rear bolt into the hole a few threads. Then, I switched to the driver-side, threading in both rear bolts, but again only a few threads. I continued to bounce back and forth wiggling the hitch and threading bolts until all of the bolts were threaded in. At this point, I pushed and pulled to get the tow hitch into it's rear-most location and then finger tightened the bolts. Last, I ratcheted them down snug (not torqued) with a 15mm socket.

Bumper On

To complete the test-fit, I set the bumper in-place and threaded the 2 outer, but rear-facing, rusty bolts through the hitch-resident bumper support and set the 13mm washers and nuts on. This gave me an approximate visual for how the finished product will look. Overall, I think it looks great. While I will miss the modesty skirt thing, and I have not yet confirmed that the exhaust will fit without modification, I will definitely appreciate having that hitch for a bike rack, or equipment shelf or for actually towing something small.

That's it for now. I will be cleaning up the bumper and exhaust, probably painting the bumper again and then repeating this install, plus re-installing the exhaust. I'm sure I'll post on it. Thanks, as always, for following along--

Injector-Go-Round (Part 1)

I got back outside and started playing on the TDI's (Hapy the camperbus and Flash the daily Jetta) as the weather has been somewhat hospitable, though not consistently so. Since Hapy is running so well (still no codes, accelerator responding as one would expect, etc.), I decided to step up his injectors and get that Malone Tune I had dreamed about for years. In contrast, Flash has been making a plume of black smoke when he starts in the morning (after a long start cycle), so I figured his injectors had gotten pretty clogged up. My thinking: I can upgrade Hapy's injectors and put his under-100k miles injectors onto Flash to extend his life. Today's post is about picking, and removing injectors. I'm still perfecting both Flash and Hapy injector installs, so I'll post part 2 on that once at least one of them is running right. Good times.

Injector Selector

PowerPlus 764

For the uninitiated, like me, the world of diesel injectors or nozzles is cloudy and the choices not clear. For one thing, the manufacturers all suffer with varying quality because of their efforts to get them constructed at lower costs. As is true with any market, there are always new players. Some new players build good stuff, but have little recognition. Others are simply trying to turn a dime and build garbage, but have flashy advertisements. Like I said, all markets are like this, but for a product about which you know little, how do you avoid overpaying or getting garbage? This is where your trusted vendors are so important. For TDI stuff, I go to KermaTDI and IDParts first and then some others like PartsPlace or TuneMyEuro to see what they are selling. When they are all selling the same subset of the market, you can be fairly sure those are the better quality-to-price. In many cases, your greatest gains from an injector upgrade require an ECU tune, a turbo upgrade, or both. Regardless, my research indicates that they need to be balanced / pressure checked / set-up or you will probably not get the performance you were expecting.

To help me through the maze, I worked with the folks at Malone Tuning and researched my 2 usual forums: TDIClub and VWVortex. There really is nothing better than true end-user feedback, but in most cases, the folks who replaced their injectors were going from clapped-out original stock injectors to something new, so, of course, they worked way better. And, they only did that one set ever, so they only had the old crappy ones to compare against. Still, the forums helped steer me where KermaTDI and TuneMyEuro were already taking me: Bozio injectors are the market leaders right now, but even they have quality issues. So, having them set up will best ensure a high-performing set. I decided to have mine set-up by our friends at KermaTDI since that brought with it better guarantees and some things are just best done as a unit.

DLC 1019

I spent considerable time toggling back and forth between the DLC1019 and the PowerPlus764. I ultimately went with the PP764, but, in retrospect, they are both great injector nozzles from everything I have read. Here is another write-up of the PP764. Both injectors appear to have the DLC protective coatings that extend the nozzle life against lower quality and low-sulfur fuel. Knowing that the quality of diesel fuel varies across the country, this is important. The PP764 also has hardened surfaces, etc. to extend its life relative to the stock injectors (the DLC1019 probably does as well), and have a higher upside in terms of HP potential with additional upgrades. Ultimately, the TDIClub seems to feel that the PP764 may produce more smoke, but more power than the 1019, but again, as in so many things, your mileage may vary, and with all the other variables at play, it is very hard to distinguish between these nozzles... except for which one can handle larger modifications: the PP764.

I had Kerma set them up at the lowest "pop" stage, so they are fairly tame, which parallels the stock-for-now turbo. I should be able to replace the original VNT-15 turbo with a stock-in-some-VW's VNT-17 and the PP764 injector set up can remain the same. The 1019 may not embrace the higher boost as well as the PP764. Again.. who really knows? This feels like a job for MotorTrend's Engine Masters, if they ever give a whiff about performance in otherwise not monster engines... and diesels in general.

Injector Removal

still from KermaTDI vid

I had a rain-free, beautiful Saturday morning, with a forecast for decent March weather (read: spotty rain) all weekend, so I had my opening. KermaTDI co-hosts a great video on YouTube for how to remove / replace the injectors which I mostly followed. So, I am not going to go through all those steps in great depth here. Instead, I will highlight what I found particularly interesting. In the video, the glow-plug harness was removed at the very beginning. It was easier to remove once the injector hard-lines were moved out of the way. Getting a good angle on the bottom compression fittings on the injector pump was difficult, but not impossible, especially during initial removal. With the hard-lines out of the way, for the Hapy removal, I then had to remove the vacuum ball and the bracket holding it to the head in order to get to the clips for the 3rd injector plug-wire. This bracket did not interfere with the plug in Flash, but his plug was very difficult to get out of the bracket. With that unplugged, I shifted to the injector-hold-down brackets. On Hapy, I lost concentration for a second and pulled the bolt out of the 4th injector bracket independent of the bracket, causing the dished washer to disappear into the engine bay. This momentary lapse cost me some time searching.

I never found that washer, but it was nowhere near the injector so I moved on. Finding a single replacement washer took some time, though. For posterity, it is either part number N0231312 or N0237314. With the brackets removed, the injectors would not budge (no surprise). So, I cleaned up around them as much as I could with brake cleaner and a slotted screwdriver, getting as much black gunk off as I could. I felt this would minimize the risk of that hard yuck falling into the open injector port once the injector came out. I applied a short burst of Kroil penetrating oil around each of the injector-to-head mating surfaces to help in the extraction.

Injector Removal Tool

no worky

The injector has a M14-1.5 thread where the hard line injector fitting attaches. Metalnerd makes a slide-hammer specific for removing this injector that threads right on. As of this writing, they cost around $45US. Back when I was working on the dents on Zed (the 1978 Datsun 280ZX), I got one of those stud welder / dent slide hammer kits from Harbor Freight. This kit includes a 2-pound slide hammer with a single thread-on attachment that is designed to grab onto one of those studs. The thread on the slide hammer is M14-2. Soooo close to the injector thread, but not. I would rather re-use a tool in-hand rather than buy another rare-use tool. So, I got 2 nuts from the hardware store (M14-1.5 and M14-2) and JB Weld'd them together. I would have Mig welded, but welder one I used on Oliver's floors has disappeared into the tool collective of Travis' friends and I didn't want to wait. Besides, I'm not sure welding these nuts would have been a slam-dunk anyway. Turned out, the JBWeld failed on the first injector, so my tool became just the one M14-1.5 nut: I force-wedged it onto the slide-hammer and threaded the other end into the injectors. Yes, this cross-threaded the nut at the slide-hammer end, but it served it's purpose.

I'm going to stop here, and pick up the actual removal and install experience in the next post. Like I said above, the removals were actually quite easy. Like so many things, destruction is easy; construction is hard.

Gramps Clutch

Unrelated, I mentioned the clutch replacement for Gramps (2-dot-slow Jetta 3) a few weeks back when I was considering what work to do next. K2 decided that he wanted to hire that out, so we called up Courtney over at MobilePdx. We have called on these guys a few times over the years when our workload was more than we wanted to handle at once, and they have never disappointed. He and his guys (Lou and Joe) knocked it out, replacing the clutch, flywheel (old clutch blue'd the friction surface), throw-out bearing, the throw-out bearing cover, etc. Before they started the tear-down, the engine got a de-greasing. Once everything was apart, they replaced the rear main seal on the engine. With everything clean, they were able to lubricate things (like the shift linkage), and confirm the oil leak was the rear main seal. All in, it was a ton of work, but Gramps is running like a champ again. And, he is no longer marking his spot every time he parks. Thanks MobilePDX!

Last, an early shout-out to my local-to-NW Oregon friends: Hapy turns 50 on 3-September-2021, so to celebrate, we will be camping at LL Stub Stewart State Park that weekend. If you have little else to do for US Labor Day weekend, we (Hapy, Boo and I) would love to see you.

Thanks, as always, for following along and I'll post again once at least one of the 2 injector beneficiaries is running right.

Beware the Modern Loan Shark

With the historically and incredibly low mortgage rates over the last 6 months or so, I have received lots of uninvited overtures to refinance. Today's departure from my usual car stuff will touch on some mortgage-related stuff. I am not a banking professional; I have just bought/sold and re-financed a few houses over the years, so I've learned some things.

I am posting this because I just walked away from a re-finance after the lender hid the fact that to reach the advertised interest rate there were 3% in points, making the loan a bad deal. By bad deal, I mean it would have taken over half the life of the loan to pay for the fees. To be fair, this was in part because the rate wasn't that much better than what I have now, after all was said and done. I figure there are folks who do not have as much exposure to lending trickery so this might help you avoid them.

Some Terms

ReFi - a simple abbreviation of re-finance.

P&I - Principal and Interest. This is the only part of your payment that the refi folks will talk about. Depending on your situation, this could represent as little as 60% or so of your monthly payment

PMI - Primary Mortgage Insurance. This is total bullshit, but if you were granted a loan with less than 20% down, you probably have this added to your monthly payment. Basically, this is an extra fee to underwrite the additional risk that the bank is taking because the principal outstanding on the loan is more than 80% of value of the property. They do this to get you into a competitive interest rate without taking on extra risk that would be reflected in a higher rate. Getting PMI removed from your loan can be very difficult, and sometimes a refinance is the easier way to do it.

Points - a percentage of the principal balance charged at the origination of the loan so you can get the interest rate. I think of this as an interest balloon payment at the start of the loan.

Escrow - an account (that usually generates 0 interest for you) that holds a portion of your monthly payment for paying your homeowners insurance and land taxes. Depending on where your property is, this could be a significant percentage of your monthly payment.

Coupon - this is the little paper ticket that you include in the envelope when you send a paper check. With online banking, many more folks pay online or use auto-pay, but the coupon explicitly states what each portion of your payment is for.

Term Loan - the agreement you sign is for a fixed period of time (15, 20 or 30 years, usually).

Payment Schedule - Payments are calculated based on your term using an annuity/amortization schedule. This makes all but your last payment consistent for P&I. The escrow portion is re-evaluated periodically.

Pre-Paid's - there is a short list of things that need to be pre-paid for the remainder of the partial month in which the loan starts. This includes a partial month of interest, and home owner insurance.

Initial Escrow - usually you need to juice the escrow account to get things started. Similar to pre-paids, this is determined based on the annual review schedule of your escrow amount, so this could be a pretty big number, depending on where you are on that calendar. Included are homeowner insurance and land taxes. PMI may need to be prepaid this way. You can wrap this into your loan, but it is best if you can avoid that.

Closing Costs - the wrap-up of all the inception fees incurred in the creation of the loan. You would think that the interest pays for that, but nope, you get to pay for those costs up front. Makes you wonder what the interest rate is for once you see all the fees

Inception Fees - processing fee, underwriting fee, recording fee, title endorsement fee, title lender policy fee, title settlement fee, etc. This list seems bigger, and their names are more obscure, every time I do a loan. One day you'll have a "speak to a human" fee; just watch.

Earnest Money - some money you put in with the offer to help secure the purchase. This doesn't apply in a refi, but this is money you may lose if you walk away from the deal. Losing it or not depends on how the offer was structured. You can walk away right up to signing, though the longer you go into the process, the less supportive your loan officer, agent, etc will be.

Loan-to-Value (LtV) - the ratio (usually represented as a percentage) of your home value that is financed by your loan balance. This is important for PMI calculations, but also influences your credit rating. So, while it is important for this mortgage conversation, your variable rate credit lines could see a sympathetic increase in the few months after you close the loan. They really do get you coming and going, don't they?

Scared yet? I hope not. The terms sound scary, but ultimately, you agree to an interest rate, term and amount down. You can abort your loan at any point up to the final signing day, though you may lose some earnest money if you do.

APR versus Interest Rate

The interest rate is the rate you are actually being charged as a part of the term loan. This is the rate used to calculate the annuity for the P&I portion of your monthly payment. The APR is a representation of how expensive the loan is as expressed in an interest rate form. It pulls in all the fees, points paid, etc. and considers what the interest rate is if all of those were considered part of the interest rate instead of something you pay up front. Most folks glass-eye when they see the APR, but it could be very telling. For example, your advertised interest rate could be 2.75% which sounds pretty good. The APR, however, could be something like 3.5% which, over the course of 30 years, is a big difference. The bigger the difference, the more you are paying upfront. So, while this number is not part of your payment calculation, it may prod you into looking at the fees, prepaids and points to see if things are what you expected.

Some Pits-

Buying to Your Limit

Real estate agents are great. They help you find a home, navigate a big portion of the lending process and help you understand the market so you are making a more informed decision. For these things, their commission is understandable. For a very short and intense period, they are like a best friend. The one thing that many agents will do is push you into a more expensive house than you may have intended to buy. That is not very best-friend-like. I won't say it is because of their commission, but their commission is percentage-of-home value based, so you decide why. Some are oily, some are warm, some share their limits, others don't; do your research. Like a lawyer, this is one of the most important persons for you to have picked well.

Say you are qualified to borrow $200kUS. Good for you, that will get you something nice in most US markets. That doesn't mean you need to buy a $200kUS house, either. I suggest that when you talk to your agent, at the very beginning, don't talk about what you are qualified for. Talk about what you are willing to spend, which, hopefully, is a lower number than what you are qualified for. Eventually they will learn what you are qualified for, and that is when your spending decision is subject to influence. Be steadfast! You could find yourself buying a $230kUS house because you qualified for $200k but have $30k in hand. You picked your team (lender, agent), are they following your lead, or their own?

Points

Recently, I walked away from a re-fi because of a charge for points that the lender did not disclose up-front. The re-fi was pitched based on the existing principal, demonstrating a significant monthly savings. What he did not disclose was that arriving at that monthly savings was through financing over 3% of the original principal again through "points". That 3% principal increase then spread out across the term consumed all but $50/month of the monthly savings originally advertised while increasing my overall debt load. So, a 3% increase in principal for $50. Playing this out in real numbers, if your principal was $200kUS, 3% points would make the loan balance now $206kUS. That $6kUS increase is offset by the $50 a month savings, but even at 0% interest, it would take over 120 months (or 10 years) to pay for those points plus a couple months for the interest accrued over the period. So, it would take over 10 years before you were really enjoying the new rate, assuming you held the property that long.

In today's low interest market, you should be able to avoid points, but be aware there are lenders who will hide this fact in hopes that you will feel like you are so invested in the deal that you'll just go along if you find out. Shark alert! At this point in my process, my sole regret is the lost time. Rates are rising again, and I think I missed my window to get under my current rate. 1st world problem, I know.

PMI

I railed about this a little bit above, but this is another one of those things loan officers avoid talking about. Consider that if you are unable to get your loan-to-value (LtV) below 80%, you will be paying an extra fee every month. So, if you fall in love with a house that is at the limit of your borrowing capacity ($200kUS in my example above), but you only have 15% ($30kUS, which is still a lot of money) to put down, you will be penalized for that. Since LtV is above 80% (it's 85%), you get to pay an extra fee that could be as high as 2.25%. For our example, let's say its in the middle of the Freddie Mac published range, and call it $100US. An extra $100 may not be enough to make you want out of the deal, but better to know it's coming. You may need to ask if you are going to have to pay one, because, like I said, this bad news is not consistently volunteered.

Some Math

To compare a good loan deal against a bad one, start with the fees and the rate. Avoid points and do the math if it will be part of the deal. If you are refinancing, it is easy to become complacent and not do your due-diligence. It's your loan, and your monthly spend. Only you can decide when to change it with a refinance, and only you can decide if a fee or points are worth what you are getting. For a new mortgage, consider how much you have to put down as much as you consider how much you want to spend. Your lending limit is only interesting if it is below what you wanted to spend. If thinking in terms of tens-or hundreds- of thousands of dollars is hard to wrap your brain around, you can back into a spending limit based on what you are willing to spend per month via an online mortgage calculator.

Consider our ongoing example, where we have $30k to put down, want to cap our investment at $170k (or maybe a monthly spend at $1k), and we got pre-approved for up to $200kUS. If the market, your real estate agent or your own wandering eyes land you at a $200kUS property, what is the monthly cost? I got these calculations from here, assuming a 3% interest rate.

$1084/mo: $717(P&I) + $104(Homeowner Ins) + $175(taxes) + $88(PMI) on a $170k (200k-30k down) loan

If you stuck to your plan, what's the monthly cost on that $170kUS house?

$916/mo: $590(P&I) + $104(Homeowner Ins) + $149(taxes) on a $140k loan (170k - 30k down)

You save $168/mo and avoid PMI. And you're under $1kUS/mo.

If you got swindled into paying points and stretched into that $200kUS house?

$1113/mo: $742(P&I) + $104(Homeowner Ins) + $175(taxes) + $92(PMI) on at 176k loan (200k + 6k points - 30k down)

Those points cost you another $29 per month in P&I plus another $4/month in PMI (because the principal bumped up).

If you avoided the points, but expanded to the maximum loan ($200kUS) for a $230kUS house?

$1253/mo: $843(P&I) + $104(Homeowner Ins) + $201(taxes) + $104(PMI) on at 200k loan (230k - 30k down)

But if you avoid the points, and stick to your plan, you earn/save $197/mo in P&I plus the $92 in PMI for a total of $289/mo. If you arrived at $170k from a target of spending no more than $1k/mo, you hit your goal, and have $84/mo available for improvements or paying down the principal. Here in Oregon, land taxes go up every year, so you will eventually, in future years, need that wiggle room to go into that monthly payment. Sorry.

On the other end, if you went to your absolute lending limit, you are spending an extra $337/mo for that extra $60k of purchase price. That includes PMI, and a higher tax bill. Depending on your plan going in, this could create a house-poor situation that adds stress to your life, your relationships, etc., so step wisely.

There Are ALWAYS Options

These differences help to highlight how easy it is to be house-poor when you buy a house. Finding a house that is within your spending limit may push you out of your most-desired neighborhood. You can (a) pay to get in now, (b) save to get in later, or (c) buy-in where you can afford, and have market-lift you into your target in a few years. Option b only works if you can save faster than the neighborhood is appreciating; this can be emotionally exhausting as well as very difficult depending on your target. This is a mid-term strategy (think months not years). Option c reduces how much you need to save ongoing since the sale of the where-you-can-afford house will produce funds for the next down payment. This is a longer term (think years not months) strategy. Option a is absolutely a short-term strategy, and brings with it the cost of getting what you want now.

I think the most important advice I have is for you to do your own research and decide for yourself what you are and are not willing to do. Buying a house is unlike buying a TV where we will sometimes overbuy in a knee-jerk way. You do not want to be making knee-jerk or uninformed choices with a 30-year mortgage. The clarity from an entry plan will be very useful when others try to move you in a direction that might benefit you, but will definitely benefit them.

That's it for today. Next time, I will be back under or inside the bus doing something car-related.