Thinking of buying a House

[Vdubchaos]

Vdubchaos:

Thank you for delivering another voice of caution and explaining yourself much better than I did.

Thanks

 

[rh71]

you prolly make 2-3x as much as me atleast.

I'm not 6 figures if that's what you're thinking... it's actually quite sad what I make after being here 12 years. But I just read the national avg was $40k annual salary per person... $60-$80k for a house is sweet any way you slice it.

 

[Falloutboy]

I totally get the making sure your ready, I know if I wait 2-3 years I could easily put down 20%, but also know that I will have to by a house basically as close as I can find to what I want and ready to go. if I buy now I can look at the house as a project, buy cheap and work on it over the next 2-3 years. both would have the same out come. 60-70k house that has had 20-30k of work done on it (or less than that since I did alot my self or enlisted contractor reletives to save money over what market rate is) or buy a 120k house that is not what I want but is close enough and not much work is needed to make it a nice home. the former sounds more attractive to me.

 

[Falloutboy]

I'm not 6 figures if that's what you're thinking... it's actually quite sad what I make after being here 12 years. But I just read the national avg was $40k annual salary per person... $60-$80k for a house is sweet any way you slice it.

oh I agree I know i'm lucky living near a big city where there are jobs, but there is plenty of nice country homes that don't have insane association costs or property taxes and are fairly low in price. if I wanted to live in town in a nice neighbor hood I prolly would spend 150-200k getting what I want/need. Still need to do some school research but I think I have a couple areas highlighted that get me into the good schools while being on the outskirts enough to be cheap still.

 

[Exterous]

Don't forget to set aside some money for all the random shit you need as a homeowner. First time it snowed:
"Hey - it snowed!"
....
"Fuck - I need to go buy a shovel and salt"

Someone gives you a plant for your house
"Here's a plant for your new house."

"Hey thanks!"
....
"Fuck - I need to go buy a different shovel. Probably some potting soil and a water can as well"

It may not snow there but there will be a ton of random little items that you will need to buy that first year - stuff that most homeowners already have. Like painting a room (just as an example). Sounds easy and cheap right? Well, there's the paint and primer. Oh and we need brushes. A roller and multiple roller brushes. A paint tray. Paint tray liners. Drop cloths. Painters tape.

After the first time painting you will usually only have to get one or two of those things but the first time you need all of it. Those types of things add up - as does the gas to constantly go to the home improvement store

 

[Vdubchaos]

I totally get the making sure your ready, I know if I wait 2-3 years I could easily put down 20%, but also know that I will have to by a house basically as close as I can find to what I want and ready to go. if I buy now I can look at the house as a project, buy cheap and work on it over the next 2-3 years. both would have the same out come. 60-70k house that has had 20-30k of work done on it (or less than that since I did alot my self or enlisted contractor reletives to save money over what market rate is) or buy a 120k house that is not what I want but is close enough and not much work is needed to make it a nice home. the former sounds more attractive to me.

To do all that you need capital/budget. Also anyone in the industry will tell you, deeper you dig, more problems you will find.

Best advice I can give you if you go this way. DO NOT buy ANYTHING older than 30 years. Heck my good friend remodels houses for living (quite successful as well) and he would never buy a house older than 30 years (regardless).

Whatever you plan on spending on a house project, DOUBLE IT!!! Chances are you will come close to end result.

And do NOT borrow to do renovation. Home equity loan is one of the worse financial decisions you can make.

oh I agree I know i'm lucky living near a big city where there are jobs, but there is plenty of nice country homes that don't have insane association costs or property taxes and are fairly low in price. if I wanted to live in town in a nice neighbor hood I prolly would spend 150-200k getting what I want/need. Still need to do some school research but I think I have a couple areas highlighted that get me into the good schools while being on the outskirts enough to be cheap still.

Once you have a kid, above in bold will be your # 1 priority.

You do NOT want to be stuck in a wrong/unsafe place. Also "not so good" neighborhoods hardly ever grow in value (even during the prime years of real estate).

Rule # 1. Location location location (especially if you plan on family/kids)

 

[nanobreath]

When I bought my house, I estimated I could afford a maximum of around 1300 a month, the lender told me I was approved for up to something like 2200. I could not imagine trying to pay that much a month for a mortgage, and I make WAY more now than I made then. Moral of the story, realistically examine your own finances to determine if you can afford anything, and exactly how much you can pay a month.

Now to help with realtors etc. Realtors have absolutely no problem showing you around without any kind of preapproval. Maybe if you were looking at some really large houses that only certain kinds of people buy, the ones that show these houses would require preapproval, but for the average person no preapproval is necessary.

Once you know your price range however, don't start looking with an agent, start going to open houses. Go to LOTS of open houses. Go to any and all you see, doesn't matter if they are in your price range or not. This will give you a much better picture of the market. The price ranges in different areas. Then you will be able to realistically judge whether the price range you have set will even buy the house you want in the area you want to live in. Finally you can start looking only at houses in the areas and price ranges you want, and should look into getting a realtor.

 

[ichy]

Start going to open houses. They're free, kind of fun to go to, and give you a bit of an idea what the market is like. I was going to open houses for years before I bought my house.

 

[Vdubchaos]

^^ agreed with 2 above

Even with an agent, I always preferred to drive to location and just check out the area and the house (outside) LONG before I asked to see the inside. Nowdays you can even do it with Google Streeview .

90% of the time I would never EVER consider the house Agent was trying to show me.

 

[Pr0d1gy]

You may want to reconsider for the moment. Analysts are forecasting another recession is coming soon and, if that happens, you could lose a good bit of equity if you buy before it happens. My recommendation is give the market another year or two to level out and then look to jump. Your original plan is a smarter move given the tentative markets at the moment.

 

[NoCreativity]

seems to me the smart money is putting the least amount of money down on the house the bank will allow you too. say I got 16k to put down on my 80k house. wouldn't it be better to put 10k of that into some kinda of investment that I still have acess to in the even of an emergency? a House really isn't an investment atleast in the shortterm anymore the way I see it, not unless the housing market changes drastically soon.

Make sure you buy a house you are comfortable staying in for a while. Supposedly market has hit bottom but you don't know and you don't want to be stuck in a location/house you dislike.

Since you are planning on children, make sure location has good schools. If not, make sure you can afford private.

Any money that you can invest making greater percentage than your mortgage interest won't be liquid. I.E. It will be more risky and the chances of principle taking a hit are very good. Point is, no it probably isn't better to have smaller down payment and invest the rest.

Also, listen to folks who say you need money for stupid stuff. In the begining, most trips to home depot/lowes will cost you $100-$200.

 

[boomhower]

now another question say I find a solid house that needs 20k in mechanical, and general updates to work, how hard is it to say buy a 60k house and include the 20k in mechanical and nessary upgardes in the morgage?

If the FHA loan interests you look into the FHA 203k loan. It does exactly what your looking at. It provides money to rehab the property. You don't just get the money though, you have to use a contractor so no getting friends or family to do the work for cheap.

I bought a house earlier this year using FHA, I actually only put $100 down. It was a deal they were running because it was an FHA foreclosure. I could have put more down but the house was only $58k and the PMI on it was close to negligible. I chose to keep the money in the bank. Got 15 years at 3.5%.

 

[Falloutboy]

If the FHA loan interests you look into the FHA 203k loan. It does exactly what your looking at. It provides money to rehab the property. You don't just get the money though, you have to use a contractor so no getting friends or family to do the work for cheap.

I bought a house earlier this year using FHA, I actually only put $100 down. It was a deal they were running because it was an FHA foreclosure. I could have put more down but the house was only $58k and the PMI on it was close to negligible. I chose to keep the money in the bank. Got 15 years at 3.5%.

well friends and family would be contractors and i'm sure I could work some loophole where they charge me full rate but then kick back a House Warming "gift" so I have some cash for DIY work.

 

[Vdubchaos]

well friends and family would be contractors and i'm sure I could work some loophole where they charge me full rate but then kick back a House Warming "gift" so I have some cash for DIY work.

No matter how much work you can do, at the end of the day you will still need capital for projects.

You still haven't answered my 1st question.

 

[ThePresence]

If the FHA loan interests you look into the FHA 203k loan. It does exactly what your looking at. It provides money to rehab the property. You don't just get the money though, you have to use a contractor so no getting friends or family to do the work for cheap.

I bought a house earlier this year using FHA, I actually only put $100 down. It was a deal they were running because it was an FHA foreclosure. I could have put more down but the house was only $58k and the PMI on it was close to negligible. I chose to keep the money in the bank. Got 15 years at 3.5%.

What kind of house do you get for $58k? Pics now!