The Home-ownership Thread

[Doohicksie]

Lots of good advice on here wrt financing, so as a homeownwer, my advice when looking at a house you like would be to carefully inspect the plumbing.    Plumbing can be very expensive, have the main sewer line inspected with a camera to verify no roots are invading the line and the pipe is secure.    Ask the previous owners if they've had any issues with pipes bursting in walls, etc...   How old is the plumbing, etc..   It can be a real nightmare.

 

From that perspective, a single story ranch on a full basement is the best way to go if you have any plumbing issues.  It's what we had in Dearborn and we did have to change out the old galvanized for new copper pipes.  The plumber was able to do the whole job with virtually no knocking out walls (just a couple of small access holes under sinks and through a closet for the shower).  You may not want to constrain your search to single story homes, but that's one consideration.

[shrader]

I wish there was something special or groundbreaking to the way our search went, but there wasn't.  We had bounced from open house to open house back when we were in Boston, just getting a feel for a housing search.  After we moved to NC, it was obviously a very different market and we were lucky to have deeper wallets as well.  We had a basic idea on a timeframe for when we wanted to buy. 

 

We started looking at new construction first, bouncing from neighborhood to neighborhood.  After living in a few apartments with serious needs of renovation and maintenance, this was an appealing option, and obviously if we were going to go that route, we would need to start looking early.  Typically we'd either find a house we liked, but the neighborhood and plots of lands were lacking, or the other way around.  It started to seem a bit iffy, in order to find the right combination you'd either have to sacrifice price or commute distance (pretty standard I'm sure).

 

One day just for the experience, we looked at a new development in my brother's neighborhood.  He lives way too far away from our jobs, but if nothing else, it was more experience checking out homes.  Later that week, we got a call from that company talking about a new development they were starting that was right near the border of how far we were willing to go.  I actually told my wife to not bother calling back because we weren't crazy about what we saw at their first one.  But we were out looking one weekend, so we figured we might as well.  Thank god for that as it had just about everything we wanted, much better models than the other development, and a great price point.  So of course that's where we wound up.  It's funny to think about how close we were to not even looking.

 

 

Blah blah blah.  Long story short, even if you're not going to be serious for a while, start looking as soon as possible.  It's a great experience and you'll find yourself so much better prepared at that moment where you are serious.  You will also get a much better feel for what each of you wants in a house.  As it turned out, my wife and I were much closer to the same page than I ever would have thought.

[darksabre]

I want to thank everyone for their input so far. There's some stuff in here I had no idea about. I won't go back and quote individual posts but I'll address some things. 

First off, Jo and I love to work on projects. Actually, living in an apartment is driving me crazy because I can't make improvements to it. My enjoyment from things like motorcycles and cars extends to dwellings as well. I like to tinker and solve problems. I'm doing what I can to learn about anything home repair/improvement related BEFORE I buy a house, so that I can better visualize the work I want to do when I'm looking houses. 

Josie and I are paying a combined rent of $940/mo for a 2 bedroom apartment. Even if we end up with a mortgage payment that is half of that, we would probably expect to have the same level of expense overall with taxes, repairs, etc. It's certainly not a money saving pursuit, but a desire to invest in something tangible. 

 

We're pretty aware of what our limits will be for a first house. I have no interest in living anything other than modestly. That said, cheap =/= good value. I would expect a first home cost of somewhere just under $150k. Cheaper if possible, but who knows. 

 

I really appreciate the tip on the first time home buyer savings accounts. The New York Federal Home Loan Bank offers the First Home Club savings program which I would qualify for and is provided by many banks in the area. Just a quick look at First Niagara, they're matching 4 to 1 on savings deposits. An 18 month enrollment gets me $7500 towards a down payment? That's incredible. 

[MattPie]

I want to thank everyone for their input so far. There's some stuff in here I had no idea about. I won't go back and quote individual posts but I'll address some things. 

 

First off, Jo and I love to work on projects. Actually, living in an apartment is driving me crazy because I can't make improvements to it. My enjoyment from things like motorcycles and cars extends to dwellings as well. I like to tinker and solve problems. I'm doing what I can to learn about anything home repair/improvement related BEFORE I buy a house, so that I can better visualize the work I want to do when I'm looking houses. 

 

Josie and I are paying a combined rent of $940/mo for a 2 bedroom apartment. Even if we end up with a mortgage payment that is half of that, we would probably expect to have the same level of expense overall with taxes, repairs, etc. It's certainly not a money saving pursuit, but a desire to invest in something tangible. 

 

We're pretty aware of what our limits will be for a first house. I have no interest in living anything other than modestly. That said, cheap =/= good value. I would expect a first home cost of somewhere just under $150k. Cheaper if possible, but who knows. 

 

I really appreciate the tip on the first time home buyer savings accounts. The New York Federal Home Loan Bank offers the First Home Club savings program which I would qualify for and is provided by many banks in the area. Just a quick look at First Niagara, they're matching 4 to 1 on savings deposits. An 18 month enrollment gets me $7500 towards a down payment? That's incredible. 

 

I was thinking about it some more last night, and other people have alluded to it, but when you get approved for a mortgage they'll approve you for, frankly, a lot more than you can comfortably afford. I forget what the formula is but there's no way I could live comfortably if I had maxxed out my mortgage. Think of it like the NHL salary cap and you're Florida with an internal budget and not the Rangers (or Sabres these days) spending to the limit. It doesn't seem like you'd do that, but I figured it should be said.

[darksabre]

I was thinking about it some more last night, and other people have alluded to it, but when you get approved for a mortgage they'll approve you for, frankly, a lot more than you can comfortably afford. I forget what the formula is but there's no way I could live comfortably if I had maxxed out my mortgage. Think of it like the NHL salary cap and you're Florida with an internal budget and not the Rangers (or Sabres these days) spending to the limit. It doesn't seem like you'd do that, but I figured it should be said.

It's sound advice that should be repeated. I think we're pretty aware of what we can afford. But judging by the amount of homes I regularly see going through foreclosure, a lot of people could use this advice.

[dEnnis the Menace]

Mrs Menace and I are paying PMI because we couldn't save the full 20%.  Also think about if this is gonig to be a long term house or a starter house.  For me and the mrs, our sorta long term house turned into starter house because of the two new ones on the way.

 

Check all of your financing options.  We went through a local credit union, where if we put all of our direct deposit into the checking account, and used them as our primary checking bank, they paid us for the closing costs (i.e. the deed filing, and all of the other added costs).  Saved us around $7K.  We also went full price on the house for our offer, and then asked the seller for $4k in concessions.  So that took another $4k off the closing costs.  So again, look at ALL of your options with the lenders.  

 

We love our little home.  There isn't many repairs needed, but there is general upkeep, and the little changes that 1. make it ours, and 2. increase resale value.

 

Also, do your research on your inspector.  We were saved by an inspector and how thorough him and his associate were.  What the seller advertised as a small problem in the basement was closely examined and deemed to be a larger fix.  Our realtor suggested we pass on that house after that visit, not to mention the sellers wouldn't budge on any concessions.  Which brings me to one more point.  Don't be afraid to walk away from the table if you don't get a fair deal.  The house may seem perfect, but you can't get hosed either.  If you ever have any questions on the process, shoot me a text.  

[Iron Crotch]

 

 

Also, do your research on your inspector.  We were saved by an inspector and how thorough him and his associate were.  What the seller advertised as a small problem in the basement was closely examined and deemed to be a larger fix.  Our realtor suggested we pass on that house after that visit, not to mention the sellers wouldn't budge on any concessions.  Which brings me to one more point.  Don't be afraid to walk away from the table if you don't get a fair deal.  The house may seem perfect, but you can't get hosed either.  

 

The above is good advice.

 

Get the best, most thorough, inspector in town.  Ask around.  Do some research.  And, remember to stick to your guns - you are in charge despite the pressure you'll receive to buy.  Throughout the buying process everyone has an interest in pushing you into buying the highest priced home possible.  No one gets paid until you buy, and that includes lenders, as well as both your and the other Realtor. The commission to both Realtors is paid by the seller, so in some sense your Realtor is working for their own paycheck and not necessarily for your own interests.  The only person on your side is the inspector, but there are a ton of lousy inspectors out there.  They usually get paid on a flat fee, so they have an incentive to do a half-assed inspection.  Finding one with some integrity can save you thousands - once you sign the documents you inherit whatever problems the home has (electrical, structural, plumbing, roof, etc.).

[X. Benedict]

Not sure if it has been mentioned, or if I'd necessarily recommend doing it, but I think you're still able to take out 401k/IRA funds without penalty for a down payment on a first time home purchase.

Yes. But money is cheap right now. I would avoid doing this if I could. 

The tax deferred benefits and potential growth outweigh the price of a mortgage with good credit. 

[biodork]

In my experience, the first thing to know is: YOU ARE GOING TO SPEND MORE MONEY PER MONTH TO OWN THAN RENT. Some of that money comes back with tax breaks, but I still feel like I'm paying out way more than I way when I was renting. Partly with the mortgage itself, but also the other bills and costs that you're shielded from in a rental (trash collection, water, HOA fees, lawn maintenance, &c.). Long term, like 10-15 years, I think you start to get ahead (although I've owned my house 9 years and a don't feel like I'm ahead at all) but that's assuming your house stays stable in value or increases. Until recently my mortgage balance and home value tracked pretty well such that I'd just barely be able to pay off my mortgage if I sold my house. And I considered myself fortunate that I wasn't "underwater" at any point so I wouldn't have to pay into selling my house like the people I bought from. But if I sold today, I'd get roughly my down payment back (last I checked). All the money I paid into capital and interest (and property taxes, and fees)? Gone.

 

I don't want to be completely negative, I have a nice house that meets most of my needs. And I bought at a ridiculously bad time. But do your homework and be prepared to live in that place for a LONG time in case the market dictates that selling your house would be cost-prohibitive.

 

 

I don't want to argue too much since it really depends on the specifics of each situation, but if I had continued to rent (granted, a two-bed apartment and not a house), I'd still be paying $300-400 less per month than my mortgage. Over 9 years, that's a lot a money, especially if I had just taken my down payment and invested it in an index fund or something. And as I mentioned, if I sold today I *might* get my down payment back (my house's value has declined at least 10%, and for awhile it was closer to 20%). And I did make extra payments early on to try to get ahead. As for rates, mine is in the mid-4% range from 2010, the earlier rate was a little higher (maybe 6%, nowhere near teens). That was in the heart of the housing bubble where banks were practically giving money away.

 

I'm not saying don't buy a house, I'm saying be wary. There's a confluence of stuff that made my decision pretty questionable, although it seemed like a good idea at the time. As it is, if I ran the numbers I'd bet the house is one of the worst decisions I've made financially. The only other thing that comes close is buying a motorcycle.

 

My house started depreciating a couple years after I bought it, my bad luck (or lack of foresight). It's still worth less than I paid. My property and school taxes are more than my parents' place in Elma, so I don't want to hear about how bad NYS taxes are, either. Between PA state and local income taxes, I'm pretty close to NYS income tax too. (I'm checking out now, I'm getting too ranty)

 

Your second paragraph is spot on. Maybe if you look at just the mortgage+ vs. rent, you come out OK. But once you add in all the maintenance and improvements it starts to get dicey. Maybe some of that comes back when you sell, but something like the lawn is just a cost. And like tires on a car, you're never going to recoup the cost; you can only lose value if the lawn needs work when you're selling.

Can't emphasize this enough.  Do not buy into all the hype about "owning for less than you rent" without crunching some numbers of your own.  Those statements normally only factor in your base mortgage payment, and do not account for homeowners insurance (which costs far more than renter's insurance, especially depending on where you live) and property taxes (which can vary a great deal by locale, so do your homework).  I don't necessarily regret buying my house because I wanted a permanent place I could do what I wanted with after moving around apartments for several years prior, and I went into it with the mindset that I was only aiming to break even by the time I sold, which should have been reasonable given I was there for 9 years.  But in hindsight (which is always 20/20), I would've been better off financially renting all those years because what had been disposable income I could use towards debt became nonexistent, and things will always break and need repair with a home, and like Matt, property values in my area declined to where I sold my home for LESS than I paid 9 years prior.

 

So buyer beware:  rates are excellent right now and if you can find the right place at a price that allows you to retain some flexibility and breathing room in your budget, go for it, but with eyes wide open.

Edited December 3, 2015 by biodork

[wjag]

This forum is always good for advice on topics outside of hockey and I bet this will be no different. I know Bio has regaled us with stories of her house nightmares, so maybe others have things to contribute?

 

Although home-ownership not in our immediate plans, Josie and I talk frequently about our desire to stop throwing money into the apartment rental void. Our lives are still a little too unpredictable at the moment, but I think within the next two years I want to take a stab at it. 

 

 

Obviously this is just an open thread. These are just my conversation starters. 

 

 

 

My advice.. Jump now.  before the rates start creeping up.  The mortgage always looks large to a first time buyer.  It will shrink as you grow older and make more coin.  Scrape together whatever you can by whatever method you can.  Your taxes will come down and your equity will go up.  Find a starter home and start paying yourself and not the landlord.  You have two rents, I presume. Combined they probably equal a mortgage payment.

Edited December 3, 2015 by wjag

[Ogre]

Dark, I'm positive that you would love owning your own home. I went about it differently than most. Late twenties I payed cash for a fixer upper mobile home in a nice park. Spent a little money to make it nice and just sucked it up and stuffed money away for ten years. Seriously roughing it. Driving an Aveo, eating ground beef and pack lunch. We got pre approved for a construction loan that would roll over into a mortgage. We put up a modular on a walk out in a place we feel is paradise. We are lucky enough to pay equal to or less than the average rent for a one bed apartment. I work my nards off finishing the painting, landscaping, etc, but I friggin LOVE it. I have a beloved pet buried here, a healed broken wrist from messing with an old hand crank tractor I bought...I love it...You will too. Good luck, man.

[woods-racer]

Dark, I'm positive that you would love owning your own home. I went about it differently than most. Late twenties I payed cash for a fixer upper mobile home in a nice park. Spent a little money to make it nice and just sucked it up and stuffed money away for ten years. Seriously roughing it. Driving an Aveo, eating ground beef and pack lunch. We got pre approved for a construction loan that would roll over into a mortgage. We put up a modular on a walk out in a place we feel is paradise. We are lucky enough to pay equal to or less than the average rent for a one bed apartment. I work my nards off finishing the painting, landscaping, etc, but I friggin LOVE it. I have a beloved pet buried here, a healed broken wrist from messing with an old hand crank tractor I bought...I love it...You will too. Good luck, man.

 

Sorry, but I'm missing something. What is a *walk out*?

 

Also, I think you nailed home ownership on the head.

[Ogre]

Sorry, but I'm missing something. What is a *walk out*?

 

Also, I think you nailed home ownership on the head.

Basement. I shopped around for a local mason who threw in 12" block get the job. I rented a backhoe and yada yada I'm finishing a very large patio outside of the walkout. If anyone is considering building then you should look into modulars. We did a 1 1/2 story chalet. You can go basic and do varying degrees of being finished. We preferred the blank slate.

[woods-racer]

Basement. I shopped around for a local mason who threw in 12" block get the job. I rented a backhoe and yada yada I'm finishing a very large patio outside of the walkout. If anyone is considering building then you should look into modulars. We did a 1 1/2 story chalet. You can go basic and do varying degrees of being finished. We preferred the blank slate.

 

OK!

 

That make's it all clear now.

 

The *modular home* is anything you can dream of. Their quality control is amazing because they build the modules  (can be 1 wall to a section of the home) indoors and within a mold (best description I have). Everything comes out square. Holes from plumbing and electric are pre-drilled. The home building process has more in common with tool and die work. Forms, inspection processes, state of the art tools and laser precision. 

 

Very cool.

[French Collection]

We went modular with our current home (3rd home). Not really cheaper than building, which they advertised, but a well built home.

You are committed in advance with your choices because it is factory built. The cool thing was that the 2 storey home arrived in 4 pieces, the crane set up at 08:00 AM and we were walking in the home by noon.

Another thing we liked was choosing a property we wanted, country acreage, and getting the house you want on that lot.

No maintenance to do on a new home. I like to landscape, build trails, sheds, small barns and bridges.

Definitely not starter home prices though.

[X. Benedict]

We went modular with our current home (3rd home). Not really cheaper than building, which they advertised, but a well built home.

You are committed in advance with your choices because it is factory built. The cool thing was that the 2 storey home arrived in 4 pieces, the crane set up at 08:00 AM and we were walking in the home by noon.

Another thing we liked was choosing a property we wanted, country acreage, and getting the house you want on that lot.

No maintenance to do on a new home. I like to landscape, build trails, sheds, small barns and bridges.

Definitely not starter home prices though.

 

I've long been curious about people who have purchased modular homes. 

Do they maintain value? 

[French Collection]

Haven't heard any different.

Like I said, it is a well built home. When the 4 pieces went together there was no shims or wedging or sledgehammers.

Snapped together like LEGO, perfectly level.

There was 3 weeks of work before moving in to touch up and paint the drywall, install ceramic flooring and tie in services (well, septic, electricity, phone & cable).

[BMWR100RT]

Can't emphasize this enough.  Do not buy into all the hype about "owning for less than you rent" without crunching some numbers of your own.  Those statements normally only factor in your base mortgage payment, and do not account for homeowners insurance (which costs far more than renter's insurance, especially depending on where you live) and property taxes (which can vary a great deal by locale, so do your homework).  I don't necessarily regret buying my house because I wanted a permanent place I could do what I wanted with after moving around apartments for several years prior, and I went into it with the mindset that I was only aiming to break even by the time I sold, which should have been reasonable given I was there for 9 years.  But in hindsight (which is always 20/20), I would've been better off financially renting all those years because what had been disposable income I could use towards debt became nonexistent, and things will always break and need repair with a home, and like Matt, property values in my area declined to where I sold my home for LESS than I paid 9 years prior.

 

So buyer beware:  rates are excellent right now and if you can find the right place at a price that allows you to retain some flexibility and breathing room in your budget, go for it, but with eyes wide open.

This. I was shocked when I bought "Home buying for dummies" 20 years ago and it talked of the folly of home ownership. For years all my elderly relatives were pestering me about throwing rent away. What the Dummies book said was that home ownership was only good investing strategy in hot economic markets, and even sometimes that was fleeting. Google "Is home ownership a good investment". And don't read the answer from Realtors or banks (or property tax collectors).

 

You need to look at it as an expensive hobby and not an investment. I love our house and I have made many improvements, but unless I was married with a child on the way it would be the last thing I'd invest in. I'd be renting and enjoying my free time which you will give up when every problem becomes yours, every home and garden show ill make you feel inadequate until you upgrade, etc. When ever I'm working on something instead of relaxing I humor myself by saying "Ah yes, the American dream!"

 

You two are some of my favorite posters as I am mostly a lurker........I don't want you to take this as negative. My wife with child and one on the way moved into a house in 1998 and it's almost paid for (get a 15 or 20 year mortgage if you can) and it's been an excellent adventure. But think it through. You've got some excellent advice on PMI and other stuff.

[darksabre]

Balanced advice is why I come here. You guys are great.

[josie]

A friend sent me this calculator when I started mumbling about going down this road a year ago.

 

http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html?_r=0

[Iron Crotch]

To all the mixed advice I'll reiterate that land is an appreciating asset and a structure is a depreciating asset.  Those with horror stories almost certainly live in areas where the land value is not suitably appreciating due to a stagnant economy, low growth rates, excess housing supply, etc.  I'm in full agreement with them.  In those areas, absolutely think twice about buying, especially if it is an older home that requires a lot of maintenance.  But, in high growth areas if you time the market properly it can be a great investment.  I'm making a killing on my current home due to appreciation in the local real estate market here.  Best investment I've ever made.

 

Bio - Denver is a top-5 real estate investment market w/ year-over-year price increases of around 13%.  If you ever decide to buy out there let me know.  I moved to Nashville from Colorado (my screen name used to be COSabre).

 

 

 

 

 

 

[biodork]

A friend sent me this calculator when I started mumbling about going down this road a year ago.

 

http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html?_r=0

Good call!  Bankrate.com has some good ones, too:

 

http://www.bankrate.com/calculators/index-of-mortgage-calculators.aspx

 

To all the mixed advice I'll reiterate that land is an appreciating asset and a structure is a depreciating asset.  Those with horror stories almost certainly live in areas where the land value is not suitably appreciating due to a stagnant economy, low growth rates, excess housing supply, etc.  I'm in full agreement with them.  In those areas, absolutely think twice about buying, especially if it is an older home that requires a lot of maintenance.  But, in high growth areas if you time the market properly it can be a great investment.  I'm making a killing on my current home due to appreciation in the local real estate market here.  Best investment I've ever made.

 

Bio - Denver is a top-5 real estate investment market w/ year-over-year price increases of around 13%.  If you ever decide to buy out there let me know.  I moved to Nashville from Colorado (my screen name used to be COSabre).

I believe you... I'm shocked at how places here that are nothing special and would be in the $175-250k range back in central PA are valued in the upper $300s to low $400s.  I'd like to buy again someday, but for now I can't afford it; my rent on a one bedroom apartment in the Tech Center is more than twice what my mortgage was in PA!   :blink:

[Iron Crotch]

Good call!  Bankrate.com has some good ones, too:

 

http://www.bankrate.com/calculators/index-of-mortgage-calculators.aspx

 

I believe you... I'm shocked at how places here that are nothing special and would be in the $175-250k range back in central PA are valued in the upper $300s to low $400s.  I'd like to buy again someday, but for now I can't afford it; my rent on a one bedroom apartment in the Tech Center is more than twice what my mortgage was in PA!   :blink:

 

Denver is expensive.  But, at least you can legally smoke pot while you watch hockey.   :D

 

BTW - there is an authentic Czech hockey bar on South Broadway (Sobo 151)

[biodork]

Denver is expensive.  But, at least you can legally smoke pot while you watch hockey.   :D

 

BTW - there is an authentic Czech hockey bar on South Broadway (Sobo 151)

You've piqued my interest!  I have no idea what an authentic Czech hockey bar should entail, but I'd like to find out!

[wjag]

You've piqued my interest!  I have no idea what an authentic Czech hockey bar should entail, but I'd like to find out!

Pilsner Urquell and the original Budwesier would be a must...