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View Full Version : Why not buy a house?



kalynraye
25 Mar 2016, 11:09
So not sure if this is the place to post this but it is hearth and home so Mods please move if wrong spot.

That being said we currently live with my in laws to pay off some debt well at the rate I'm paying them and the prices I am hearing coworkers talk about apartments and mortgages I say why not. I have no intention of leaving Wisconsin for a long while. I'm tired of feeling like a burden and I don't want to rent. We want our own space. That being said I know nothing of house buying. I know we need to save a down payment, but if I use one of those calculators to see how much we can afford it says way low.I have no clue on how to look at a home loan or how we see how much we can get. We could
D talk to in laws but call it pride or the wish to avoid an argument but I don't want to. Any advice/help would be awesome.

- - - Updated - - -

Oh and I emailed a realtor to get help but they haven't called me yet.

B. de Corbin
25 Mar 2016, 11:56
If you can, buy a house - tax breaks on the interest, and cash back that rent doesn't provide, and value that increases with inflation.

Get the worst house in the best neighborhood you can afford - greatest increase in value.

Figure out how much you can pay per month, easily, and figure out how much house you can afford based on that - not what the bank or realestate agent tells you. They make money based on how much you spend.

DragonsFriend
25 Mar 2016, 12:14
Buying a house or any property is the best time to get a lawyer involved. A real estate lawyer will save you many times what they charge to broker a your purchase. The lawyer works for you and not for the seller like the real estate folks. The lawyer will likely have a flat fee instead of the 7% (more or less) that the agents get paid.
Some things to be aware of:
Roof inspection, foundation inspection, sewer line inspection, chimney inspection if there is one, overall condition of the home - doors and window sealing, construction an pest inspection. Is the home in a flood plain? Earthquake or storm zones are a big consideration and is the house built to those standards? Is the home bolted to the foundation? Are there ties from the roof to the foundation? You can request the seller to do all these but it is better if you have the lawyer ask for them. You should ask about taxes, heating and cooling costs. Are there trees that could fall on the house or brush that can be a fire hazard? Off street parking or a garage. Is the garage connected to the house? That will raise your fire insurance costs. Are there any easements on your property - these allow others to use your property as a travel route so you don't actually own that part of the property. If the property is on a hill or near a cliff you need to have a soil movement study to ensure that your home won't be put in danger. Is the electrical up to standards? Are the outlets near the sinks GFIR rated and is the microwave and garbage disposal plugged into a dedicated GFIR circuit?
You can figure out what it will cost to convert the lighting over to LED lighting that will save a bunch on your electric bill. Do you have appliances or will you want to keep the ones that are in place? If the home is served by gas is there tooling to shut off the gas connected to the meter? Do you need special tools to shut the water off and are they present?

Go to your bank and get pre-qualified for your loan so you know what you can afford and then use that as a high limit while buying for less. Make sure your income is secure and that you get loan disability and life insurance. (pay off all your bills and credit cards and then get rid of all but one credit card before qualifying)

Azvanna
27 Mar 2016, 05:45
So not sure if this is the place to post this but it is hearth and home so Mods please move if wrong spot.

That being said we currently live with my in laws to pay off some debt well at the rate I'm paying them and the prices I am hearing coworkers talk about apartments and mortgages I say why not. I have no intention of leaving Wisconsin for a long while. I'm tired of feeling like a burden and I don't want to rent. We want our own space. That being said I know nothing of house buying. I know we need to save a down payment, but if I use one of those calculators to see how much we can afford it says way low.I have no clue on how to look at a home loan or how we see how much we can get. We could
D talk to in laws but call it pride or the wish to avoid an argument but I don't want to. Any advice/help would be awesome.

- - - Updated - - -

Oh and I emailed a realtor to get help but they haven't called me yet.

Very exciting!!!!! My husband and I bought our first home October last year. We are still in the honeymoon phase. I'm loving it! I had my eye on the market a good year or so before we bought, but knowing the market is only a tiny part of the work I had to put in. I'm not sure how legal matters play out in the US, but I'll throw my two cents in.

The very first thing I did was to do a detailed budget. I recommend considering annual expenses and then dividing those by 52 to break it down to a weekly budget. https://www.moneysmart.gov.au/tools-and-resources/calculators-and-apps/budget-planner this is the template I used.

To fill it in as honestly as I could, I used my bank's spending tracker to see where I had been spending money for the previous year. It was a real eye opener and I freaked out at that moment of realising the lifestyle changes I would have to make. It was genuinely frightening but I faced it because it was important for me to be honest with myself about what my spending habits actually were, rather than what I hoped they would be.

Once I felt I had a realistic budget, I emptied my rent expense and filled in how much I thought I might be spending on Rates, Insurance and Home Maintenance/repairs. Cue tweak budget again! :D

Once I knew how much money I had to spend on repayments (double repayments or close to for the first while), THEN I started looking at Home Loans. Features that are important to me are:
- no or low cost exit (in case I can find a better deal down the track)
- no penalty for extra repayments (some banks will charge you if you overpay)
- low or no cost redraw.

At first, I went to see a Mortgage Broker to quickly access a few lending choices. The Broker explained Home Loans to me. The most important piece of information I walked away with was about Comparison Rates. Comparison Rate is the interest rate plus fees. It gives a better idea of what you can expect to pay over the duration of the loan. Interest Rate is calculated daily based on the size of the loan/debt. Comparison rate factors in bank fees as well. It's the Comparison rate you want to pay attention to. For example, Bank A offers a loan at 4.1% interest rate but comparison rate is 4.9%. Bank B offers interest rate at 4.1% but its Comparison Rate is only 4.5%. Assuming both banks offer exactly the same T&c'S, Bank B is the better choice.

I could keep going and going. Here is a website I think might help you as it is fairly close to what I did. http://michaelbluejay.com/house/figurepayment.html
Though I do think doing the budget first is best. Bottom line is if you don't have a relatively reliable income, don't buy. I wouldn't waste my money on Income Insurance, but I don't work for private enterprise/small company.

kalynraye
27 Mar 2016, 15:26
Thanks guys so very much. Azvanna, those links are really helpful I will def be using them.

Azvanna
27 Mar 2016, 20:36
Thanks guys so very much. Azvanna, those links are really helpful I will def be using them.

So welcome! I love talking property so feel free to chat more!!! There's no reason why you can't start looking online at homes now while you're doing groundwork. It will help you to get to know which areas you can buy in and how much you might need to have ready to buy the size house you want.

How long you intend to own the house for? Someone said to me that it takes about 5 years of owning a home to make it worth the initial cost and expenses of buying. So I think if you can see yourself in the same place for the next little bit, it could work in your favour to own vs rent. I'm
Not sure what it will be for my husband and I personally because land value hasn't increased dramatically for a very long time and I doubt it will considering the housing affordability crisis we have in some parts of Australia at the moment (eg Sydney and Melbourne).

Also I found out last night Australians pay Rates to their local government and you guys pay Property Tax. Same thing, different name.

thalassa
28 Mar 2016, 08:19
As someone that *hasn't* bought a house (due to a mobile lifestyle, as well as some of the below), but has watched many people get way in over their head---


1) make sure you factor in effective property tax payment increases due to inflation, property tax rate increases, and an increase in the assessed value of your home/property into your monthly payment--I've seen many people that have bought homes they could afford because they were cheap (due to the economic downturn) end up with a payment 300-700 more a month due to renovations they made and/or increased value due to economic recovery, in a few cases causing them to have to sell, or short sell

2) make sure the house is firmly in a good school district if you plan on having kids, not borderline between a good and bad school---you can find yourself in the good school one year and the bad one the next

3) get the very best homeowner policy you can and make sure you always have enough money in the bank to pay the deductible AND to pay for a new heater in the winter/ac in the summer, a hole in the roof if it rains, and the plumbing if your pipes freeze and burst-- Things will go wrong. The advantage of the apartment is that someone else pays to fix it, and generally there's a legislative time limit for things that affect quality of health. When its your house, there's no back-up. If a pipe leak goes undetected, and your toilet falls through the ceiling, that's all on you.

4) Use whatever calculator you can find to figure out the utilities--houses often run higher utility bills because you lose the effect of neighbors apartments acting as a sort of HVAC buffer zone....also, lawn care (gardening, etc) often uses more water.

B. de Corbin
28 Mar 2016, 08:27
Good points - in WI, make sure you know what the heat will cost, and don't count on cheap petrochemicals to stay cheap.

Shahaku
28 Mar 2016, 09:09
We saved about 200 a month buying a house vs renting. And we didn't have a down payment. But our home loan will have to be refinanced in a few years because we couldn't get a fixed rate at the time due to that. It's only fixed for five years. But we can refinance once we've paid it down a little and shown we're responsible loan holders.

Expect to spend a long time searching and don't get discouraged. Make a list of what you want in a house and then prioritize it. Use that list to give to anyone helping you look for a house as well as your budget. Things like the number of bedrooms/bathrooms, whether you want appliances included, I wanted there to at least be room for a built in dishwasher. Do you want or need a yard? Basement? Do you want the basement finished? Living in the Midwest, basements are fairly common, but some are more like a crawlspace. Dampness and mold are a concern. Older houses probably have asbestos to some degree. Look into the radon levels of that's a concern in that area. Figure out what is and isn't acceptable for you in all these areas.

Also, get an inspector. And you can ask the seller to cover that fee and closing costs. They might not agree, but you can ask.

anunitu
28 Mar 2016, 09:48
Good thing to remember,if you are a VET,the veterans will do an inspection of the property as part of the veterans loan process. They will not allow you to buy a house with any structural concerns.

kalynraye
28 Mar 2016, 11:17
Thanks guys for all the tips and advice. Getting our ducks in a row is definitely the first order of business. Followed by budgets and payments. Neither of us are VETS, so inspections is definitely something we will have to figure out.

kalynraye
12 Apr 2016, 16:50
Went and talked to a mortgage guy today. I have them a number well see if we can qualify for it and if so well start house shopping. Fingers crossed.

Hawkfeathers
12 Apr 2016, 18:24
I've been down this road 3 times in 3 different states and they may as well be different countries as far as what's required and how it's done. In general, when you hire a realtor, their commission comes from the sale, not the buy. They shouldn't charge you anything. Go to open houses just to see what's out there, and ask questions about the plumbing, etc. You'll learn a lot from just looking at houses and listening to what the listing agency has to say.

B. de Corbin
12 Apr 2016, 20:27
Went and talked to a mortgage guy today. I have them a number well see if we can qualify for it and if so well start house shopping. Fingers crossed.

You should be able to find a licensed inspector in the yeller pages.

A good inspector will find all kinds of stuff, and give you a fat portfolio of info on everything from the condition of the roof to the state of the electrical service. ALL houses need things repaired - the inspector should also tell you which things really matter, and give you estimates.

Azvanna
12 Apr 2016, 21:27
You should be able to find a licensed inspector in the yeller pages.

A good inspector will find all kinds of stuff, and give you a fat portfolio of info on everything from the condition of the roof to the state of the electrical service. ALL houses need things repaired - the inspector should also tell you which things really matter, and give you estimates.

oh my goodness this is so true, especially with the older houses.

We've been in our 1950's home for 3 months and so far we've had guttering issues, land drainage issues, a collapsed ceiling in one room, plumbing issues (bathroom, kitchen and outside) and SERIOUS pest control to be done. None of these things showed up on our building inspection. So glad we held back some savings for immediate repairs.

kalynraye
27 Apr 2016, 09:11
Fingers crossed were going to apply for a mortgage!

Azvanna
30 Apr 2016, 04:21
Fingers crossed were going to apply for a mortgage!

Wish you luck!!!!

kalynraye
02 May 2016, 09:49
And we were approved. House shopping begins Wednesday!!!

Hawkfeathers
02 May 2016, 09:57
And we were approved. House shopping begins Wednesday!!!

YAY!!! Enjoy the experience.

DragonsFriend
02 May 2016, 10:30
don't settle for lees than you need to have and get insurance for major repairs. As a matter of fact you need life insurance and disability insurance to pay the mortgage if something happens.

kalynraye
06 May 2016, 08:32
We put an offer on a house... I know it's fast but we looked at houses found one that clicked took his Dad it clicked for him and says it's a steal.. so we'll see. I'm happy I'm scared I'm excited..

B. de Corbin
06 May 2016, 10:00
We put an offer on a house... I know it's fast but we looked at houses found one that clicked took his Dad it clicked for him and says it's a steal.. so we'll see. I'm happy I'm scared I'm excited..

Ohhh...

Ahhhh....

I'm ohin' and ahin' at your excitement ;)

Azvanna
06 May 2016, 18:48
We put an offer on a house... I know it's fast but we looked at houses found one that clicked took his Dad it clicked for him and says it's a steal.. so we'll see. I'm happy I'm scared I'm excited..

Woop!!! That's a rare day when you don't even have to negotiate on a price! Wish you all luck!

kalynraye
07 May 2016, 14:24
And accepted!!!!

Azvanna
07 May 2016, 14:54
And accepted!!!!

CONGRATULAMATIONS!!!!! :bounce: