Buying a home

[fan-of-fans]

I have been debating the subject of buying a home for the last 4 years. At first it wasn't much of a debate, I didn't have good enough credit. Now that my credit is improved, surprise, the prices are increasing! There aren't as many great deals out there anymore. And I hear interest rates are going up.

I'd love to have my own place to arrange as I want and get some vintage appliances for. But the thought of taking on the debt is scary.

I would prefer to get something cheap, but the choices in that range are slim. I am the type that likes to have everything paid for, and don't want to be stuck with a mortgage for a really long time.

My preference, oddly is really old homes (pre 1940s) or ones built in the late 1980s or later. I like vaulted or high ceilings, kitchens that have wood cabinets, and not that 70s/80s laminate front stuff. I like nice wide casings and moldings (again like old homes or those built recently have, not clamshell casings and flat, white hollow core doors like most 60s/70s/80s homes have).

But again stuff like that is getting harder to find in today's market. Anyone else having the same issue? Sometimes I feel like the very people that I always laugh at in the Househunters programs where they scorn because the kitchen doesn't have granite or stainless, and I'm thinking "Who cares, it's all less than 10 years old, live with it! It could be much worse!"

 

[DADoES]

 
<blockquote>I am the type that likes to have everything paid for, and don't want to be stuck with a mortgage for a really long time.</blockquote> Add extra for the principle on your monthly payments to accelerate the payoff, unless the terms prohibit doing so.  Add when you can if you don't have extra funds for every payment.  I paid my 15-yr mortgage in 8.5 years, cut off $16,500+ interest.

 

[rp2813]

Depending on your income level and tax bracket, mortgage interest may benefit you at tax time.   Around here, only people from mainland China and Hong Kong pay for homes in cash.  On the flip side, if inventory is tight and bidding wars are common, a cash deal will often trump bids that are contingent on financing.

 

The one thing above all else that you need to accept up front is that you are not likely to find your ideal home with everything you want.  You are correct -- your wish list had me conjuring up images of House Hunters and Property Brothers. 

 

Be open to anything your agent may show you that's in your price range, and keep in mind that the best investment involves these three words:  location, location, location.

 

And never deal with the seller's agent.   You need your own advocate, particularly if this is your first rodeo.  Ask friends and relatives to suggest an agent who did right by them.  There are plenty of snakes out there.

 

 

 

 

 

[ea56]

I have to say that I totally agree with DADoES in reply #1. I don't know how old you are, but retirement will come quicker than you may think and having your home paid for will make your life much easier! When we took out our first mortgage in 1987 we immediately began paying 1/12th of a mortgage payment extra every mo. If you start out that way you'll never miss the extra $ and your principal will pay down much quicker. When we refied our current home in 2003 with a 15 yr. mort. we did the same thing, but this time we had autopay and we just had the mortgage company add the extra 1/12th to every mo pymt. In addition we saved $ in our bank acct. so when we reached the point that the mortgage interest wasn't enough to use as a deduction from our fed inc tax we just paid off the bal on the mort. What a relief!! And we managed to do this during the height of the mortgage meltdown, and pay off the home in just over 15 years. And we did it off of a Social Worker's and Hotel employee's salaries, so it can be done. And I also agree with Ralph in reply #2, location, location, location! You'll never find a home with everything that you want, but in time you can change these things, but the location will always be the same. I wish you good luck in your endeavor. Just remember that when you become a homeowner you also become the responsible party for all repairs and maintenance, it can be a big job, so buy a house that you can afford to keep up with both financially and time wise.
Eddie[this post was last edited: 1/16/2016-16:58]

 

[whirlcool]

At first a mortgage payment may seem to be more expensive than a rent payment, but as time wears on you'll soon notice that you couldn't rent a home for what you are paying in mortgage payments every month. Rent has a way of constantly rising whereas mortgage payments stay the same.

 

[petek]

Just being on this site you probably have it together enough to know an ugly paint job in a house is just paint.. ugly wallpaper comes off albeit sometimes with a struggle, etc etc.. Blows my mind those real estate shows with people poo pooing a house just because of the paint, wallpaper or "old kitchen"  they're all fools.  But then it wouldn't make for good tv I guess. 

 

When we bought our first house we kept it pretty conservative as to what we could afford mortgage wise etc.  We were both of the mind set to pay off the mortgage as soon as possible. I think that is more common in  Canada than the US because we can't deduct it from income tax so best to get rid of it.  

We went with bi-monthly payments and tossing in extra $ against the principle whenever possible, not that often but anything, even a hundred or two every few months cuts it down. Basically near all of my pay went on the mortgage and some of the utilities and we lived off his wages. 

I guess that's not as practical when you're single. Though taking in a good roomie is certainly going to help. A friend of mine in Vancouver did that for years.. A straight guy no less and never had a problem . You have to in high value markets like that.  

 

[DADoES]

 
Mortgage interest deduction is a point ... but another point is that it's an income deduction, not a full-on tax credit, so the "gain" is just a percentage of the interest paid.

 

[lordkenmore]

Another point with mortgage interest deduction: there is always a risk that it will be taken away next time tax code gets tinkered with. Indeed, I think I recall that was one idea during the Bush years.

Another point. Incredibly obvious, but worth considering. If one owns a house, one is liable for property taxes, which is one thing to consider. Also there are maintenance costs on the house. It's probably a good idea having emergency cash to deal with repairs. Some probably can be predicted and budgeted for (e.g., "probably need a new roof in 5 years!"). But some can happen suddenly, like the water heater suddenly starts spurting a geyser.

 

[rp2813]

Maintenance Costs

Indeed, we just got hit in a city sweep up and down our street, resulting in mandatory repairs to 104 square feet sidewalk along with 34 linear feet of curb and gutter.  In this town, the property owner is responsible for for all of this.

 

To have the city do the work and bill us, the cost would be $3,600.  We're having a contractor do the work for $2,400 (guaranteed to pass inspection).

 

This past October we had termite and roof work done.

 

We sock funds away into a dedicated account each month for household expenses, but it took a big hit.  The house needs paint and a new (long) driveway, but those items will have to wait until after a recovery period.

 

 

 

[dartman]

If your budget is small consider a newer manufactured or modular home on its own lot. We got a 96 good sense manufactured home that is 1400sf and was all rehabbed with a new kitchen, floors, windows, roof, siding, paint and 4br with two baths, paid 115900 on a FHA loan that also includes property taxes and is fully transferable. Also got 30 year fixed at 3.62 locked.
We're 2 houses from a small park, have two huge pine trees in the small front yard and get along with the neighbors.
Had enough money left to have a gravel parking area put beside the house with a nice 6 foot cedar privacy fence and a drive through gate. Also a 12x16 mini barn to stash the stuff that doesn't need to be in the house.
Wasn't in the area I wanted and no shop/man cave, but house was nice and move in ready, and very affordable so I jumped in. Pay under 850 a month which is cheaper then my rent was for a tiny 2br house with a big lot, I was paying 900 a month for it the last 3 years, up from 600.
Rents are sky rocketing and no tax break on rent so buying made way more sense in 2012 and still do now till they jack interest rates back up to knock poor folks out if the market.

 

[petek]

I've never heard of having to pay to have your curbs and gutters repaired or replaced.. Isn't that why you pay city taxes. 

 

[rp2813]

"Isn't that why you pay city taxes?"

Yeah, you'd think it was, wouldn't you? 

 

As I recall, this has been an on-again, off-again thing over the years.   I think it's been at least a dozen years since curb, gutter and sidewalk maintenance reverted from city to homeowner responsibility due to budget cuts.   Same goes for street trees, which are almost always the culprits behind cracked or buckled curbs, gutters and sidewalks.

 

I do think this policy is exceptional and that in most communities, the city takes care of these things -- as it should.

 

[askolover]

Time flies

and you will have it paid for before you know it. My house will be paid off in September!!!!! Of course, then it will need a new roof, new windows, new vinyl siding, redo the floors....etc. But at least it's MINE! Now I'm ready to build a new house, I'm tired of an old one haha.

 

[tolivac]

For those curbs,gutters,walks,could it be those folks live out of the city limits-in my area if your housing area has those its yours or the homeowners associations.The HOA fee would then cover those things.

 

[polkanut]

When we bought our house on June 29, 1998 the best interest rate we could find in our area was 7.75% on a 15 year fixed rate mortgage.  We paid $60,000 for our 1100 sq. ft. 3 bdrm bungalow.  Our monthly payment was $660.00.  We had the payments taken out of our paychecks.  At the time my wife and I were paid on alternating weeks so we were in a sense making payments every week.  Then on Jan. 30, 2001 my mother-in-law died, and with the inheritance received we paid off the balance.  The credit union was kinda pissed, but who cares.  Our monthly payment was about equal to renting a house at the time.

 

You won't be sorry!

 

[jamiel]

Home ownership ties you to an area (for good or for ill). It's a good choice, but not the best choice for everyone or at every stage in your life.

 

[alr2903]

If your job is stabile in the area it is almost a no brainer. That said a house is a lot of work. and usually a good investment we will be right here. I jokingly told my partner should we win the big powerball this week. No more houses, we would consider buying a hotel/motel. or a senior living complex. We are in our 50's, but you have to look ahead. As far as a first house make the necessary repairs for safety and live with it. You may have to deal with some inconvenience but when property is high sell it and move on. Chances are the new owners will rip it all out anyway. alr

 

[rp2813]

After barely scraping up enough for a down-payment, we bought our first house in 1990 for $245K.  A vintage 1957 stamped-out 3 bedroom/2 bath with 1,300 square feet.  We remodeled the sad kitchen, mostly ourselves except for some plumbing, a couple of additional electrical circuits, and the new floor covering.  The rest of the house we spruced up.  Money was tight.  The mostly original bathrooms remained with minor improvements.  We landscaped front and back and gave it curb appeal that it had sorely lacked.

 

None of this happened overnight, but by the 10-year mark we had done about all we were motivated to do.  Other than the kitchen, it didn't cost us much.  We re-financed twice to lower our interest and monthly payment, but upon my insistence we never took any money out against our equity.

 

We bought when the market was down.  It stayed down for a while, but once things picked up, it didn't take long for our place to double in value.  After 18 years, we sold it -- for almost three times what we paid.  Today, six years later, that house is worth over four times what we paid.  Even after the mortgage meltdown, prices in that area didn't even hic-up.  Part of that has to do with the school district, which was a factor in our decision (for resale), along with what was then a sleeper location that became more and more desirable.  These days, nothing stays on the market for long in that neighborhood.

 

Granted, the real estate market in Silicon Valley is a unique anomaly and it has become insanely inflated, but just like those weight loss ads that advise in fine print, "results not typical," it serves as an example of what's possible, and real estate's potential for being the smartest and best investment one can make.  Get informed, go into it with a long term strategy, and overall, you won't regret it.

 

 

[dartman]

Sidewalks/ water

Portland pulls that sidewalk crap too. Where I work somebody complained about one of them close by so they came around and tagged everyone. Same deal, either pay us to do it, or get your own contractor as long as it passes inspection.
Portland is a very greedy city and tries to charge us for everything they can get away with while slowly dropping services.
I didn't want to be in this area because of the overpriced water rates and the very long interval between bills so you forget you have a $300 water sewer bill coming.
They also took over the garbage routes, raised the prices, appointed haulers you cant change, and recently forced everyone to use little compost buckets for the leftover food stuff. Because of that they then dropped garbage pickup to every other week, the recycling every week, but charge exactly the same rates as before. I so want out of Portland proper but we're stuck here and at least my house is nice enough.
That is why we bought the new HE top load washer, and may disconnect the downspouts on the gutters even though I'm pretty sure they are on a french drain and don't go into the sewer. The washer saves us about 50 on every water bill and disconnecting will get us another 25, unless I can prove they are standalone. I think some city's forget not everyone makes a lot of money and are there just for them to use as their personal bank accounts.
My old house was on a water PUD and the bill was usually 30 every two months, plus the city sewer charge every 3, so at least it was cheaper and spread out a bit.