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The Home-ownership Thread

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#1 darksabre

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Posted 02 December 2015 - 11:33 AM

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. 

Now, I'm no stranger to making hasty and risky financial decisions, but I've lived in enough rental homes and done enough of my own work in those homes to know what I'm getting in to, and I know that preparation is key. I don't want to go into this without knowing what I'm doing. 

Things I'm curious about:

1. The process of home buying. How did you go about finding, inspecting, financing, etc? I spend a lot of time messing around on Zillow and stuff, but I've never spoken to a realtor or anything. 

2. Financial incentives. What is out there for young adults, first time home buyers, people who don't make a lot of money, etc.?

 

3. What improvement jobs have you tackled yourself? What were your results? Tips? 

 

4. Foreclosed homes and short sales. Ever bought one? How did it go?


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

 

 



#2 Eleven

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Posted 02 December 2015 - 11:45 AM

1-2.  The first home I bought was financed with an FHA mortgage.  There are programs for first-time homebuyers that can lower the cost of borrowing and reduce down payments.  Any realtor or banker would be happy to spend hours talking to you about this stuff because they want your business!  The second and third homes were easier to finance because I had proceeds from sale to put down.

 

3.  Interior, I have one rule:  If water or electricity runs through it, nope.  I can do just about anything else.  I'm not even that handy; just patient.  Exterior, nope.  I have had to hire a roofer once; it's expensive, but that's really not the type of job I'm equipped to tackle.

 

4.  No idea.



#3 Alkoholist

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Posted 02 December 2015 - 11:49 AM

I can't speak to all of your questions but I would start by getting your credit score in order and talking to your bank or (hopefully) credit union and getting pre-approved for a mortgage. They'll look at your income, credit, and debt to decide how much house you can afford so you'll have a upper limit number in mind before you start looking. Inspections I suspect would vary from state to state and you live in NY where I live in NC so I'd let someone else field that for you, although I suspect you can pick your own guy and if you don't have one I'm sure the bank/credit union has a list of ones they recommend. The financial incentives can also vary depending on who you get your loan through but I'm sure there are also government programs that you can possibly qualify for and I've never done the short sale or foreclosed home thing since my place was a new construction.



#4 Samson's Flow

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Posted 02 December 2015 - 11:51 AM

I'm sure that my process was a-typical, but I just randomly went to an open house one day and met the realtor there (who happened to be a family friend). The house was in the neighborhood I liked, but wasn't very compatible with what I was looking for. That day went home and did some internet research on one of the realty companies sites. After a few more showings I found a house with the bones I was looking for in a first home/renovation project.

 

What surprised me most is I didn't save up much money at all before deciding to buy, and was able to get a minimal down payment as a first time homebuyer. I should have used one of those first time home buying savings accounts that banks were offering at the time (2013) but like I said it was sort of an 'impulse' buy.

 

I have been doing renovations ever since, including building a new front porch, gutting and renovating two upstairs bedrooms and totally redoing the kitchen/dining room area. Working on the 1st floor bath and entryway at the moment.

 

The mrs. is very patient with my renovations and absolutely loves the new kitchen.



#5 MattPie

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Posted 02 December 2015 - 11:54 AM

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. 

Now, I'm no stranger to making hasty and risky financial decisions, but I've lived in enough rental homes and done enough of my own work in those homes to know what I'm getting in to, and I know that preparation is key. I don't want to go into this without knowing what I'm doing. 

Things I'm curious about:

1. The process of home buying. How did you go about finding, inspecting, financing, etc? I spend a lot of time messing around on Zillow and stuff, but I've never spoken to a realtor or anything. 

2. Financial incentives. What is out there for young adults, first time home buyers, people who don't make a lot of money, etc.?

 

3. What improvement jobs have you tackled yourself? What were your results? Tips? 

 

4. Foreclosed homes and short sales. Ever bought one? How did it go?


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

 

 

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.



#6 Samson's Flow

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Posted 02 December 2015 - 12:00 PM

1-2.  The first home I bought was financed with an FHA mortgage.  There are programs for first-time homebuyers that can lower the cost of borrowing and reduce down payments.  Any realtor or banker would be happy to spend hours talking to you about this stuff because they want your business!  The second and third homes were easier to finance because I had proceeds from sale to put down.

 

3.  Interior, I have one rule:  If water or electricity runs through it, nope.  I can do just about anything else.  I'm not even that handy; just patient.  Exterior, nope.  I have had to hire a roofer once; it's expensive, but that's really not the type of job I'm equipped to tackle.

 

4.  No idea.

that's what I got as well. Only required something like 3% down which seemed really small. Also don't overextend yourself with mortgage payments beyond what you can afford. Usually the pre-approval number the mortgage companies give you is much higher than what you actually want to spend/look for.


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.

But if you had rented during that time you would have spent all that money (or a slightly lower percentage of it) and not had the opportunity to recoup the investment by selling the house. It would just be gone.

 

Home ownership isn't supposed to make you money, but it allows you to invest in capital rather than paying someone else for the right to live somewhere.

 

The other point is that with the interest rate market where it is now, at roughly 4%, it is a much better time than 10 years ago when rates were in the teens. The more money you can pay upfront and in the first year, the less you get killed with interest and the more you pay in actual principle on the mortgage. That's why you buy in a price range you are comfortable in and are able to make extra payments in (if possible).



#7 Iron Crotch

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Posted 02 December 2015 - 12:20 PM

In my experience, the first thing to know is: YOU ARE GOING TO SPEND MORE MONEY PER MONTH TO OWN THAN RENT.

 

You must live in New York state where property taxes are absurdly high.   :)   It is very much the opposite where I live.  I'm spending far less per month owning (+ getting the interest write-off + my home is appreciating at a ridiculous rate).  It is market-dependent for sure.

 

IMHO, the biggest difference between renting and owning is the amount of work and the incurrence of unexpected expenses that come up when you own.  As a first-time owner, my biggest difficulty was finding a good plumber, a good electrician, a floor guy, a handyman, etc.  There are a lot of lousy ones out there - finding someone who knows what they are doing took some time.  Knowing what you should pay for the work that is done (i.e. not getting ripped off) takes time as well.  I also had to learn how to fix a lot of basic things on my own, which again took time and effort.



#8 MattPie

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Posted 02 December 2015 - 12:29 PM

that's what I got as well. Only required something like 3% down which seemed really small. Also don't overextend yourself with mortgage payments beyond what you can afford. Usually the pre-approval number the mortgage companies give you is much higher than what you actually want to spend/look for.


But if you had rented during that time you would have spent all that money (or a slightly lower percentage of it) and not had the opportunity to recoup the investment by selling the house. It would just be gone.

 

Home ownership isn't supposed to make you money, but it allows you to invest in capital rather than paying someone else for the right to live somewhere.

 

The other point is that with the interest rate market where it is now, at roughly 4%, it is a much better time than 10 years ago when rates were in the teens. The more money you can pay upfront and in the first year, the less you get killed with interest and the more you pay in actual principle on the mortgage. That's why you buy in a price range you are comfortable in and are able to make extra payments in (if possible).

 

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.


You must live in New York state where property taxes are absurdly high.   :)   It is very much the opposite where I live.  I'm spending far less per month owning (+ getting the interest write-off + my home is appreciating at a ridiculous rate).  It is market-dependent for sure.

 

IMHO, the biggest difference between renting and owning is the amount of work and the incurrence of unexpected expenses that come up when you own.  As a first-time owner, my biggest difficulty was finding a good plumber, a good electrician, a floor guy, a handyman, etc.  There are a lot of lousy ones out there - finding someone who knows what they are doing took some time.  Knowing what you should pay for the work that is done (i.e. not getting ripped off) takes time as well.  I also had to learn how to fix a lot of basic things on my own, which again took time and effort.

 

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.



#9 woods-racer

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Posted 02 December 2015 - 12:33 PM

D4rk I have one question...

 

Are you the type of person that loves doing something constructive with your own hands?

 

Whether it's fixing something you own, something of Josie's, or parents, good friends, doesn't matter to you just as long as your day was in your own way fruitful, you will absolutely love home ownership.

 

Because owning home gives you the ability to do something every day to make your world a little better than it was the day before, and exactly as how you guys envision it. It will be your man cave, Josie's art studio room. You can put holes in walls and windows in where you think there should be one because it's yours. 

 

But there's a price for this. Hard work, dirty hands, missed social events, and trade off's in the budget for home improvement stuff vs. fun stuff.

 

Other wise you have to be cold and truthful with yourself and look at it strictly as a financial matter. MattPie as out lined that rather well.

 

Good luck. 



#10 josie

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Posted 02 December 2015 - 12:55 PM

D4rk I have one question...

 

Are you the type of person that loves doing something constructive with your own hands?

 

Whether it's fixing something you own, something of Josie's, or parents, good friends, doesn't matter to you just as long as your day was in your own way fruitful, you will absolutely love home ownership.

 

Because owning home gives you the ability to do something every day to make your world a little better than it was the day before, and exactly as how you guys envision it. It will be your man cave, Josie's art studio room. You can put holes in walls and windows in where you think there should be one because it's yours. 

 

But there's a price for this. Hard work, dirty hands, missed social events, and trade off's in the budget for home improvement stuff vs. fun stuff.

 

Other wise you have to be cold and truthful with yourself and look at it strictly as a financial matter. MattPie as out lined that rather well.

 

Good luck. 

Honestly, that's half the appeal for both of us. I love customizing spaces, d4rk does too. 

 

And the whole house will be a man cave. I guarantee it. My choice :) 

 

We have a bundle of old wooden hockey sticks that I'm not sure will be kept for occasional playing use, but if not, those are gonna be wall ornaments or turned into a desk/chair/hutch/key holder/something. 

 

And I'll finally have an excuse to spend a few extra bucks on some memorabilia I've had my eyes on for a few years. 

But those are small idealistic cosmetic things. I'm mostly concerned with a house having a good roof, no basement flooding problems, and a little bit of land. House can be minuscule, an old farm house or cape cod would be great, as long as we've got at least an acre. 



#11 Eleven

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Posted 02 December 2015 - 12:56 PM

TBBoyes makes a really good point.  Don't "max out" with what a lender is willing to extend.  You don't want to be housepoor.



#12 Samson's Flow

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Posted 02 December 2015 - 12:58 PM

TBBoyes makes a really good point.  Don't "max out" with what a lender is willing to extend.  You don't want to be housepoor.

Just remember - its the poor people that the banks and credit institutions make all their money off of. If you max your mortgage payment, you can't beat the lending system.



#13 Doohickie

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Posted 02 December 2015 - 01:02 PM

The process of home buying. How did you go about finding, inspecting, financing, etc? I spend a lot of time messing around on Zillow and stuff, but I've never spoken to a realtor or anything.

 

I've bought three homes over the years.  Realtor-wise, this is how it worked out:

 

1. Our first home in Fort Worth.  We used a friend who was also a realtor.  Unfortunately she was pretty new at it, so while she did everything correctly, she wasn't a very good adviser.  I'd give her a C+.  (After we settled, she mentioned that there were some things she learned during the process that could have saved us money if she'd known them earlier.)

 

2. Our home in Dearborn, MI.  We lucked out and found a realtor that both really knew his stuff and didn't try to oversell to us.  He bought his first rental property when he was 18 with money from his paper route.  His primary income was originally rental property and he learned enough through buying and selling to go into real estate as well.  He was a wealth of knowledge, both in terms of the little details of real estate transactions, and in terms of the neighborhood we were looking.... he knew streets and homes like the back of his hand.  And like I said, even though we qualified for much more mortgage than we were comfortable with, he didn't push more house on us than we wanted.  The only "up-sell" he did was that he steered us to a more desirable, and slightly more expensive (which he disclosed up front) neighborhood which really paid off when we sold that house.  Almost 20 years since we sold that house and he still sends us a calendar here in Texas to keep in touch, just in case we ever move back.

 

3. Our second home in Fort Worth.  Our old friend that was just starting out the first time had left the business, but referred us to another realtor she had worked with.  The result, actually, was similar to the first home we bought:  The transaction was processed okay, but we really didn't get the quality of advice we did from our Dearborn realtor.

 

So realtor-wise, I think the thing to do is to maybe go through word of mouth, and maybe go to some open houses.  Get to know some realtors and see if you can find one who listens to you and does not rush you.  Be wary of newer agents just starting out.  Talk to a prospective agent about what you want in a house (everything, from the kind of location you want, how important schools are to you, whether you like new or old, how long you intend to keep the house, how you'll be financing it).  Listen to their advice and see where they're leading you.  If you feel a realtor is steering you to what he or she wants to sell versus what you want to buy, walk away and find another realtor.  But if they have an uncanny knack of showing you homes that you really like, then you know you're good.  



#14 woods-racer

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Posted 02 December 2015 - 01:10 PM

Honestly, that's half the appeal for both of us. I love customizing spaces, d4rk does too. 

 

And the whole house will be a man cave. I guarantee it. My choice :)

 

We have a bundle of old wooden hockey sticks that I'm not sure will be kept for occasional playing use, but if not, those are gonna be wall ornaments or turned into a desk/chair/hutch/key holder/something. 

 

And I'll finally have an excuse to spend a few extra bucks on some memorabilia I've had my eyes on for a few years. 

But those are small idealistic cosmetic things. I'm mostly concerned with a house having a good roof, no basement flooding problems, and a little bit of land. House can be minuscule, an old farm house or cape cod would be great, as long as we've got at least an acre. 

 

Then you've already won, no matter what you get you'll make it great!



#15 ubkev

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Posted 02 December 2015 - 01:23 PM

D4rk I have one question...

Are you the type of person that loves doing something constructive with your own hands?

Whether it's fixing something you own, something of Josie's, or parents, good friends, doesn't matter to you just as long as your day was in your own way fruitful, you will absolutely love home ownership.

Because owning home gives you the ability to do something every day to make your world a little better than it was the day before, and exactly as how you guys envision it. It will be your man cave, Josie's art studio room. You can put holes in walls and windows in where you think there should be one because it's yours.

But there's a price for this. Hard work, dirty hands, missed social events, and trade off's in the budget for home improvement stuff vs. fun stuff.

Other wise you have to be cold and truthful with yourself and look at it strictly as a financial matter. MattPie as out lined that rather well.

Good luck.


This is my experience.

Love owning my home. I love being able to regrout my shower, to do my own landscaping to make my yard beautiful. I've learned HVAC and plumbing. I built a fire pit. I get to park my car in a garage now. I can have not a care in the world that I'm not going to get my deposit back because my dogs chewed something, or my kid broke something. It's basically the freedom to do whatever I want, whenever I want and I don't have to ask a landlord (I just have to ask my wife.)

The realtor was extremely helpful. She walked us through every step of the process.

#16 tom webster

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Posted 02 December 2015 - 01:23 PM

A lot of good advice. One thing that I would add is that First Niagara had a program were first time buyers could set up an account before they were ready to buy and the bank matched funds toward the first purchase when you were ready to buy. You may want to check into different offers like that but as always, the proof is in the details and nobody is doing it from the goodness of their heart. 



#17 Doohickie

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Posted 02 December 2015 - 01:26 PM

A lot of good advice. One thing that I would add is that First Niagara had a program were first time buyers could set up an account before they were ready to buy and the bank matched funds toward the first purchase when you were ready to buy. You may want to check into different offers like that but as always, the proof is in the details and nobody is doing it from the goodness of their heart. 

 

My nephew used that program.  I think it's actually a state thing, administered by the banks.  Also check into first time buyer incentives.  A decent realtor should be able to explain all these programs and how they work.  But if you're going to buy a couple years from now, it's an ideal time to set that account up now.



#18 Iron Crotch

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Posted 02 December 2015 - 01:35 PM


 

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.

 

It is highly dependent on the area that you live in.  In general, land is an appreciating asset while the structure on said land is a depreciating asset.  The rate of land appreciation varies greatly across areas.  And you can, of course, do things to the structure to abate or even reverse the rate of structural depreciation.  Personally, I always think of buying a home as an investment decision.  And, I think of every change I make to the home also in terms of investment value (e.g., "will putting in new floors for $X make me more than $X when I sell the home?")

 

I live in one of the hottest real estate markets in the country (Nashville) so my perspective is very different from someone who lives in western NY/PA.  We have no state income tax and very low property taxes, and rents here are sky high.  I gambled correctly on what I thought would be the next "hot area" of Nashville and built a unique home that sets it apart from others in my area.  Buying this house is easily the best investment I have ever made.



#19 darksabre

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Posted 02 December 2015 - 01:48 PM

Awesome stuff here so far guys. When I'm home later I'll address some of your thoughts in detail. 



#20 Iron Crotch

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Posted 02 December 2015 - 01:58 PM

BTW - I recommend saving 20% as a down payment if you have the means to do so, which avoids PMI. Paying PMI is basically a gigantic waste of money.



#21 woods-racer

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Posted 02 December 2015 - 02:03 PM

BTW - I recommend saving 20% as a down payment if you have the means to do so, which avoids PMI. Paying PMI is basically a gigantic waste of money.

 

Completely forgot about that.

 

Yah, what a waste. Unless your a bank exec looking for a bonus.



#22 Claude_Verret

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Posted 02 December 2015 - 02:03 PM

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.



#23 ubkev

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Posted 02 December 2015 - 02:04 PM

BTW - I recommend saving 20% as a down payment if you have the means to do so, which avoids PMI. Paying PMI is basically a gigantic waste of money.



PMI sucks! It was unavoidable in my case, unfortunately. It's an extra $100ish added to your mortgage payment until you have 20% invested into the home. I'll be paying it for at least 2 more years.

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.


Up to $10 grand.

#24 Samson's Flow

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Posted 02 December 2015 - 02:06 PM

BTW - I recommend saving 20% as a down payment if you have the means to do so, which avoids PMI. Paying PMI is basically a gigantic waste of money.

PMI is also automatically cancelled once you reach the 80% remaining principle on the mortgage value. But yes it is a waste of money and is only necessary when you can't save the requisite amount.

 

Here's a good informational link: http://www.consumerf...om-my-loan.html


PMI is also why I went with a 15yr rather than a 30yr, so that I can reach that 20% threshold as soon as possible. That and buying a much cheaper house than I could afford were key in my situation.



#25 pi2000

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Posted 02 December 2015 - 02:18 PM

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.

 

Other things a good home inspector should be able to point out, make sure you trust the guy and take notes.            



#26 Doohickie

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Posted 02 December 2015 - 02:24 PM

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.



#27 shrader

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Posted 02 December 2015 - 02:29 PM

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.



#28 darksabre

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Posted 02 December 2015 - 09:40 PM

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. 



#29 MattPie

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Posted 03 December 2015 - 10:16 AM

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.



#30 darksabre

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Posted 03 December 2015 - 10:19 AM

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.

#31 dEnnis the Menace

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Posted 03 December 2015 - 10:27 AM

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.  



#32 Iron Crotch

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Posted 03 December 2015 - 10:50 AM

 

 

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.).



#33 X. Benedict

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Posted 03 December 2015 - 10:54 AM

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. 



#34 biodork

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Posted 03 December 2015 - 06:27 PM

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 by biodork, 03 December 2015 - 06:43 PM.


#35 wjag

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Posted 03 December 2015 - 06:32 PM

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 by wjag, 03 December 2015 - 06:33 PM.


#36 Ogre

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Posted 03 December 2015 - 08:12 PM

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.

#37 woods-racer

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Posted 03 December 2015 - 08:37 PM

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.



#38 Ogre

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Posted 03 December 2015 - 08:55 PM

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.

#39 woods-racer

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Posted 03 December 2015 - 09:12 PM

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.



#40 French Collection

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Posted 03 December 2015 - 09:24 PM

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.





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