Buying a house later this year (hopefully)
02-15-2011, 12:56 PM
#21
I disagree with Jason on the 30 year fixed. On my first home, I got a 5 year intrest only ARM at a nice rate, knowing the minimum payment was only intrest, so I paid 30-40% additional per month to the principal. After 5 years, deep int the recession the rate "reset" to 3%, now, the place is generating 40% profit and I can afford to pay the morgatge down much faster.. The rate resets every six months but can only go up 1 point per adjustment maximum, so if morgatge rates go up tomorrow, I have got plenty o time to refinance.
Intrest only loans can work great if your not a dumbass about it and fully understand what you are getting into, but you MUST be diligent about paying it down.
Intrest only loans can work great if your not a dumbass about it and fully understand what you are getting into, but you MUST be diligent about paying it down.
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02-15-2011, 03:27 PM
#22
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While there is truth to faeflyper's post, the main thing about buying a home is that it is the ONLY way available to the PROLES like us, to leverage your money into an income-producing asset that is (for now) tax free when it appreciates. IOW you put up 20%, then you can rent it out, then if you sell at a profit later, the gains are tax free.
When considering your awesome potential-income-producing-asset though, recognize that even if your house appreciates ONE HUNDRED PERCENT in say five years while inflation is only up 1%, you are ONLY looking at a potential income of what, $200,000? $300,000? Yes, that sounds like a lot of money, but unless you live in a trailer, it won't be enough to retire on. The reality is that while you might might make some money on a future sale, you are still accepting a large amount of risk at the present time, and also, facing risk until that sale occurs. The risk that faces you is bankruptcy, **** credit, being evicted, paying all your money for repairs, increased property taxes...
Oh LOL.
Seriously, come on. If our little 'ol bassmachine was not the epitome of a financial neophyte, he would not have posted this thread. I seriously doubt that he has a spreadsheet. Or knows what the cap gains tax exemption is, or what it pertains to and how it affects him.
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02-15-2011, 04:04 PM
#23
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I know what you are saying, but are you aware of this:
http://www.swifteconomics.com/2010/0...oing-bankrupt/
http://useconomy.about.com/od/critic...r_collapse.htm
The USD *will* erode. We *will* get mass inflation. We *will* get very high interest rates in the future, just like the 70s' stagflation. The USD will cease to be the reserve currency of the world. The Fed Gov *will* go insolvent. It's a question of when. Niall Ferguson, a CFR bigwig and economic historian, thinks it's less than 6 years away.
If the US debt ceiling is raised yet again in March, our fate is sealed. It means spending cuts are politically impossible, and the only way for this to end is DEFAULT/INSOLVENCY. Anyone who claims otherwise does not understand the numbers.
http://www.swifteconomics.com/2010/0...oing-bankrupt/
http://useconomy.about.com/od/critic...r_collapse.htm
The USD *will* erode. We *will* get mass inflation. We *will* get very high interest rates in the future, just like the 70s' stagflation. The USD will cease to be the reserve currency of the world. The Fed Gov *will* go insolvent. It's a question of when. Niall Ferguson, a CFR bigwig and economic historian, thinks it's less than 6 years away.
If the US debt ceiling is raised yet again in March, our fate is sealed. It means spending cuts are politically impossible, and the only way for this to end is DEFAULT/INSOLVENCY. Anyone who claims otherwise does not understand the numbers.
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02-15-2011, 06:55 PM
#26
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Location: TX
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Can't stress that enough. Also, put as much money as you can toward the down payment. Obviously, make sure you hold some back to fix anything that might crap the bed in that first year. And make sure there's no penalty for paying ahead on your note - some of those ******* are sneaky.
Don't forget to shop that mortgage around. I take it you've just about got it lined up, but it never hurts to keep shopping. I talked to several banks (including mine) before I ended up with an independent broker. Since it was my first time, I appreciated the hand-holding and spoon-feeding, and I got a better deal than the banks were trotting out for me.
Not necessarily. My house was built in 1956 and it's in great shape. Plus, it was ready to move into. I didn't have to do one damn thing to it except clean up the crap the sellers left behind. The wiring is probably original, but it has a proper breaker box instead of fuses. Almost a year and a half into ownership, things have gone very smoothly (knock furiously on wood). Only the ancient Monkey Wards water heater has let me down, and that was a pretty cheap thing to have replaced.
Ask around and get a GOOD inspector who's willing to go under the house and up in the attic. My inspector took about 5-6 hours to give the house a thorough once-over. His 30-page report listed every last little thing that might need attention, and included big color pictures. The sellers fixed everything I asked for except the water heater that pissed in the closet a few months ago (it wasn't leaking at the time).
Not to sound like a crotchety old man with good-old-days syndrome, but you'll probably find that houses built in the 50s and 60s are more solid than some of the newer houses. Plus, an older neighborhood usually means nicer lots, more trees, wood floors, etc etc etc. Also, FWIW, pier-and-beam foundations make it real easy to fix plumbing, rewire, and remodel. And depending on the soil in your area, they're a lot more stable than slab homes.
Home warranty? In my experience, these are pure junk. I paid for one and it was a complete cluster monkey **** when I had them come out to fix a toilet leaking at the base. I coulda/shoulda done it myself but I was lazy and thought "hey, they'll just take care of it." Even with the warranty, they charged me $200 to replace a ******* wax seal. **** me for being lazy. When the water heater popped, I went through a lot of back and forth before getting them to pay for the cost of the heater while letting me use my own guy to install it. Saved myself about a grand over using the crooked warranty *******. YMMV, of course.
If I had to do it all over again, I wouldn't change one thing except that ******* home warranty...
That's my $0.02.
Don't forget to shop that mortgage around. I take it you've just about got it lined up, but it never hurts to keep shopping. I talked to several banks (including mine) before I ended up with an independent broker. Since it was my first time, I appreciated the hand-holding and spoon-feeding, and I got a better deal than the banks were trotting out for me.
Not necessarily. My house was built in 1956 and it's in great shape. Plus, it was ready to move into. I didn't have to do one damn thing to it except clean up the crap the sellers left behind. The wiring is probably original, but it has a proper breaker box instead of fuses. Almost a year and a half into ownership, things have gone very smoothly (knock furiously on wood). Only the ancient Monkey Wards water heater has let me down, and that was a pretty cheap thing to have replaced.
Not to sound like a crotchety old man with good-old-days syndrome, but you'll probably find that houses built in the 50s and 60s are more solid than some of the newer houses. Plus, an older neighborhood usually means nicer lots, more trees, wood floors, etc etc etc. Also, FWIW, pier-and-beam foundations make it real easy to fix plumbing, rewire, and remodel. And depending on the soil in your area, they're a lot more stable than slab homes.
Home warranty? In my experience, these are pure junk. I paid for one and it was a complete cluster monkey **** when I had them come out to fix a toilet leaking at the base. I coulda/shoulda done it myself but I was lazy and thought "hey, they'll just take care of it." Even with the warranty, they charged me $200 to replace a ******* wax seal. **** me for being lazy. When the water heater popped, I went through a lot of back and forth before getting them to pay for the cost of the heater while letting me use my own guy to install it. Saved myself about a grand over using the crooked warranty *******. YMMV, of course.
If I had to do it all over again, I wouldn't change one thing except that ******* home warranty...
That's my $0.02.
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02-15-2011, 09:34 PM
#27
As I was reading all the replies I was thinking about mentioning the home warranty as well. They are complete pieces of ****. The only time I used mine was to fix a leaky toilet above my garage. Same thing, big bucks for a wax seal. The warranty didn't even cover fixing the hole that the water put in my garage ceiling. I talked to the repair guy about it and he said all of them have tons of loopholes which mean they do not pay hardly anything.
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02-15-2011, 09:48 PM
#30
The only thing we can't do in my neighborhood is raise livestock, put up a chain link fence, and build a cinder block building (at least according to something we signed when we bought the house). We don't have an HOA or any dues. There is a 6,000 sq/ft house in the neighborhood so you can live in "nice" places without HOAs. My friends I mentioned earlier just got dish network. They have the dish mounted on a pole in the ground because they are not allowed to put it on the house. Strange...
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02-16-2011, 11:05 AM
#33
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Join Date: Apr 2009
Location: TX
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^^^ THIS.
My little 'hood doesn't have an HOA, but a lot of newer areas have them. Not sure what rules (if any) govern them in your neck of the woods, but there are plenty of horror stories out there about HOA ***** in TX. And you get to pay money for the privilege. Yay.
My little 'hood doesn't have an HOA, but a lot of newer areas have them. Not sure what rules (if any) govern them in your neck of the woods, but there are plenty of horror stories out there about HOA ***** in TX. And you get to pay money for the privilege. Yay.
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02-16-2011, 11:06 AM
#34
I have never understood peoples stance on paying your house off early. If you look at loan amortization you are stil paying most of the interest and letting them out on loaning you cheap money. If you pay your house off in 15 years rather than 30, then at that point you will have turned a liquid asset loaned to you at an effective 2% into a illiquid asset. Also, if you are paying extra on your loan and you don't end up living there past you paying it off, you have just given the bank a 0% loan for all those years.
To me it doesn't make sense. I understand finance very well, but there is a fair amount of subjectivity to this. You guys may be right and I may be the nuts one, but I just wanted to bring up another side for the OP. BTW, you should never get a ARM loan unless you know exactly what you are doing and have a plan to be rid of the property before the adjustment period.
Not having an HOA is awesome as well. I have a lift in my side driveway and sometimes as much as 7 miatas parked in my back yard. Given I'm on 3/4 of a acre, but still.
To me it doesn't make sense. I understand finance very well, but there is a fair amount of subjectivity to this. You guys may be right and I may be the nuts one, but I just wanted to bring up another side for the OP. BTW, you should never get a ARM loan unless you know exactly what you are doing and have a plan to be rid of the property before the adjustment period.
Not having an HOA is awesome as well. I have a lift in my side driveway and sometimes as much as 7 miatas parked in my back yard. Given I'm on 3/4 of a acre, but still.
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02-16-2011, 02:56 PM
#39
I'm on my 2nd house. My wife and I purchased our first home when we were 23.
I still regret the decision to buy our first house.
We should have rented a house. Renting gives you the experience to learn what it is in a house that you want and don't want. That 1 acre lawn sounds nice on paper. The time spent keeping it sucks, and is expensive. Renting gives the maintenance responsibility to someone else. The downside is that you will not be able to upgrade it the way you want. This isn't necessarily a bad thing, because upgrades are expensive. i.e. My current home; Windows 6k, doors 1.5k, fence for dogs 3k, New Hvac system 8k.
Must haves in a house in your situation (I'm gathering that you do not have tons of expendable income). Energy efficient windows, doors, and a HVAC unit that is less than 5 yrs old. Attic insulation is cheap to blow in.
RENT RENT RENT
When you get tired of the first house you rent, then try to find one that is closer to what you want, and then rent that house for a little while. Owning a home can be a money pit. You save a lot of money renting.
RENT until you know exactly what you want, and save money for a down payment while renting. DON'T rent a slum while trying to save. That defeats the point.
I still regret the decision to buy our first house.
We should have rented a house. Renting gives you the experience to learn what it is in a house that you want and don't want. That 1 acre lawn sounds nice on paper. The time spent keeping it sucks, and is expensive. Renting gives the maintenance responsibility to someone else. The downside is that you will not be able to upgrade it the way you want. This isn't necessarily a bad thing, because upgrades are expensive. i.e. My current home; Windows 6k, doors 1.5k, fence for dogs 3k, New Hvac system 8k.
Must haves in a house in your situation (I'm gathering that you do not have tons of expendable income). Energy efficient windows, doors, and a HVAC unit that is less than 5 yrs old. Attic insulation is cheap to blow in.
RENT RENT RENT
When you get tired of the first house you rent, then try to find one that is closer to what you want, and then rent that house for a little while. Owning a home can be a money pit. You save a lot of money renting.
RENT until you know exactly what you want, and save money for a down payment while renting. DON'T rent a slum while trying to save. That defeats the point.
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