I think we're going to buy our first home

Miscellaneous and Personal Stuff I Must Share
1

I think. I’m kinda freaked out, kind of ridiculously excited to the point where I can’t stand being patient, kind of numb. I dunno.

We’re just at the beginning of all of this. A little background. About three weeks ago, my wife and I were at a local fair/flea market we like to go to. It just so happens that a company there had a manufactured home demo set up. Years ago, we’d had interest in buying but decided not to for a variety of reasons. Seeing the home they had set up and the seemingly affordable prices got our interest up again. So we went home, spent an hour or so looking at housing prices, and then spent the rest of the week trying to get the idea out of our head. We failed.

We figured the best way to kill our lingering thoughts and hopes was to go to a mortgage lender and have them shoot us down. So we dropped by a place that does FHA loans on a Saturday morning. During the course of our hour long visit, we learned that we were in WAY better shape than we could have guessed, and an affordable home is well within our reach. He was ready to process us that day if we’d wanted.

So, stunned, we started looking at places that days. And we did some more looking last weekend. Right now, we’re looking at mostly new construction, although that’s problematic because all of the affordable new homes are far, far away from where I work. But it may still be worth it.

Right now, we’re holding off on diving in too much because we’re trying to clean our current house (which we rent) and get it in shape to be shown once we inform our landlords of our intent. We’ll probably let them know and hire a real estate agent at the beginning of March. Once we hire an agent, we’ll start looking at older houses as well just to see what’s out there. We’re interested in houses (preference) and townhomes, but ruling out condos. I’ve driven myself crazy spending just about every spare moment I have on Century21.com and ReMax.com and redfin.com.

There is also the small but not impossible chance that our current landlords will try to get us to buy their house. They’ve tried to get us to do so in years past (we’ve lived in our current residence for 7.5 years), but the house is worth more than we can afford. On the other hand, they’ve owned the home for 28 years and may be willing to cut us a really good deal to avoid having to find new renters. We won’t know until we talk to them about it.

So…I don’t necessarily know what I’m soliciting. Advice? Encouragement? General thoughts? If you’ve got it, throw it this way. We’re reasonably intelligent people, but I’m sure there’s plenty we don’t know or haven’t thought about. All comments are welcome. And if you have no comments, please just wish us luck. :slight_smile:

2

I’ve got a comment.I always pronounce your user name in my head as “Ass-uh-movin’”

Good luck!

BTW, I hear congress just passed a bill for people who buy a house this year. $15,000 tax credit, IIRC. Look into it!

3

Oh, Santo – how I wish you were the first person to pronounce it that way. :wink:

We are aware of the tax credit, which of course, amounts to being an interest-free loan, but it will still be tremendously helpful to us. I didn’t realize it had passed independently of the proposed stimulus package, though – I thought it was contingent on the rest of the package passing. Am I mistaken? At any rate, there is already a $7,500 credit in existence which we won’t sneeze at if that’s all we get.

4

Nice! It’s always good to here that you are in better financial shape than you think. Where are you looking to move ? (I know nothing about buying a home, so the local connection is all I got.)

And even better if you can buy the house you are currently in. Moving is a hassel, but home ownership seems really good. So you get the good without the hassel(I told you I had nothing. ;))

ETA: I got something! It varies depending on a lot of things but, the intrest on your mortgage is ( believe) 100% tax deductable already. So the tax break would be closer to a negative interest loan.

5

We are in a great neighborhood on a lovely cul-de-sac currently, so there would be some tremendous advantages to staying where we are. The house would need some work to get it where we want it (it needs new floors and windows rather badly, really could stand new carpet, and there’s a wall we’d love to tear down that, sadly, is probably a load-bearing wall), but the benefits would outweigh all that.

We are looking pretty much all over LA County and in western San Bernardino County as well. Areas that are ideal are pretty much anywhere in the San Gabriel Valley along the foothills, as well as Glendale or Burbank. The majority of our friends live in the San Fernando Valley, so it would be nice to live closer to them and have people over more often. However, as I said, if we want new construction, we’re going to end up farther away. We’ll have to compromise somewhere regardless.

And I’m pretty sure you’re correct about the interest. My wife is much smarter with a calculator (Excel, actually) than I am and has factored in all the various tax breaks we’d be getting.

NAF, your encouragement is always appreciated! :slight_smile:

6

Oh, please, please puleez PLEEEEEEEZZZZZE buy this home: Pasadena Water Tower. (Note: adjacent mansion not included.)

It is a perfect superhero home and I’ve been trying to get everyone I know to buy it, so I could visit them there. If I had an extra $320,000 lying around, I would so buy this.

Good luck with your home search!

7

Hah…I’ve never heard of that before, but it looks pretty damn awesome! Slightly out of our price range, but not incredibly so. :slight_smile:

Do you think in these tough economic times, we could get them to throw in the mansion as well for the same price? I might be willing to stretch the ol’ budget for that!

8

Best of luck. Having been involved in buying two houses and selling one of those, I must be an expert (insert sarcastic chuckle here). But I will tell you a few things I learned.

The goods of owning outweigh the bads for most people, but the bads need to be kept in mind. Especially this one: when things break, no more calling the landlord. It’s all on you. Be prepared for that, and make sure you have a little cash on hand when you finish. You’ll need it.

Normally, I’d say it’s worth it to stretch a little to get a house you like, because your income would catch up in a few years. But with the unpredictability in the economy it may not happen for a long time.

Be flexible. If you can’t get everything you want in a house, be willing to sacrifice what you can live without for a few years if you like the location, etc. But make sure not to sacrifice the things that are most important to you.

Ask your friends about their agents. Don’t be afraid to interview a few (they will be working for you after all). And if you start with one and are unhappy with their work, move on.

When you finally make a purchase, make sure your wrist is in shape. You’ll be signing your name more times than Shatner at a Star Trek convention.

9

It is awfully exciting, isn’t it? My advice - don’t make yourselves house poor. The banks may (I don’t know if they do any longer) loan you more for a mortgage than is really good for you. If you buy a house at the upper limit of what the bank is willing to lend you, it can be a heavy burden, meaning no one ever loses their job or takes a pay cut or has any unexpected expenses. Far better to buy less house than you qualify for and not lose it if something changes.

The other advice I’ve heard about househunting is to not fall in love with any one house - you don’t want to pay too much for a house because IT’S THE ONE! WE MUST HAVE IT! There’ll be other houses just as good if you don’t get the one you have your eye on.

We’re planning to move and buy another house this spring/summer - I would be more excited about it if I wasn’t so worried about getting the rest of the work done on this one, and the spectre of having to keep the house spotless for months while we show it (I’ve gone on record here as being a half-assed housekeeper). And the moving. And the unpacking. And fixing up a new house. Well, I’m looking forward to having a different house, anyway. :slight_smile:

10

Please stay out of San Bernardino county… it’s a shit hole. Seriously- hubby used to be a DA out there, and it’s just not good.

I don’t suppose we could entice you down here behind the Orange curtain, could we? :slight_smile:

11

Buy something already so that I can come visit!
Thanks.
(good luck–just looking can be daunting).

12

Seriously, you may as well move to Lancaster at that point. Because there’s abundant (cheap!) housing. And a bowling alley, and a chicken and waffles joint. Not that I have any selfish reasons for listing all that, nope. :wink: :smiley:

13

OK, not all of San Bernardino is a shithole, folks. :slight_smile: Rancho Cucamonga? Alta Loma? Portions of Upland? Even some small gems in Fontana, believe it or not. I’m not moving to Beaumont, for God’s sake! I live fairly close to the border of San Berdoo now, and my wife works in Ontario – I promise I won’t go anywhere scary, 'k? :slight_smile:

EJsGirl, I actually love Orange County. Unfortunately, my commute to downtown LA would not love most of Orange County. And since my wife will soon be attending school full time at Cal State LA, it matters quite a bit.

And yes, I assure you will be buying a home for far less than what the lender is willing to give us. We know exactly what we’re willing to spend on a monthly basis.

You guys are awesome – keep it coming!

14

Well, okay, but even Redlands has plenty of nasty bits… just sayin’… :cool:

15

You know me so well. :smiley:

16

I think the $15,000 is not an interest free loan. It is a tax credit. Straight out cash to you really, as long as you don’t owe any taxes. The first one was a $7500 interest free loan…then it was a $7500 tax credit…last I heard it was $15,000 tax credit thanks to the Senators revisions.

Don’t take my word for it…but I’m pretty sure.

Have to see if it made it into the final bill.

17

My understanding is that it’s a check straight to you provided your federal tax liability is $15k or greater. So it’s in effect a regressive benefit (ie, the more you make the larger your potential benefit). Some Joe making 30k a year wanting to buy a home is going to see a negligible benefit (because his federal tax liability is minimal). It can be spread equally over 2 years so essentially:

If your federal tax liability is between [1, 7500] you can receive a maximum of 2 times your federal tax liability over both years. If you have a federal tax liability of [7501, 14999] you can take a lump sum of your tax liability for the one year or spread it equally (ie, bank on having a federal tax liability next year and “only” taking 7500 this year) or you could say screw it I want it all now (ie, if you have a liability of 13k is it worth it to wait an extra year to essentially get 2k more (since you would have to take 7.5k this year and 7.5k next year)). If your federal tax liability is [15000, infinity] you get 15k when you do your taxes.

Keep in mind that federal tax liability is the total federal taxes you pay for the entire year. This is available on your W2. It’s NOT the amount you have you pay in April 15th (because you can easily adjust your withholding and affect this number)

I hope this is clear. It’s really not that confusing once it “clicks.” See this website for maybe a clearer explanation.

http://thefinancebuff.com/2009/02/tax-breaks-in-stimulus-bill-for-buying-a-home-or-a-new-car.html

And this was correct as best as I can tell as of a day or so ago. Who knows what may have changed.

18

InLucemEdita and dgrdfd: I am…stunned. My previous understanding was that this portion of the stimulus was simply going to double the current existing tax credit/loan. I had no idea this new plan would not require the money to be repaid. My wife and I just read this over and we’re in shock. What a tremendous deal this is!

It may mean that we try to buy sooner rather than later (shortly after the stimulus package passes, assuming this remains a part of it) because I suspect the market will rebound a bit immediately thereafter, causing prices to rise again.

Just…wow.

19

I was shocked when I heard about it, too. I would find it hard to believe if this was removed. This is one of the best things to get new home buyers into the market and off the sidelines. I didn’t plan of buying, but where I live a 150k house is great for me. And it’s something I planned to do eventually anyway. And if I can capitalize on a (somewhat for my area) depressed market, cheap interest rates, and this 15k if it’s approved, then why the heck not jump in.

20

Yeah, it really is an incredible deal. I’m in the strange position where I don’t really want to buy a house here all that much, but I’m having a hard time turning down a free $15,000 from the government.

I expect a lot of the $150,000 houses are going to get cleared off of the market. This won’t help the more expensive market so much.