Reply
 
Thread Tools Display Modes
  #1  
Old 10-08-2019, 03:01 PM
Leaper is offline
Charter Member
 
Join Date: Jul 2001
Location: In my own little world...
Posts: 12,614

Thinking of buying my own home... How the hell do I start?


So I recently got converted to a full time employee from a limited contract. Iíve been renting the same apartment for a very long time now, and now that Iíve got some security, Iím giving serious thought to owning my own condo or small townhouse (I donít need any further room). I like the area Iím in now, though I wouldnít mind being closer to work, though obviously prices arenít guaranteed these days (another reason Iím thinking of acting now).

Trouble is, I have no idea how to begin. Iím with a credit union Iíve asked tentative questions of in the past before my conversion (although both contacts havenít replied to emails for months now). I have access to a down payment. But this is so big Iím completely overwhelmed by possibilities.

Thoughts? Advice? Links to thoughts and/or advice?
  #2  
Old 10-08-2019, 03:04 PM
thelurkinghorror is offline
Guest
 
Join Date: Jun 2006
Location: Venial Sin City
Posts: 13,908
Get a good realtor, credit unions are unlikely to be helpful. Ask for recommendations if you know someone who bought in the last few years. Except hidden costs like closing and home inspection (and definitely don't skip the inspection).

Complete YMMV opinion from me: condos suck and HOAs suck.
  #3  
Old 10-08-2019, 03:23 PM
Leaper is offline
Charter Member
 
Join Date: Jul 2001
Location: In my own little world...
Posts: 12,614
The credit union was for the loan. And I live on my own, and simply do not have a need for an entire house (not to mention a yard and unnecessary stuff like that).
  #4  
Old 10-08-2019, 03:30 PM
HurricaneDitka is offline
Guest
 
Join Date: Aug 2012
Posts: 14,618
I agree with everything thelurkinghorror said. I'd add to that that you might want to consider talking to a bank or other mortgage lender (I used Box Home Loans) to get "pre-approved". That'll give you some assurance that your budget is what you think it is (i.e. that there's a financial institution out there willing to lend you the money you're going to offer the seller to purchase the condo / townhouse).

ETA: I'd encourage you to read this too

Last edited by HurricaneDitka; 10-08-2019 at 03:32 PM.
  #5  
Old 10-08-2019, 03:31 PM
SmellMyWort is offline
Guest
 
Join Date: Mar 2006
Location: Wisconsin
Posts: 3,101
Quote:
Originally Posted by thelurkinghorror View Post
Get a good realtor, credit unions are unlikely to be helpful. Ask for recommendations if you know someone who bought in the last few years. Except hidden costs like closing and home inspection (and definitely don't skip the inspection).

Complete YMMV opinion from me: condos suck and HOAs suck.
I can't help but disagree with some of this advice. My wife is a Realtor and by far the fewest problems she encounters on the lending side are with our local credit unions compared to the big banks like Wells Fargo and Chase, which pretty much manage to fuck something up every time. Make an appointment with your CU and talk to a mortgage person there. Feel free to shop around to other banks or lenders and compare rates and costs. Unfortunately, I suspect the nature of your employment history might limit your ability to get a loan since I seem to recall lenders wanting to see at least 2 yeas of full time employment, but it can't hurt to go in and find out for sure. Plus, there are other factors that might be taken into consideration like the size of your down payment.

I would not bother getting a Realtor until you know you are even eligible for a mortgage. I do agree with the advice to talk to friends/colleagues and get recommendations on both the agent and lender.
  #6  
Old 10-08-2019, 03:36 PM
Bone's Avatar
Bone is offline
Extrajudicial
Moderator
 
Join Date: Jul 2003
Posts: 10,883
If you need to borrow, then getting pre-approved is probably your first step. It allows you to see about how much you can afford. That's different than how much you want to pay, but it puts an upper limit on your search.

Once you have an approximate price point in mind, then you can narrow your searching. Figure out what things you want to prioritize (location, house and lot size, schools, neighborhood look/feel, HOA or not, age of home, other various amenities) then use that to narrow your searching.

Consider what attributes contribute towards preserving or increasing resale value and think about whether those align with your priorities.

Many times you'll be able to get a feel for various neighborhoods by just visiting open houses on your own. Once you are closer in your mind to what you want, finding a realtor could be helpful. Look for recommendations from people you know that have actually used the service.

There is simultaneously a lot to think about, and not that much. Ask questions, get answers
  #7  
Old 10-08-2019, 03:40 PM
Voyager's Avatar
Voyager is offline
Charter Member
 
Join Date: Aug 2002
Location: Deep Space
Posts: 46,561
I'm sure the credit union will respond now you're serious. If not, you don't want to deal with them.
A townhouse seems like a good starter for you.

You can check prices on line, and you can drive around places you might be interested in to see how they are at night. If there are message boards for your town, join them and listen. Check out police reports.
Once you have a good familiarity with prices and neighborhoods, interview a few realtors. Don't get sucked into making a bid too soon - the market isn't so hot anymore and you probably have time. Once you looked at a few places take a day off from the search and lay out what you want in a place. Then you can search with more direction.
  #8  
Old 10-08-2019, 04:09 PM
Mrs. Cake is offline
Guest
 
Join Date: Dec 2004
Location: Central Iowa
Posts: 1,978
The way I started was by figuring out a range I could afford and going to open houses. Check Realtor.com for both. If you click on a property and scroll down, you can get an estimate of monthly payments to help get a feel for the actual outlay, including P&I, taxes, insurance, HOA if any.

Once I had some idea of what I was looking for I got a pre-approval for the top of the range I was interested in, and found a realtor. I contacted a realtor.
  #9  
Old 10-08-2019, 04:30 PM
Joey P is offline
Charter Member
 
Join Date: Jun 1999
Location: Milwaukee, WI
Posts: 29,220
I agree with starting by talking to your CU and/or a bank to get pre-qualified. Once they tell you what (they decide) you can afford, you'll at least have something to work with. If they tell you they can give you a loan for $150,000 that puts an upper limit on what you can look for.
Also, remember, it's just an upper limit, you don't have to spend that much.

Someone mentioned that your employment history could be an issue. You can try to get in front of that by having your employer write a letter (or you write one and have them sign it) stating how much you're making now and that they don't foresee that changing. It really just needs to be a few sentences. Just something like "Leaper is currently making $15/hour and works an average of 40 hours per week. Leaper's current annual income going forward is approximately $30,000 and we intend to keep Leaper employed, at that rate, for the foreseeable future".
Bring in a few paystubs that show your previous income and how it matches last year's W-2 and a few newer paystubs to show how much you're making now. They'll call and verify this as well.

Once you have that all figured out, it's just a matter of looking at houses. IRL or online. When you find one you like, tell the person showing it you want to put in an offer and they'll walk you through it.

You can also get your own agent to help you as well.
  #10  
Old 10-08-2019, 06:32 PM
Isosleepy's Avatar
Isosleepy is online now
Charter Member
 
Join Date: Jul 1999
Location: Pittsburgh
Posts: 1,828
Make sure you understand why you want to own the real estate you will be living in, and then verify that owning it would in fact accomplish that.

A mortgage is a product like any other. Get pre-approved, but keep shopping. Rates vary by provider. Rates vary by type of loan.
Once you have a number at which you are pre-approved, start looking at what that buys you. Zillow can give you a rough idea, maybe help narrow down neighborhoods etc. Then start looking at properties with an agent. If you buy without having seen at least a few dozen properties, especially on your first purchase, you ain’t doing it right.
And as said by others, that pre-approved amount is an upper limit - not some goal. I have always found comfort in living in a cheaper house than I can afford.

Last edited by Isosleepy; 10-08-2019 at 06:32 PM.
  #11  
Old 10-08-2019, 07:30 PM
Icarus's Avatar
Icarus is offline
Member
 
Join Date: Feb 2001
Location: In front of my PC, y tu?
Posts: 5,318
If I recall correctly, the formula that is used to calculate what you can afford is called the Back-End Ratio ~36% of your monthly gross. That looks at all of your existing personal debt (auto loan, school loan, credit card debt) plus your Front-End Ratio. The Front-End Ratio is PITI - Principle + Interest + Taxes + Insurance (you can find lots of online resources for calculating this).

If it is a condo/townhouse you would also have a monthly Homeowners Association Fee.

And, if you loan is more than 80% of the total cost, because you have a lower down payment, there is something called PMI - Private Mortgage Insurance. It gets paid out until you have sufficiently reduced your principle to below 80% of total cost.

Get to know these numbers for your situation, they'll help you understand what the loan industry expects of you.

Likely none of the loan people will mention them to you, but they are used in their calculations.
  #12  
Old 10-08-2019, 07:48 PM
HMS Irruncible is offline
Guest
 
Join Date: Nov 2004
Posts: 8,544
Quote:
Originally Posted by Leaper View Post
Thoughts? Advice? Links to thoughts and/or advice?
My first advice would be to sit down, compare the rents in your area with the cost of home ownership, and ask yourself if you really need to own.

I think over the course of my 20 years of home ownership, I've enjoyed being a homeowner, but I think the costs have more or less been a wash. The only real perks have been when I wanted to make some very specific upgrades that a landlord wouldn't provide or a HOA might not tolerate.

Also, all HOA are financially and morally bankrupt.
  #13  
Old 10-08-2019, 08:51 PM
monstro is offline
Guest
 
Join Date: Mar 2002
Location: Richmond, VA
Posts: 20,742
I joined my credit union for the sole purpose of buying a house. Not only did I get my home loan through the credit union, but I also got my realtor through them. I'm sure there are downsides to doing something like this, but it was convenient for me. Especially with it being my first home and me jumping through all the hurdles all by myself and being scared out of my mind about the whole thing.

My realtor asked me for my "must haves" and I kept the list short and simple. I wanted a small house (I told him I would not consider anything more than 1,000 sq ft, and that I really preferred something in the 700-800 sq ft range) within five miles of my office. Of course, he also knew how much I had been pre-approved for. And as difficult as it was, he stuck within those parameters and without any complaints to boot. It was slow-going and frustrating at first, but then I went on craigslist and found my dream house for sale by owner. But my realtor earned his fee by doing all the other stuff. If there's one quality that I valued in him, it was his quick response time. I saw that craigslist ad and we were checking the house out and making an offer for it all within a few hours. I would not have this house if the realtor had been just a little slower checking his emails. (I also would not have it if my work hours had been less flexible, so keep that in mind too).

It is overwhelming, but your realtor has a vested interest in keeping the stress level down so you don't freak out and bail out of the whole thing. My realtor helped me to "understand" every step. I put understand in quotes because my understanding never progressed beyond the "for dummies" level, truth be told. But at least I never felt so overwhelmed that I wanted to bail out of the whole thing. Also, my realtor did a great job of making me feel so excited about finding my special little place that I kinda forgot to be a nervous wreck.

Like you, I rented for a long time. I wasn't even that crazy about owning property since I believe its financial benefits are oversold. But four years in, I have no regrets. My house still feels like a "dream", and I feel like I paid the right amount of money for it. I am also glad that I didn't deviate from my "must have" list. Doing so would have made my life easier while house-shopping, but I think it would have left me with some disappointment.
  #14  
Old 10-08-2019, 08:59 PM
Gatopescado is offline
Guest
 
Join Date: Aug 2001
Location: on your last raw nerve
Posts: 22,461
Pick somewhere you want to be.
  #15  
Old 10-08-2019, 09:21 PM
ethelbert is offline
Guest
 
Join Date: Feb 2005
Posts: 1,190
Since you specified condo/townhouse, keep in mind that you will be moving into a community. Read the rules of that community and decide if it works for you. I am always surprised at how many people never read the rules and are outraged when those rules are enforced. Mind you, many rules are not (or only selectively) enforced, but you should at least know about them before you buy.
  #16  
Old 10-09-2019, 12:31 AM
thelurkinghorror is offline
Guest
 
Join Date: Jun 2006
Location: Venial Sin City
Posts: 13,908
Quote:
Originally Posted by SmellMyWort View Post
I can't help but disagree with some of this advice. My wife is a Realtor and by far the fewest problems she encounters on the lending side are with our local credit unions compared to the big banks like Wells Fargo and Chase, which pretty much manage to fuck something up every time. Make an appointment with your CU and talk to a mortgage person there. Feel free to shop around to other banks or lenders and compare rates and costs. Unfortunately, I suspect the nature of your employment history might limit your ability to get a loan since I seem to recall lenders wanting to see at least 2 yeas of full time employment, but it can't hurt to go in and find out for sure. Plus, there are other factors that might be taken into consideration like the size of your down payment.

I would not bother getting a Realtor until you know you are even eligible for a mortgage. I do agree with the advice to talk to friends/colleagues and get recommendations on both the agent and lender.
It sounds like OP doesn't know where to start as far as the process, so that's why I suggested realtor as the CU doesn't handle the actual process. Obviously you have to talk to lender, but it sounds like finances are not the main issue. If they have the ability to suggest a realtor and you trust them, then sure.

One more thing for OP: how long is "recently" converted? Usually they want 3+ months of employee paystubs. But they want 2 years (!) of independent contractor pay history.
  #17  
Old 10-09-2019, 01:31 AM
Dr. Strangelove's Avatar
Dr. Strangelove is offline
Guest
 
Join Date: Dec 2010
Posts: 7,973
Quote:
Originally Posted by thelurkinghorror View Post
Complete YMMV opinion from me: condos suck and HOAs suck.
I love my condo and I have no problems with my HOA. The fees have gone up only with inflation, and pays for all kinds of stuff that I'd otherwise have to deal with on my own (paint, roofing, landscaping, garbage, driveways, structural inspections, pest removal, and other stuff). They set aside money for known future maintenance and have been responsive for pretty much everything. Once, a huge tree blew over in strong winds and they had a crew out taking care of it in hours.

Sure, there are some horror stories about HOAs, but probably the worst situations can be avoided with just a little research. And the benefits to first-time homeowners are significant.
  #18  
Old 10-09-2019, 01:59 AM
glee is offline
Guest
 
Join Date: Aug 1999
Location: Obama country
Posts: 15,616
Quote:
Originally Posted by HMS Irruncible View Post
My first advice would be to sit down, compare the rents in your area with the cost of home ownership, and ask yourself if you really need to own.

I think over the course of my 20 years of home ownership, I've enjoyed being a homeowner, but I think the costs have more or less been a wash.
In my first 20 years of home ownership, I paid off my mortgage. (It didn't cost much more than renting would have.)
During that time, the value of my property went from £60,000 ($73,000) to £150,000 ($183,000).
10 years later I'm retired, living in a house I own. (I do wonder how renters manage when they retire...)
  #19  
Old 10-09-2019, 03:01 AM
DorkVader's Avatar
DorkVader is offline
Guest
 
Join Date: May 2011
Location: boise idaho
Posts: 2,887
First, go to your CU in person and talk to the loan officer directly. Tell them what you want to do and find out if you can even get financing.

Assuming they approve you for some amount, you will then be able to determine where and what is the best thing to buy. DO NOT BUY A HOME THAT IS CONVENIENT TODAY! You will regret it and it may turn out to be costly. You're looking to make the largest single purchase you will ever make at any particular time in your life. At the very least you need to decide where and what you think your wants and needs are likely to be and take you in 10 or more years.

The rule of thumb I used when buying my homes was, I plan to die here. So financing, size of home, size of yard, ease of access in my old age were all factors. If I thought something would take me away from the area in 10ish years or less, I wouldn't have bought. The hassles and tax consequences in my state when selling a home make it not worth it depending on what and where happens to cause a move. YMMV

So, once you have the money figured out, research realtors in your area just like you would any other contractor. Do web searches, go to specialized websites for realtors that give ratings and testimonials, check their BBB rating etc.

Some other factors to consider, how much home do you want to be responsible for maintaining? Are you ready to understand that when that wire goes bad inside the wall while your out of town for two weeks, YOU have to get the electrician to fix it and you have to get the contractor to repair all the drywall the electrician had to tear out to fix the wire and you have to pay them yourself out of your pocket on top of all your regular bills and replacing all the food that went bad and cleaning the now nasty stinky fridge.

On the plus side you can paint, hang whatever wherever however on the walls change the doors and trimwork, get new appliances that you like, find the just right toilet for you, not to tall, not to short and you can put the seat on it you want, you know the one, soft and cushy and padded.
__________________
"The Wonka will show you the true nature of the chocolate, He is your master now."
Darth Desserticola, Sith Hare
  #20  
Old 10-09-2019, 06:20 AM
monstro is offline
Guest
 
Join Date: Mar 2002
Location: Richmond, VA
Posts: 20,742
Quote:
Originally Posted by glee View Post
In my first 20 years of home ownership, I paid off my mortgage. (It didn't cost much more than renting would have.)
During that time, the value of my property went from £60,000 ($73,000) to £150,000 ($183,000).
10 years later I'm retired, living in a house I own. (I do wonder how renters manage when they retire...)
Renters with some fiscal ability and sense can invest their money in ways that have a ROI that is just as good (if not better than) real estate.

My city has a number of apartment complexes that are targeted to people 55 or older with incomes less than some amount. The average middle class homeowner may feel like such a place would be a major step down for them, but the average lifelong renter probably doesn't have that attitude. Rent controlled apartments and low-income housing are also helpful.

Usually people who rent their whole lives have good reasons for doing so. Like, they are too poor to afford a downpayment or to be approved for a home loan. Poor people work as long as their bodies hold up; they don't really retire in the traditional sense of the word. For the remaining lifelong renters, most are living in locations where renting is the norm.
  #21  
Old 10-09-2019, 06:28 AM
Nava is offline
Member
 
Join Date: Nov 2004
Location: Hey! I'm located! WOOOOW!
Posts: 42,772
Another reason for renting is being highly mobile; yet, another, being Swiss (and it's not like the Swiss don't know anything about money). Considering how many people downsize an empty nest or move to sunnier lands upon retirement, "by the time retirement comes, I want to own the house where I live" isn't necessarily the best motive. My own "retirement home" (which I do own) wasn't a bad purchase but it's not going to appreciate by much unless the market changes a lot, because it's in a tiny village that people simply don't think of; my "investment purchase" (which has already appreciated by 30% in two years) is the one in Barcelona.



To consider: what exactly do you want from buying? And what exactly do you need, want, absolutely not want, can live with, in your new home? For example, many people think that they would love a garden; I know I like mine cared-for by the city's government. Schools aren't important for you now, but access to decent schools might be important in the future. And so forth.
__________________
Evidence gathered through the use of science is easily dismissed through the use of idiocy. - Czarcasm.
  #22  
Old 10-09-2019, 07:36 AM
Gray Ghost is offline
Guest
 
Join Date: Apr 2008
Posts: 4,399
One thing I have not seen mentioned in the thread yet (though it is chock full of good advice) is to ask yourself, how am I going to be able to sell this proposed property in the future? I.e., how are the schools, is the neighborhood on the rise or declining, is this a type of property that is easy to sell (SFA vs Condo vs Time-share). You want something that you're going to be able to resell in the future, assuming you don't think you're going to die owning this property.

Another thing is that, while there are such things as buyer's agents, the realtor is only going to get paid on a sale. Consequently, you might find yourself feeling pushed into a property by someone you may have thought you were paying to give unbiased advice.

Stuff already mentioned, but worth reiterating: Shop around for financing. Your credit union is a great place to start, and interest rates are quite low. Figure out how much you realistically can spend. Include a budget for maintenance. Being house-poor sucks. Consider potential disasters in choosing your property. Perhaps I'm sensitive, living in seemingly the flood capital of the US, but flood plain maps aren't definitive, and often should've been expanded.

Good luck! Owning your own home can be great!
  #23  
Old 10-09-2019, 09:41 AM
peedin is offline
Member
 
Join Date: Aug 2000
Posts: 3,083
I live in a townhouse and my HOA is just fine. Monthly assessment is low ($128) and has only gone up about $10 in the 15 years I've lived here. The HOA has over $200K in reserves. All roofs were replaced without an additional assessment. The landscaping and snow removal are good. We don't have fancy stuff like a pool or a clubhouse. If you go the condo/townhouse route, be sure to check out the rules and regs before you buy.
  #24  
Old 10-09-2019, 10:20 AM
filmore is offline
Guest
 
Join Date: Aug 2002
Posts: 4,575
You can start looking at what's available in your area by going on any of the real estate websites that show homes for sale. Zillow.com is a popular one. Homes typically have lots of pictures and you can get a very good feel of what kind of house is available for your price range. Drive by houses you like to see what they look like in person. Look for open houses, which is where the house is open for browsing during certain hours.

A simple way to figure your price range is that every $100,000 of loan value will be about $1000 in total mortgage payment. The mortgage payment is more than just the loan repayment. In addition to the loan itself, it also includes escrow (payments for home insurance/taxes) and possibly loan insurance. You should plan on having about 10-20% of the home price to pay for the down payment. That will vary depending on your mortgage requirements.
  #25  
Old 10-09-2019, 10:21 AM
HMS Irruncible is offline
Guest
 
Join Date: Nov 2004
Posts: 8,544
Quote:
Originally Posted by glee View Post
In my first 20 years of home ownership, I paid off my mortgage. (It didn't cost much more than renting would have.)
During that time, the value of my property went from £60,000 ($73,000) to £150,000 ($183,000).
10 years later I'm retired, living in a house I own. (I do wonder how renters manage when they retire...)
As I mentioned, it's market-specific.

But I'd also point out... you made a profit of US $110,000 in 20 years. In my area, I'd pay that much in property tax in 20 years. I would pay that much in upkeep and renovations over 20 years.

It's a good point that you'll eventually own the home outright, but a home mortgage is really just an enforced savings vehicle.
  #26  
Old 10-09-2019, 10:35 AM
CookingWithGas's Avatar
CookingWithGas is offline
Charter Member
 
Join Date: Mar 1999
Location: Tysons Corner, VA, USA
Posts: 13,432
Quote:
Originally Posted by HMS Irruncible View Post
Also, all HOA are financially and morally bankrupt.
That is an irresponsible and uninformed generalization.
__________________
Making the world a better place one fret at a time.
| | |∑| |∑| |∑| |∑| | |:| | |∑| |∑|
  #27  
Old 10-09-2019, 10:42 AM
thorny locust's Avatar
thorny locust is offline
Guest
 
Join Date: Apr 2019
Location: Upstate New York
Posts: 1,285
Just want to add in here re realtors: most realtors are working for the seller, not for the buyer. If you want the realtor to be working primarily for you, make sure that it's clear you're looking for a buyer's agent -- and note that you'll in that case be the one paying the realtor.
  #28  
Old 10-09-2019, 10:53 AM
HMS Irruncible is offline
Guest
 
Join Date: Nov 2004
Posts: 8,544
Quote:
Originally Posted by CookingWithGas View Post
That is an irresponsible and uninformed generalization.
Lighten up, it's hyperbole informed by the lived experience of myself and people I know. Which is - HOA are often underfunded and mismanaged. They often don't perform agreed-upon maintenance, but are fairly controlling on what they expect homeowners to do.

HOA should be scrutinized carefully in any buying situation, understanding that many of them do not perform to expectations.
  #29  
Old 10-09-2019, 11:11 AM
Tired and Cranky is offline
Guest
 
Join Date: Dec 2014
Posts: 1,587
Start by asking yourself: where do I want to live, how do I want to live, how much can I afford, and how much do I want to spend?

Where: Close to work? Near recreation? Near relatives? City? Country? Suburbs?

How: Do you want a perfect house that you just move into and enjoy? A house you can renovate to your tastes? Can you do renovation work yourself? Can you afford to pay contractors to do it all for you? Do you want a single family with a big yard for gardening? Do you want a condo so you have less to worry about when you travel? Or one that's close to urban amenities? Maybe a townhouse so you don't have to take care of the yard? A place where you can entertain friends? A place big enough for relatives to stay in? An exercise room?

Afford: Your credit union can help with this. It's a good idea to prequalify for a mortgage before you start making offers.

Want to spend: Obviously, this should be lower than the number above. If it isn't, save more, earn more, and try again later.

I agree with those suggesting that you go to open houses and check listings online. Once you have some idea what you're interested in and what the market is like, find a good real estate agent. Ask people you know who recently bought for recommendations.

Quote:
Originally Posted by filmore View Post
A simple way to figure your price range is that every $100,000 of loan value will be about $1000 in total mortgage payment. The mortgage payment is more than just the loan repayment. In addition to the loan itself, it also includes escrow (payments for home insurance/taxes) and possibly loan insurance. You should plan on having about 10-20% of the home price to pay for the down payment. That will vary depending on your mortgage requirements.
With interest rates where they are today, every $100,000 of loan value adds only about $550 to a loan payment, assuming a 30-year fixed rate mortgage at 3.875% and property taxes at about 1% of the purchase cost. Your mileage may vary, particularly if property taxes are higher in your area. There are calculators online that will give exact calculations to the penny, and the OP can check those out. Bankrate.com is a good source for current mortgage interest rates.
  #30  
Old 10-09-2019, 12:40 PM
Leaper is offline
Charter Member
 
Join Date: Jul 2001
Location: In my own little world...
Posts: 12,614
Good advice so far, and good question on motive.

Major motive: my rent keeps going up, and I’ve been told that a mortgage might be financially better in the medium to long term. I remember all the radio ads for mortgage companies before 2008, so I know renting isn’t necessarily “a waste of money,” but if I can eventually get some kind of “savings,” it’d be worth it to me. I know I may end up spending it on other things like maintenance, so even roughly equal would help; at least then I’d have something to show for it.

I don’t care about yards, I’m not handy (right now), and as I said in my OP, I like the area I’m in right now. I’d love to live closer to work, but the closer you get to it, the more expensive things get, since it’s a hot high-money employment area, and I’m a little afraid that waiting will either boost my rent a lot, boost prices a lot, or both, even in my neck of the woods. If I do this, I’d prefer not having to move further away.
  #31  
Old 10-09-2019, 12:49 PM
Icarus's Avatar
Icarus is offline
Member
 
Join Date: Feb 2001
Location: In front of my PC, y tu?
Posts: 5,318
Quote:
Originally Posted by Leaper View Post
I know I may end up spending it on other things like maintenance, so even roughly equal would help; at least then Iíd have something to show for it.
One aspect I found to be true in the past with buying a home is that once you set up a flat rate mortgage, your monthly cost is essentially fixed. So, even though rents might seem comparable today, down the road you will be paying the same and rents will have risen. Yes, taxes and insurance costs will tick up over time, but I haven't found them to go up like rents do. So, ten years from now you may/will feel like your monthly is a bargain.
  #32  
Old 10-09-2019, 12:55 PM
Pork Rind's Avatar
Pork Rind is offline
Charter Member
 
Join Date: Jan 2001
Location: Santa Barbara
Posts: 2,606
Quote:
Originally Posted by thorny locust View Post
Just want to add in here re realtors: most realtors are working for the seller, not for the buyer. If you want the realtor to be working primarily for you, make sure that it's clear you're looking for a buyer's agent -- and note that you'll in that case be the one paying the realtor.
I've twice used a buyer's agent in buying a home and they've been paid the standard 3% commission by the seller. Other than a thank you gift I haven't paid anything directly.
  #33  
Old 10-09-2019, 01:53 PM
Translucent Daydream is offline
Guest
 
Join Date: Nov 2005
Location: Grand Valley
Posts: 1,821
We tried to buy in Oregon. We were preapproved for the mortgage, but couldn't get a realtor that would work with us on a house that was less than $300,000 since the market was one fire then. I had to update my preapproval each 90 days, and did this throughout the two years we were looking for a realtor. We almost bought a place by owner during the time, but a guy swooped in with a cash offer and we lost out.

When we finally got a realtor, our preapproval was revoked a couple of weeks later because I turned 35 at the time, and they didn't want to lend to me when they thought I would be retired and still making the payment. We were then on the hunt for another lender, which the realtor promised wouldn't be a big deal because our debt to income was fine and our credit was fine.

We never found a lender. The purchase price of the homes we were looking at were all sub $300k, and the lenders would either slow roll our application or flat out tell us and the realtor that they weren't currently doing loans below $290 or $300k. After 6 months, we gave up. Each one of these bastards ran our credit each time, and by the time we quit looking, our score had dropped 150 points. We were still approvable through the credit score hits for the inquiries, but we gave up when we couldn't find a lender. Even our bank and credit union (we had both at the time) weren't a lot of help.

I hope the market is better where you are. We gave up on the state once our landlord sold the house to the SAME fucking broker our realtor was working with, making us homeless.
__________________
I promise itís not as bad or as good as you think it is.
  #34  
Old 10-09-2019, 02:09 PM
Leaper is offline
Charter Member
 
Join Date: Jul 2001
Location: In my own little world...
Posts: 12,614
You raise a possibly good point above; I’m even older than 35. Have I aged myself out of a house?
  #35  
Old 10-09-2019, 02:18 PM
filmore is offline
Guest
 
Join Date: Aug 2002
Posts: 4,575
Quote:
Originally Posted by Leaper View Post
You raise a possibly good point above; Iím even older than 35. Have I aged myself out of a house?
Mortgages come in different lengths. The standard is 30, but there are also 20, 15, and 10 year mortgages. Keep in mind that the shorter the mortgage, the higher the payment. But overall, the shorter the mortgage, the less you'll spend in total for the house.
  #36  
Old 10-09-2019, 03:05 PM
Tired and Cranky is offline
Guest
 
Join Date: Dec 2014
Posts: 1,587
Quote:
Originally Posted by Leaper View Post
You raise a possibly good point above; Iím even older than 35. Have I aged myself out of a house?
No.

Quote:
Originally Posted by Federal Trade Commission
Two federal laws, the Equal Credit Opportunity Act (ECOA) and the Fair Housing Act (FHA), offer protections against discrimination.

The ECOA forbids credit discrimination on the basis of race, color, religion, national origin, sex, marital status, age, or whether you receive income from a public assistance program. Creditors may ask you for most of this information in certain situations, but they may not use it as a reason to deny you credit or to set the terms of your credit.
https://www.consumer.ftc.gov/article...discrimination
  #37  
Old 10-09-2019, 03:34 PM
Translucent Daydream is offline
Guest
 
Join Date: Nov 2005
Location: Grand Valley
Posts: 1,821
Quote:
Originally Posted by Tired and Cranky View Post
It depends. Notice the slow roll I went through... On paper, they never told me ,"You are now 35 with no prior equity therefore you don't qualify anymore" but they did over the phone. They suggested trying with another lender, and so did the next one, and the next one.... Your application might be in "processing hell" never to come out. I don't think this happens in Oregon as much today, that sweet teat of California cash is fading from what I hear from friends still there.

If it was Splendora, Texas where I was trying to buy the lender would have driven out to my house with a bottle of wine and a massage table to get the deal to go through. Beaverton, Oregon? Oh hell no.
__________________
I promise itís not as bad or as good as you think it is.

Last edited by Translucent Daydream; 10-09-2019 at 03:34 PM. Reason: 1,800th post, just pointing it out
  #38  
Old 10-09-2019, 05:16 PM
Voyager's Avatar
Voyager is offline
Charter Member
 
Join Date: Aug 2002
Location: Deep Space
Posts: 46,561
Quote:
Originally Posted by Leaper View Post
Good advice so far, and good question on motive.

Major motive: my rent keeps going up, and Iíve been told that a mortgage might be financially better in the medium to long term. I remember all the radio ads for mortgage companies before 2008, so I know renting isnít necessarily ďa waste of money,Ē but if I can eventually get some kind of ďsavings,Ē itíd be worth it to me. I know I may end up spending it on other things like maintenance, so even roughly equal would help; at least then Iíd have something to show for it.
Maintenance on a fairly new townhouse shouldn't be much of a problem. And remember, renters pay maintenance and property taxes too - this is just hidden in the rent.
I'm not sure this is a good time to buy, but if you hold onto your job and hold onto the house you'll be fine. The value of my house has fallen about $200k from its high, but it is still worth 4x what we bought it for 23 years ago. We paid off the mortgage since we lost the tax break with the new tax law, but our mortgage at the end was like 1/3 of what the rental price would be. You're right - rents rise over time, while mortgages don't.
  #39  
Old 10-09-2019, 05:18 PM
Voyager's Avatar
Voyager is offline
Charter Member
 
Join Date: Aug 2002
Location: Deep Space
Posts: 46,561
Quote:
Originally Posted by Leaper View Post
You raise a possibly good point above; Iím even older than 35. Have I aged myself out of a house?
I was 45 when I bought my last house and it was never an issue. I wonder if refusing a mortgage on that basis is even legal in the US.
  #40  
Old 10-09-2019, 05:33 PM
Kimera757 is online now
Guest
 
Join Date: Aug 2015
Posts: 605
Quote:
Originally Posted by Leaper View Post
So I recently got converted to a full time employee from a limited contract. Iíve been renting the same apartment for a very long time now, and now that Iíve got some security, Iím giving serious thought to owning my own condo or small townhouse (I donít need any further room). I like the area Iím in now, though I wouldnít mind being closer to work, though obviously prices arenít guaranteed these days (another reason Iím thinking of acting now).

Trouble is, I have no idea how to begin. Iím with a credit union Iíve asked tentative questions of in the past before my conversion (although both contacts havenít replied to emails for months now). I have access to a down payment. But this is so big Iím completely overwhelmed by possibilities.

Thoughts? Advice? Links to thoughts and/or advice?
Why do you want a house?

Rent increases year over year, whereas your mortgage probably will not. So that's a good reason to get a house.

Mortgage prices tend to be higher per month than rent, with the benefit that you will have much lower prices after you have finished (hopefully by the time you retire!) You have to do an analysis on that, and it probably depends on the local area, and on what interest rates will be like twenty years from now.

Some people love equity. I see little point to this. The house is not an income-producing asset (unless you rent part of it out). I rent and invest the (extra) money that I could have spent on a mortgage. Of course, only some renters do this, so people will often say renters can't or won't do this.

Are you married, with children? I see little point of buying a house if you're single, with no children. Furthermore a married couple (where both are working) has a far more stable income stream, which is a big deal when your monthly expenses would be higher. Despite being full-time and permanent, your organization might go out of business (unless it's the government or something really big and stable) and there's a slight risk of getting fired. This is not a reason not to buy a house, but a reason to note that one income is less stable than two incomes.

I think the townhouse is a better idea than a condo. Condos come with condo fees that can suddenly rise (where I live, condo fees are higher than my cheap rent, before you even touch a mortgage, and there's no "rent control" on condo fees). I hear horror stories of condo associations, and (if you care about equity) most of the equity is really in the land, not the house (or sky box) itself. Of course, condos are popular where I live, a big city, because land is in short supply.
  #41  
Old 10-09-2019, 05:37 PM
Translucent Daydream is offline
Guest
 
Join Date: Nov 2005
Location: Grand Valley
Posts: 1,821
Quote:
Originally Posted by Voyager View Post
I was 45 when I bought my last house and it was never an issue. I wonder if refusing a mortgage on that basis is even legal in the US.
I am really interested in this, not to hijack the thread. This was so damn common in Oregon we called it "aging out."

The beef all the lenders had wasn't my credit score or income or anything. They specifically told me that their office didn't deal with people 35 or older with no prior equity. It was the same thing from several lenders, several of these lenders are out here in Western Colorado as well. I don't know if that is their policy or not here. I lodged several complaints that went nowhere.

I had the down (FHA), credit, bank account histories, everything. They would take me if I bought a loan for more than $300k. The lenders were all pretty much at the same level and very specific. They did not respond to email (probably because it was illegal.) They would call back to an email though.

Oddly enough, although I didn't work for the company I work for now at the time, they moved from Oregon to Western Colorado because the daughters of the company couldn't get a house either, for the same reason. They had the money, but no prior equity from rolling over a house before.
__________________
I promise itís not as bad or as good as you think it is.
  #42  
Old 10-09-2019, 05:48 PM
Translucent Daydream is offline
Guest
 
Join Date: Nov 2005
Location: Grand Valley
Posts: 1,821
Sorry to hijack if I am, but maybe this will help the OP. I wish nothing but home ownership to the OP. I have been kicked out of my rent house now 4 times in two states because the landlord sold the house out as soon as my lease went month to month. You don't wanna be in that boat man. I have been lucky to have had savings or a job that helped me move, because the landlord keeps your deposit and everything for 30 days after you move, but you have to move into a new house, pay those application fees, then the 2 - 4 months of rent up front these people always want because the rental market is so tight.

Not to mention your real estate agent's damn broker can pay cash for the house you rent and get you kicked out that way. That was a huge bummer because I had just paid for a bunch of my wife's medical bills and depleted my savings THAT SAME WEEK.
__________________
I promise itís not as bad or as good as you think it is.
  #43  
Old 10-09-2019, 05:57 PM
monstro is offline
Guest
 
Join Date: Mar 2002
Location: Richmond, VA
Posts: 20,742
Quote:
Originally Posted by Kimera757 View Post
Why do you want a house?

Are you married, with children? I see little point of buying a house if you're single, with no children.
A house is no different than any other possession. People can want one just because they think they are cool and it makes them happy to own one. That is why I bought a house.

Homeowners have one benefit that I think you're overlooking. Homeowners who fail to keep up with their mortgage can stay in a property for months or even years before the bank actually kicks them out. It would be the rare landlord who would allow a tenant to be behind on rent for that long. In many localities, it is legal for a landlord to evict a tenant within a few days of giving them notice. You've missed the grace period for your rent payment? You can find your shit on the sidewalk without any recourse. That would never happen to a homeowner.

Last edited by monstro; 10-09-2019 at 05:59 PM.
  #44  
Old 10-10-2019, 09:53 AM
thorny locust's Avatar
thorny locust is offline
Guest
 
Join Date: Apr 2019
Location: Upstate New York
Posts: 1,285
Quote:
Originally Posted by Gray Ghost View Post
You want something that you're going to be able to resell in the future, assuming you don't think you're going to die owning this property.
On this topic: whether or not you think you'll die there (plans sometimes change), keep good records of everything you spend, and keep them somewhere where you can easily find them.

If/when you do sell, you may well need to be able to figure out your cost basis in the place, in order to find out whether you owe capital gains tax and if so how much (there's currently a partial exemption for sale of one's primary residence, but the amount hasn't been adjusting to inflation.) Some things -- including your costs for buying the place, not only the sales price but fees you wind up paying for various things -- are eligible, others aren't. You don't want to have to spend time hunting through the attic for a thirty-year-old box only to find that, while it does tell you that you paid $x to contractor y, it doesn't tell you whether that amount was for re-painting (probably not eligible) or for replacing the kitchen cabinets (probably is.) And of course the rules may change in the meantime. So, basically, record everything you spend on the place starting at the beginning of the purchase process, and do so in detail.

Quote:
Originally Posted by HMS Irruncible View Post
As I mentioned, it's market-specific.

But I'd also point out... you made a profit of US $110,000 in 20 years. In my area, I'd pay that much in property tax in 20 years. I would pay that much in upkeep and renovations over 20 years.
How much would you have paid in rent over 20 years? That needs to be figured in, also. Remember that the rent can and almost certainly will go up, and you don't know by how much.

It's likely to be specific to the individual situation whether one comes out financially ahead from renting or from buying; and some of the factors involved can't be known in advance.

And how much would it be worth to you (obviously this is going to vary) to be the one who decides whether you're going to have cats or dogs and how many and what size; where and how you can hang things on the walls; when and what color to paint the walls, or to wallpaper, or to get or remove panelling; when to replace the badly-functioning refrigerator, and with what model; and a whole lot of other things some people want to have under their control?

(And, in the other direction: if the refrigerator dies at three in the morning during a heat wave, how much does it matter to you that figuring out what to do about it and who to hire to help, and getting ahold of that person and/or parts, are the homeowner's problem?)

Last edited by thorny locust; 10-10-2019 at 09:54 AM. Reason: owe and own are not the same word
  #45  
Old 10-10-2019, 10:30 AM
MoonMoon's Avatar
MoonMoon is offline
Guest
 
Join Date: Jun 2012
Posts: 1,170
Quote:
Originally Posted by Kimera757 View Post
Why do you want a house?

Rent increases year over year, whereas your mortgage probably will not. So that's a good reason to get a house.

Mortgage prices tend to be higher per month than rent, with the benefit that you will have much lower prices after you have finished (hopefully by the time you retire!) You have to do an analysis on that, and it probably depends on the local area, and on what interest rates will be like twenty years from now.

Some people love equity. I see little point to this. The house is not an income-producing asset (unless you rent part of it out). I rent and invest the (extra) money that I could have spent on a mortgage. Of course, only some renters do this, so people will often say renters can't or won't do this.

Are you married, with children? I see little point of buying a house if you're single, with no children. Furthermore a married couple (where both are working) has a far more stable income stream, which is a big deal when your monthly expenses would be higher. Despite being full-time and permanent, your organization might go out of business (unless it's the government or something really big and stable) and there's a slight risk of getting fired. This is not a reason not to buy a house, but a reason to note that one income is less stable than two incomes.
- Rent increases and an increasingly tight rental market is what finally spurred me last year to buy my first house since I sold the last one 25 years ago.

- My mortgage is several hundred dollars a month cheaper than rent, and will remain stable, unlike rent. It would be even cheaper had I gone for a 30 year loan instead of a 15. Not everyone is in the market for a McMansion.

- I'm neutral on equity, but it certainly comes in handy if you want to move in the future. (as long as you've made a smart purchase and/or the economy hasn't tanked blah blah blah)

- I have an adorable little house (850 sq ft) that is perfect for me and my pets, and affords me much more privacy and peace of mind than sharing walls with neighbors would. I enjoy my yard and garden, as well. I think it's silly to say only families benefit from houses.
  #46  
Old 10-10-2019, 12:47 PM
Doug K. is offline
Guest
 
Join Date: Jul 1999
Location: Hutchinson, KS
Posts: 4,007
Quote:
Originally Posted by Kimera757 View Post
Why do you want a house?

Rent increases year over year, whereas your mortgage probably will not. So that's a good reason to get a house.

Mortgage prices tend to be higher per month than rent, with the benefit that you will have much lower prices after you have finished (hopefully by the time you retire!) You have to do an analysis on that, and it probably depends on the local area, and on what interest rates will be like twenty years from now.

Some people love equity. I see little point to this. The house is not an income-producing asset (unless you rent part of it out). I rent and invest the (extra) money that I could have spent on a mortgage. Of course, only some renters do this, so people will often say renters can't or won't do this.
Quote:
Originally Posted by MoonMoon View Post
- Rent increases and an increasingly tight rental market is what finally spurred me last year to buy my first house since I sold the last one 25 years ago.

- My mortgage is several hundred dollars a month cheaper than rent, and will remain stable, unlike rent. It would be even cheaper had I gone for a 30 year loan instead of a 15. Not everyone is in the market for a McMansion.

- I'm neutral on equity, but it certainly comes in handy if you want to move in the future. (as long as you've made a smart purchase and/or the economy hasn't tanked blah blah blah)

- I have an adorable little house (850 sq ft) that is perfect for me and my pets, and affords me much more privacy and peace of mind than sharing walls with neighbors would. I enjoy my yard and garden, as well. I think it's silly to say only families benefit from houses.
People aren't going to rent out property at a loss. Rent is always higher than the mortgage on a comparable property. The mortgage on my current house was about a third of the lowest rent we could find for a similar house. It was the same way with all of the other houses we've owned. And even the house we ended up selling at a "loss" ended up costing us less than $100 a month on average for the time we lived there. I don't think you could rent a 4 bedroom house anywhere for that little.
  #47  
Old 10-10-2019, 12:51 PM
monstro is offline
Guest
 
Join Date: Mar 2002
Location: Richmond, VA
Posts: 20,742
Quote:
Originally Posted by MoonMoon View Post

-I have an adorable little house (850 sq ft) that is perfect for me and my pets, and affords me much more privacy and peace of mind than sharing walls with neighbors would. I enjoy my yard and garden, as well. I think it's silly to say only families benefit from houses.
Me too.

I own an electric scooter despite living in a city served by rental scooters. Sure, I could rent one. But the rental scooters are not as safe or as comfortable as the one I purchased. I bought my scooter because it has features you can't find on a Lime or a Bolt. Three wheels. A wide base. A basket. Pneumatic tires. Plus, I can use my scooter however I want. I can park it next to my bed so that I can scoot away at a moment's notice. I can't get that from a rental.

Similar reasoning applies to my home. I could rent a house, but chances are it wouldn't have all the things I like about the one I own...like the corner lot, the sun room, the front-loading washing machine, and the big-ass storage shed in the back. And it is in a great neighborhood. How does it make sense to turn away from something that offers everything I want while still being affordable in favor of a rental that has everything I need but not everything I want and comes with annoying use restrictions to boot? And why would kids even be a factor in this analysis? If you can afford something and it fits with your lifestyle, I say go for it. Kids or no.

Sent from my moto x4 using Tapatalk
__________________
What the hell is a signature?
  #48  
Old 10-10-2019, 01:23 PM
Voyager's Avatar
Voyager is offline
Charter Member
 
Join Date: Aug 2002
Location: Deep Space
Posts: 46,561
Quote:
Originally Posted by Translucent Daydream View Post
I am really interested in this, not to hijack the thread. This was so damn common in Oregon we called it "aging out."

The beef all the lenders had wasn't my credit score or income or anything. They specifically told me that their office didn't deal with people 35 or older with no prior equity. It was the same thing from several lenders, several of these lenders are out here in Western Colorado as well. I don't know if that is their policy or not here. I lodged several complaints that went nowhere.
Interesting. I had lots of equity, so my example doesn't count. I also bought in California which often frowns at that kind of game.
  #49  
Old 10-10-2019, 01:55 PM
Musicat is offline
Charter Member
 
Join Date: Oct 1999
Location: Sturgeon Bay, WI USA
Posts: 21,268
Quote:
Originally Posted by thorny locust View Post
Just want to add in here re realtors: most realtors are working for the seller, not for the buyer. If you want the realtor to be working primarily for you, make sure that it's clear you're looking for a buyer's agent -- and note that you'll in that case be the one paying the realtor.
Not necessarily. The rules and practices vary by state in the US.

In my state, it is a legal requirement to work as a real estate agent to have an agreement with one or both parties to any transaction. If I have a listing, I am automatically working for the seller, and the seller is my client. I can still sell a house to a buyer, and the buyer will not be my client, but my customer. The duties I owe to a customer are less than those owed to a client, although confidentiality and honesty are still required for both.

I can give freely give advice to a client, but not a customer. I must provide factual info to either if requested (sales figures, lists of inspectors, etc.).

If a buyer signs a Buyer Agency Agreement with me, he then becomes my client. Not all BA agreements are the same (the agent/agency writes the rules within the law and ethics). I write a BA so that my buyer is NOT obligated to pay any compensation if the property eventually purchased is already listed in the local MLS, since that listing guarantees a commission of a published amount. If it is not listed, the buyer will pay the commission, although we typically write that into the offer for the seller to pay.

Other agents may work this differently, but it is not true that a BA always costs the buyer.

The above does not cover all possibilities -- there are times when conflicts arise -- but it's a rough outline of situations RE Buyer Agency.
  #50  
Old 10-10-2019, 02:46 PM
StGermain is offline
Charter Member
 
Join Date: Nov 1999
Location: Toon Town
Posts: 10,850
I bought a 2nd home two years ago from my step-father, who was moving. It's a small house, about 1100 sq ft. I financed $60K and presently have it rented for almost double the PITI. I financed for 15 years. My thought is if someday I can't maintain my (paid-off) farm, I can move to this little house in town. I had no trouble getting a small mortgage and now have about 50% equity in that house.

If I was buying my first house (and I didn't have horses), I'd want a stand-alone house, not a condo or town home. Although you're responsible for the yard upkeep, it can be pretty minimal if that's how you like it. Not having shared walls is important to me - I don't want to hear a neighbor's crying child or spousal argument. I don't require much personal space, but I have (and will always have) dogs. I need a yard.

I agree with getting financing pre-approved. Remember, you don't have to spend it all - and remember to bank money for necessary repairs. Your water heater, furnace, roof, and appliances will all need to be replaced eventually.

Be prepared to kick a lot of tires before you settle on the right house. It's not a decision to enter into lightly. Although I actually bought my farm at auction. I went for an antique trunk and ended up with a 160 yr old farmhouse and 14 acres. But I knew I wanted to stop paying horse board and move from my suburb.

Good luck. Keep us updated.

StG
Reply

Bookmarks

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is Off
HTML code is Off

Forum Jump


All times are GMT -5. The time now is 06:06 AM.

Powered by vBulletin® Version 3.8.7
Copyright ©2000 - 2019, vBulletin Solutions, Inc.

Send questions for Cecil Adams to: cecil@straightdope.com

Send comments about this website to: webmaster@straightdope.com

Terms of Use / Privacy Policy

Advertise on the Straight Dope!
(Your direct line to thousands of the smartest, hippest people on the planet, plus a few total dipsticks.)

Copyright © 2019 STM Reader, LLC.

 
Copyright © 2017