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.
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.
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.
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.
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?)
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.
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.
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.
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.
I could have said (in fact, I probably did say) that exact same thing right before I bought my condo.
In 2007.
Oops.
That said, I still love my condo and while overall I’m happy about the decision I made - hindsight clearly shows that it did not turn out to be the most financially prudent decision.
As other people in the thread have said, talk to your CU about your options and look into getting pre-approved to see what your absolute upper limit is. Start looking at your own personal budget to see what your more realistic upper limit is. Start visiting open houses in the area to see what’s available around you. Start thinking about the features that you need in a home, which ones are absolute "no"s, and which ones are nice-to-haves. Be open to learning more and changing your mind. (One of the features I love most about my place and I now couldn’t imagine living without was not even a thing I knew I wanted.) If you know anyone around you who is looking or has recently purchased a home, talk to them to find out what to expect. Get recommendations for areas to look in, realtors, and other real-estate professionals. (Don’t rely on the experiences of people in a different market or people who haven’t bought in the past 5 years - things are local and changing).
Finally, you have time. Especially if you are just thinking about things and are not looking at a specific house that’s for sale right now. Because some things in buying a home do need to be done quickly, there ends up being a lot of pressure to get everything done as-quickly-as-possible. Some of the decisions (including whether or not you want to buy at all) can wait.
I believe there are generally regulations about how the agent needs to behave to the buyer, even when they’re a sellers agent. But I think it is a good idea to understand that just because one calls up a realtor and expresses interest in buying, that doesn’t necessarily mean one’s dealing with an agent working primarily for the buyer, as opposed to the seller. That doesn’t mean a buyer shouldn’t talk to the seller’s agent, of course; but just be aware of the situation.
Avoid houses which were recently flipped. Often, the flipper buys the house cheaply and fixes it up as cheaply as possible. It may look nice, but the cheap materials can mean big problems later on.
Consider how water drains around the property. Low spots will collect water. Hills and slanted land near your property may cause excessive water to flow into your yard.
One-story houses are much easier for external work than two-story houses.
You can fix up an outdated house. Appliances can be swapped out. Painting is pretty easy. You can do tile/hardwood yourself if take the time to do it right. Bad landscaping can be changed. Bigger jobs, like changing the cabinets and counters, would likely need to be hired out. Don’t pass up a house just because it looks out of date. You may be able to get it at a good price and fix it up yourself.
If you have a homeowner friend, have them go along with you for a critical eye when you look at properties. It would be especially beneficial if they have experience with home repair and maintenance, as they can identify problems and what it might cost to address them. The realtor will just tell you the good stuff and put a good spin on problems (e.g. This tiny water heater will really save you a lot on electricity costs!). If you can’t identify the problems yourself, take an unbiased person with you who can.
I bought my first (and so far only) house through a buyer’s agent. As I understood it at the time (~20 years ago), this was a good move for a first-time home buyer, but not for cost reasons- the agent still got the same commission as a seller’s agent. The difference was that I signed a contract with the buyer’s agent entitling him to a commission on any house I bought, whether he actually helped me find a house or not, during the life of the contract. (I think it was either 90 or 180 days, I’m not sure.) Even if he spent every day stoned on crack, addressed me as Shithead, and hit on my girlfriend, while I went off on my own and found a house without his help, he’d still get a commission. The theory, at least, is that the buyer’s agent, assured of a commission, can take his/her time and work with you to find the house that really is best for you. By contrast, there wouldn’t have been any such obligation to a seller’s agent, so if I found a house on my own and hired a lawyer for the contractual stuff, the seller’s agent would be out of luck commission-wise, regardless of how diligently he/she would have been working for me up to that point. It’s in a seller’s agent’s best interest for you to buy a house for as much as possible as quickly as possible, which is why on your second home, when you’re also selling your first one, a seller’s agent is a better idea. Of course a buyer’s agent has some of the same incentive as well, but again, at least in theory they have your interest more in mind than would a seller’s agent.
“Aging out” at 35, aside from being of dubious legality, makes no sense from a risk management perspective. If you can’t make the mortgage at age 62 because you are retired, you will have made 27 years of payments, meaning the mortgage is significantly less than at closing. Absent a complete real estate collapse, that should mean that foreclosure should easily net the lender the mortgage balance plus fees. So they rejected you because they felt the values were not sustainable, because you didn’t fit their risk profile, or, more likely, because your mortgage (<300k/30 yrs/fha) couldn’t be re-sold to the people they typically dealt with.