Home purchasing

[ATobin]

Looking for some words of wisdom/encouragement from those who have been there/done that. The concept(cost) of home ownership is a bit intimidating to me personally, but the wife has recently brought it up and has full blown house fever. So I'm trying to get on board.

We have 5ish more months at this duty station before heading to the next and final one and will spend 2 years there before I get out. We've researched the area and it looks like a place we can see ourselves settling down.

So basically, what made you decide to buy a house, what made you decide on the house you purchased, how painful was the process of purchasing, anything you would do differently if you had to do it over again?


Thanks guys.

[PeteSB75]

Now is a great time to buy in most markets. As long as you can get a mortgage, go for it.

Personally, I am in a condo I bought about 2.5 yrs ago, the price has dropped and I would lose 25-30k if I sold it now. I still feel it is worth it, and would do it again tomorrow, knowing I would lose the same money. If nothing else, the peace of mind from owning your own place is well worth the money.

[mosesbotbol]

Great time to buy with reasonable home prices and great home prices in some regions. Not to mention the low interest rates. There hasn't been a time like this in decades.

Buying a home is easy if you are qualified. Get yourself you pre-qualified and study the market you want to be in. You have to become "expert" in how much homes are selling for. Go to open houses and read the journals of what the homes are sold for.

In the most simple terms, think of how much it will cost you to own a home and then calculate how much it will cost you to rent out that same property. The amount you are plus or minus should give you initial idea of the investment. Yes, you get tax deductions owning and on mortgage interestet & pmi.

Read up on the web and don't buy more than you can easily afford. Don't get an ARM mortgage. Keep it at fixed rate and you'll always know how much it's going to cost.

[SvilleKid]

Don't overpay, not in this market. From an insider's standpoint, I'd say: don't believe the government line that the market has turned around. All the up-ticks in the housing market thus far have been based on government programs, NOT on any fundamental improvements in the housing market. Thus, it is very important NOT to overpay, because we are not, I repast NOT in a recovering market. I've lived thru 3 major real estate recessions, working in the real estate business as an appraiser. Even worked the other side of the fence as a banker (handling their foreclosures and work-outs) in the 1979 recession. We are not in a real estate recovery at this time. just not there. Thus, you have time to still get good deals and be sitting much better off in the future. So make sure of your market and the past demand trends. Those trends will come back once the market does start to recover. And in that vein, remember the 3 most important value factors in real estate: Location, location, location.

Make sure you buy a house that will have decent resale value, because few people live their entire life in the same house. If the market norm is 3 BR, 2 B, make sure you get at least that. A 2 BR house in a 3 BR market is almost always a sales impediment. Even if you don't need the extra BR at this time, use for an office of something.

If you get a home inspection, make sure the inspector is actually qualified, as most states' have little (if any) regulation in regards to their qualification. There are a boatload of places out there that charge a fee for a paper, and poof!, now someone is a home inspector!

Make sure the house has a walk-in humidor. And a "Man room" for smoking your cigars! (well, it's a dream to have, at least!)

Check out school system. Part of that "location" thing. Remember, marriage begats children, oftentimes, and if you are already in a good school system, you save having to possibly move to a good system later on.

Good luck. Try and keep you sanity and your humor. NO JOKING here. Buying a home is a much more stressful situation that you would imagine.

[Eleven]

Originally Posted by SvilleKid

Make sure the house has a walk-in humidor. And a "Man room" for smoking your cigars! (well, it's a dream to have, at least!)

Would be nice!

Originally Posted by SvilleKid

Check out school system. Part of that "location" thing. Remember, marriage begats children, oftentimes, and if you are already in a good school system, you save having to possibly move to a good system later on.

This was our starting criteria. I moved to this area 20 years ago because of the schools. Got divorced, remarried, had son as well as new step-daughter along with my first son still in this school district so we bought a house in a different neighborhood, but same school district.

To us, with an established and growing family the schools were the first thing we picked, from there we found the house we wanted.

Good luck!

[MiamiE]

Patience, and lots of it.

[Ratters]

I bought mine almost two years ago and couldn't be happier. Prices are low, they may go lower, but I'd get in now. Interest rates are ridiculously low right now historically and I think will be about double in two to four years as inflation really starts to hit. I'm really pushing a friend of mine who's on the fence right now to do it. And buying now with these interest rates my house payment, including insurance and taxes is less than I was paying to rent a house a few blocks away, and I get the big tax deduction on top of it. Plus it's just nice to have something that is yours. I don't have to worry about my dogs wrecking something, I can do what I want to it and make the house exactly how I want it. The flip side is I'm responsible for anything that goes wrong, but for me the trade off was a no brainer. I say do it.

[ATobin]

Thanks for your thoughts so far guys. A walk in humi is definitely a no go at this point in time, but a nice smoking porch is a must.

Our plan is to pay off the second car next week and wait 3-4 months then check our credit score and see where we're at (my student loan balance makes my income-debt ratio look outstanding ) Right now I think we're looking at a 30 year VA @ 5.5%, which isn't bad IMO and we would repay early.

Has anyone dealt with buying a foreclosure or short sale property? There seems to be a lot of them in today's market and they seem like a deal, and we (me) aren't afraid to get our hands a little dirty with slight remodeling.

[awsmith4]

Originally Posted by ATobin

Thanks for your thoughts so far guys. A walk in humi is definitely a no go at this point in time, but a nice smoking porch is a must.

Our plan is to pay off the second car next week and wait 3-4 months then check our credit score and see where we're at (my student loan balance makes my income-debt ratio look outstanding ) Right now I think we're looking at a 30 year VA @ 5.5%, which isn't bad IMO and we would repay early.

Has anyone dealt with buying a foreclosure or short sale property? There seems to be a lot of them in today's market and they seem like a deal, and we (me) aren't afraid to get our hands a little dirty with slight remodeling.

If you aren't afraid to do some work and spend the money a foreclosure or fixer upper could be the way to go.

One thing as a word of advice, don't look at buying a home as saving money over rent. While people say paying rent is throwing away money, consider the cost of the maintenance of a home on top of the mortgage. I've seen too many people who bought the maximum amount they could afford monthly and forgot to account for the extras that come in home ownership.

But if you do have the time and the money then home ownership is a very rewarding thing

[Ratters]

Originally Posted by ATobin

Thanks for your thoughts so far guys. A walk in humi is definitely a no go at this point in time, but a nice smoking porch is a must.

Our plan is to pay off the second car next week and wait 3-4 months then check our credit score and see where we're at (my student loan balance makes my income-debt ratio look outstanding ) Right now I think we're looking at a 30 year VA @ 5.5%, which isn't bad IMO and we would repay early.

Has anyone dealt with buying a foreclosure or short sale property? There seems to be a lot of them in today's market and they seem like a deal, and we (me) aren't afraid to get our hands a little dirty with slight remodeling.

Mine was a short sale. They can take a long time to get approved. Luckily mine had already been through the approval process so it only took a month to get back to me with the approval. But waits of a few months are common. Short sales are better than forclosures in that people are usually still living in them and they are better cared for. All the foreclosures I looked at were pretty thrashed or the previous owner gutted them before leaving.

In a couple years 5.5% will seem rediculously low.

And yeah, don't buy at the top of your price range, make sure the payments are comfortable. I got approved for way more than I was comfortable spending. And make sure you have a cash reserve for all the stuff you'll need to do moving and after you move in.

[neoflex]

Some great advice thus far. My wife and I bought our house almost 4.5 years ago and it has been great so far. A lot of work but well worth it in the end. You get a sense of pride when the lawn is nice and green and mowed and the beds look great and people say things like "Your house looks great!" I felt just like you leading up to the home purchase as it's a huge financial commitment though. At the time we were living in NY on Long Island and were renting a one bedroom apartment. We had been looking there for a home for some time but we were just never satisfied with what we would get for our money. Keep in mind this was before the market took a huge hit and the market on LI was at it's peak so $4-500,000 bought you a decent fixer upper which would have taken most of the homes an additional $150-200K to get to our liking with 9-14K in taxes every year tacked on. We had friends move to the Charlotte, NC area and we decided to visit one weekend and fell in love with the area. While we were here they took us to look at homes and we were amazed at what we could get for our money here as opposed to NY. Needless to say a couple months later we were having a house built here and preparing to move. We did buy a house that was larger than we actually needed at the time with the intention of not outgrowing it and staying for a long time. We are more of less paying the same amount of money now for almost 2900sq/ft (4bd/2.5bath) new construction home that we were paying for a bread box of a one bedroom apt in NY. We figured worse case scenario if we weren't happy with the move we were young enough where we could move back to NY and more or less have our jobs back and sell or rent the house in NC and say we gave it a shot and move on. Needless to say that never happened and when people ask me when I am coming back to NY for good I respond "NEVER!" My only regret with the whole thing is I wish we would have moved here first and rented for a few months to get the lay of the land and than buy a house after rather than buy a house after a few weekend visits and do everything from NY. Simply because a lot of the places we like to go and things we enjoy doing are a little ways from where we are living now and there are other neighborhoods I would have much preferred living in now that I know the area very well. Not that ours is bad but I have friends who live in some neighborhoods that have clusters of people from the same area and the neighbors seem friendlier where a lot of the neighbors here keep to themselves and aren't as outgoing or friendly. I can go to a buddies neighborhood and if he's not home a neighbor will see me and invite me over for a beer or just come over to shoot the sh*t and hang out and I'll end up hanging out there with them whereas here it seems like a lot of the neighbors avoid each other although once the weather breaks I am breaking in my new neighbor since I learned that he too is a cigar smoker. It's because of that though that my wife and I plan on eventually selling this house and moving if and when the housing market ever improves. We're fine with traveling to go do things but we just want a friendlier neighborhood where getting together with a group of neighbors for a BBQ in the Summer won't make you think hell just froze over.
Good luck with it! It sounds like you'll be moving to a new area and buying a house there so learn from my mistake and rent first and buy later even if it's only for a couple months just so you get a feel for the area and all it has to offer.

[ATobin]

Originally Posted by Ratters

Mine was a short sale. They can take a long time to get approved. Luckily mine had already been through the approval process so it only took a month to get back to me with the approval. But waits of a few months are common. Short sales are better than forclosures in that people are usually still living in them and they are better cared for. All the foreclosures I looked at were pretty thrashed or the previous owner gutted them before leaving.

In a couple years 5.5% will seem rediculously low.

And yeah, don't buy at the top of your price range, make sure the payments are comfortable. I got approved for way more than I was comfortable spending. And make sure you have a cash reserve for all the stuff you'll need to do moving and after you move in.

If we have to go that route we definitely will shoot for a short sale, for the exact reasons you listed. And to my surprise we're looking at a 30 year fixed at 4.75%, so we're going try to lock that up here shortly.

Now when you said your price had already been through approval, does that mean that was they price they had listed it at? We've been thinking of offering list price or list price + closing just to speed things along.

We would like to rent in the area first if we can find a month to month, but we just don't want to get locked into a year lease, and moving that often with a 2 year old just plain sucks.

[Ratters]

Actually someone put an offer on the home that was more than I paid that got approval. I paid 20k less than that approval, but 5k over the new asking price but asked them for closing costs. Since the home was already on the banks radar and had someone there knowledgable about it, it helped speed things along. The sellers agent was tenacious too. But when I bought early in '09 nobody was sure about any valuation as the market seemed to be in free fall and noone was buying around here. In '05 my house would have easily sold for over double what I paid.

That's a great rate btw.

[PeteSB75]

Originally Posted by ATobin

If we have to go that route we definitely will shoot for a short sale, for the exact reasons you listed. And to my surprise we're looking at a 30 year fixed at 4.75%, so we're going try to lock that up here shortly.

Now when you said your price had already been through approval, does that mean that was they price they had listed it at? We've been thinking of offering list price or list price + closing just to speed things along.

We would like to rent in the area first if we can find a month to month, but we just don't want to get locked into a year lease, and moving that often with a 2 year old just plain sucks.

This is very much a buyer's market. I wouldn't offer anyone listing price. Offer 10% below, if not more. Short sales and foreclosures are a different ballgame, but if you are dealing with people, you have the power, so use it, but be prepared to walk away.

[floydpink]

Drive through the neighborhood you are looking at a few times and a few different times of day and night to see what it's like after dark, etc.

Nothing like discovering you have a neighbor who throws parties all night and has a vicious pit bull after the closing.

[cmitch]

So you can see yourself settling down in this new town where you'll serve the remaining 2 years of service to our country.

What I would do is rent for awhile. Here are the reasons:

1. You've not actually lived there. Cities and towns are notorious for fudging on economic and crime facts to attract settlers.
2. You'll have to find gainful full or part time employment depending on your financial needs. Make sure you have a dependable job that you like, first.
3. House fever can turn quickly into house regret. Move into town and cool your heels. GEt you a 6 month or 1 year lease on a modest apartment. Once you've had time to decide what it is you want, then make the move.
4. Rent is the best short term value for your money. No responsibility, no upkeep. No, you're not throwing your money away. If you rent for a year to make a decision, chances are, you've only 'lost' about $500 worth of principle on the average loan.

The most critical of mistakes are made by FIRST TIME home buyers. More often than not, desire clouds the skies of reason. Experience is a good teacher. Hire a reputable home inspector for your first purchase.

[bvilchez]

Everyone up top covered the majority of things.

Take a look at http://www.zillow.com/ to get an idea of what youmight be looking for. Remember these are not set in stone and many of the numbers reflected vary on many factors.

[Sled Dog]

My house was a foreclosure. The previous owner had taken out a 2nd mortgage to finance an addition and remodel. About 75% of the way through they lost the house. We got a smokin deal on the house. For us, purchasing a house was something we wanted to do, and had the luxury of waiting for the right deal at the right moment. A foreclosure is certainly more difficult than a normal purchase, but is absolutely worth it in the long run. An FHA loan was not possible as the house had unfinished aspects to it, and would have to have been finished prior to the sale. Another tip for buying a house is don't get enamored with colors or carpets, use your imagination. It drives me nuts watching the shows on HGTV where people are in the market and dismiss something because they hate the color of the living room, or don't like the carpeting. Things that are easily and inexpensively changed.