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UWPoolGod
08-10-2004, 04:29 PM
...and what you've learned since.

I am wondering how your first home buying experience went. I am going to be getting in the market for a home relatively soon and want your advice on what to look/lookout for. Any info...new/used...fixed/variable..etc. I hope to also consolidate some debt as well as buy a 9 footer in the process /ccboard/images/graemlins/smile.gif. With rates low it is the time to buy. Thanks for your responses in advance.

Barbara
08-10-2004, 07:32 PM
Todd,

Rates may be low, but it's a buyer's market and you're going to pay a lot more than from the prices a couple years ago. So maybe go a bit smaller and think about trading up in size within 5-7 years.

And be prepared to sign to the biggest check of your life!!!

Barbara~~~and have a bottle of champagne ready to get over the, "What did I do?? Oh noooooooooooo" feeling... /ccboard/images/graemlins/crazy.gif

Popcorn
08-10-2004, 07:52 PM
Buy the worst house in the best neighbor hood (within reason). You can push up it's value very easily. My sister-in-law bought a house in a luxury neighbor hood, (David Cassady lives across the street) The owner was a crazy old lady that lived there with like 20 dogs. You needed a gas mask to walk in the house. They paid $350,000 for it and put maybe another $50,000 in it. That was three years ago and the house is going to be put on the market for over a million around the beginning of the year. Never buy a house that a speculator bought and fixed up to resell. Also, if you do the fix up do top quality work and don't be cheap. Quality really stands out. There have been some pretty good changes in the tax laws in the last few years. for homesteaded property. My nephew bought a piece of crap just a few years ago and could easily make $75,000 profit on it today. If he had bought himself a house when I recommended it he would really be in the chips. I bought my first house when I was 22 years old. As a single guy you can even get a few room mates that will pay your mortgage for you.

Barbara
08-10-2004, 08:21 PM
Popcorn,

You're so right about buying cheap and fixing up!! We put a lot of sweat equity in an 80-year old fixer upper with original huge oak trim that no one had touched because it transcended through a family line to a dead end. Okay, so it's only 2000 sq ft, but it's worth at least 4 times the price we bought at 18 years ago. Plus, nothing had been done to fix anything, so we were working with just primarily fixing up instead of redoing a bad redo job.

The first thing Pete did was rewire the house. It was the original nob and tube wiring introduced into a 1920s home. Then the plaster had to be pulled since it was "dead". I'm not going any farther, but I am the best "stripper" there will ever be of varnish and the best *refinsher* of beautiful golden oak this house was originally trimmed with - 8" baseboards with ogee and quarter round moldings - old style.

We picked a ripe one. We fell into it because the first buyer fell through on his loan and the Power of Attorney for the estate liked us immensely and really wanted us to buy the house to fix it up instead of be a speculator to fix it up to sell it. It didn't hurt that we had a common wedding anniversary date, either.

To Winifred Lewis and Miss Egan, God Bless, we thank you. We love our "Shamrock Lodge" house.

Barbara~~~with two cats in the yard...

Chris Cass
08-11-2004, 12:23 AM
Don't buy a house at the end of the cultasak. All the leaves will end up in your yard. /ccboard/images/graemlins/mad.gif

Regards,

C.C.

catscradle
08-11-2004, 05:49 AM
<blockquote><font class="small">Quote Barbara:</font><hr> Todd,

Rates may be low, but it's a buyer's market and you're going to pay a lot more than from the prices a couple years ago. So maybe go a bit smaller and think about trading up in size within 5-7 years.

And be prepared to sign to the biggest check of your life!!!

Barbara~~~and have a bottle of champagne ready to get over the, "What did I do?? Oh noooooooooooo" feeling... /ccboard/images/graemlins/crazy.gif <hr /></blockquote>

Do you mean a seller's market? A buyer's market to me means there is a glut of houses and prices are stagnant or coming down. In my area it truly is a buyer's market except for condos which of course I recently bought.

I wholeheartedly agree with you're suggestion to buy in stages. Buy a smaller house, improve it (3-7 years), and move on until you're in the house you want to be in forever (or at least until it is time to downsize). Popcorn's advice is spot on too, buy a rundown property in a upscale neighborhood. Besides making money, your neighbors will love you for fixing it up and impoving their values. /ccboard/images/graemlins/wink.gif Also I think fixed vs. an ARM depends on how long you're planning to stay in this property. If you're planning on in and out an ARM makes sense. If you're settling down to raise kids IMO a fixed rate is better.
Good luck.

Perk
08-11-2004, 07:32 AM
<blockquote><font class="small">Quote Chris Cass:</font><hr> Don't buy a house at the end of the cultasak. All the leaves will end up in your yard. /ccboard/images/graemlins/mad.gif

Regards,

C.C. <hr /></blockquote>

LMAO....thats funny.

My opinion runs with popcorns. If its your first, buy a house you can fix up yourself and resell. My suggestions when you decide on the house, have someone with you that knows what to look for in regards to severe problem areas. For instance, just because they tell you the roof was new 7 years ago, doesnt mean its worth anything....We got burned on this one. If I would have jumped into the crawl space and looked, I would have noticed rotting boards, and we could have worked it out with the price. Now I am stuck having to come up with a way to fix/repair the roof. ):

catscradle
08-11-2004, 07:47 AM
<blockquote><font class="small">Quote Perk:</font><hr> ... My suggestions when you decide on the house, have someone with you that knows what to look for in regards to severe problem areas... <hr /></blockquote>

I'd suggest spending a couple of hundred bucks and getting an home inspection done.

Wally_in_Cincy
08-11-2004, 07:51 AM
<blockquote><font class="small">Quote catscradle:</font><hr> I'd suggest spending a couple of hundred bucks and getting an home inspection done.
<hr /></blockquote>

That is an absolute MUST.

Wally_in_Cincy
08-11-2004, 07:53 AM
<blockquote><font class="small">Quote UWPoolGod:</font><hr>

I am wondering how your first home buying experience went.<hr /></blockquote>

The first one, at age 23, was very stressful. I lost about 15 pounds in six weeks. I ended up 170 lbs. at 6'-5". I wish I could duplicate that feat /ccboard/images/graemlins/smile.gif.

I paid more than I should have, being young and stupid. My realtor f***ed me. I have not used a realtor since. (apologies to dg-in-central-pa, I'm sure he's a straight up guy /ccboard/images/graemlins/smile.gif ).

My best advice? Don't fall in love with a particular house. Bid low and be prepared to play hardball or walk away. You may find a seller that is desperate to sell and will take a low offer.

My second house I bought in 1990. They were asking 64,000. I bid 54,000. The old lady that owned it had moved and it had been empty and for sale for 4 months. I ended up getting it for 56 which was 5,000 less than what the rest of the houses in the neighborhood were going for. It was funny, at the closing she was bitching that I was getting the house too cheap. I just laughed (This woman was not poor). Plus we found $350 cash she had hidden behind a curtain /ccboard/images/graemlins/smile.gif

Also do not make yourself "house-poor". What good is a house if you can't afford furniture or you can't afford to take your girlfriend out on a date?

Have it professionally inspected. It may cost $200-300 (I don't know what they charge where you are)

We went looking for a house last year. We found one that we wanted bad but we walked away because the guy would not come down enough on his price. Kathy was heartbroken. Well 4 weeks later we got a call (I remember it was when we were on our way home from our Scott Lee lesson). It was the seller on the phone. He asked if my original offer still stood. I said yes and we got it for our price.

<blockquote><font class="small">Quote UWPoolGod:</font><hr>
.fixed/variable... <hr /></blockquote>

With rates as low as they are I would go fixed. Whatever you do don't get an "interest-only" loan.

<blockquote><font class="small">Quote UWPoolGod:</font><hr>..... I hope to also consolidate some debt. <hr /></blockquote>

You might consider paying off your debt before buying a house. I don't know your situation. Just don't overextend yourself. When you figure out your budget include household maintenance. You will be surprised at all the expenses you will incur. Of course it's a lot cheaper if you are handy and can do things yourself.

and like Barbara said, you will definitely need a drink after the closing, especially the first one. /ccboard/images/graemlins/smile.gif

Barbara
08-11-2004, 07:56 AM
<blockquote><font class="small">Quote catscradle:</font><hr>
Do you mean a seller's market? <hr /></blockquote>

Yeah, doh!

Barbara

UWPoolGod
08-11-2004, 08:43 AM
Yeah as of right now I would get a cheaper house by myself, a little better with a roommate. I have some school loan/car/credit card debt totalling about $10K. Rents at $600/mo for a 1 bedroom, so after my payments to the debt I spend about $1100/mo. I could get into a cheap house for about $1000/mo after killing the debt and gaining equity. Is that a sound plan or is my thinking wrong?

Wally_in_Cincy
08-11-2004, 08:55 AM
<blockquote><font class="small">Quote UWPoolGod:</font><hr> Yeah as of right now I would get a cheaper house by myself, a little better with a roommate. I have some school loan/car/credit card debt totalling about $10K. Rents at $600/mo for a 1 bedroom, so after my payments to the debt I spend about $1100/mo. I could get into a cheap house for about $1000/mo after killing the debt and gaining equity. Is that a sound plan or is my thinking wrong? <hr /></blockquote>

I don't think you can roll your existing debt into your mortgage. They can't loan you more than the house is worth.

Or are you talking about paying the debt off before buying the house?

Wally_in_Cincy
08-11-2004, 09:27 AM
If you look hard enough you should be able to consolidate your debt for about 6%. For instance, a 3-year loan at 6% interest. Here's the formula for Excel:

=PMT(0.005,36,10000)

Monthly payment $304.22

UWPoolGod
08-11-2004, 09:46 AM
Say you bought a house for $100,000 and you wanted to make a $10,000 upgrade. Would they loan you $110,000 or would they loan you $100,000 + another $10,000 loan? Or would you have to go to a seperate entity for that other loan?

Barbara
08-11-2004, 10:03 AM
<blockquote><font class="small">Quote UWPoolGod:</font><hr> Say you bought a house for $100,000 and you wanted to make a $10,000 upgrade. Would they loan you $110,000 or would they loan you $100,000 + another $10,000 loan? Or would you have to go to a seperate entity for that other loan? <hr /></blockquote>

That's what's known as a home equity loan. But you can't get that right away as you don't have any equity in your house yet.

When you get a fixed rate mortgage, regardless of the number of years it's for, you're paying off the interest of the mortgage first. As each month goes by, you'll start to pay off the principal of the mortgage, but this won't happen until at least 2-3 years.

Barbara

Wally_in_Cincy
08-11-2004, 10:05 AM
<blockquote><font class="small">Quote UWPoolGod:</font><hr> Say you bought a house for $100,000 and you wanted to make a $10,000 upgrade. Would they loan you $110,000 or would they loan you $100,000 + another $10,000 loan? Or would you have to go to a seperate entity for that other loan? <hr /></blockquote>

$100,000 plus another $10,000 loan. Your mortgage can't be more than the value of the house.

The $10K loan would be at a higher interest rate because there is no collateral securing it.

If you got the 100K from a mortgage company you would probably have to go to a separate place for the 10K. If you go to a bank you could get both there.

Wally_in_Cincy
08-11-2004, 10:08 AM
<blockquote><font class="small">Quote Barbara:</font><hr>...When you get a fixed rate mortgage, regardless of the number of years it's for, you're paying off the interest of the mortgage first. As each month goes by, you'll start to pay off the principal of the mortgage, but this won't happen until at least 2-3 years.

Barbara <hr /></blockquote>

Technically you are paying some principal from the beginning. It might only be $7 on a $700 payment though.

The good news is it will be $8 the next month /ccboard/images/graemlins/smile.gif

catscradle
08-11-2004, 11:07 AM
<blockquote><font class="small">Quote Wally_in_Cincy:</font><hr> <blockquote><font class="small">Quote Barbara:</font><hr>...When you get a fixed rate mortgage, regardless of the number of years it's for, you're paying off the interest of the mortgage first. As each month goes by, you'll start to pay off the principal of the mortgage, but this won't happen until at least 2-3 years.

Barbara <hr /></blockquote>

Technically you are paying some principal from the beginning. It might only be $7 on a $700 payment though.

The good news is it will be $8 the next month /ccboard/images/graemlins/smile.gif <hr /></blockquote>

FWIW - I couldn't get the online calculator to show month 1
Here are the actual stats for 135K @ 5.875% over 30 years:
Month # Interest Principal Balance
12 $652.55 $145.42 $133,300.95
24 $643.79 $154.18 $131,499.47
36 $634.49 $163.48 $129,589.39
48 $624.64 $173.33 $127,564.16
60 $614.19 $183.78 $125,416.84
72 $603.11 $194.86 $123,140.08
84 $591.36 $206.61 $120,726.06
96 $578.91 $219.06 $118,166.51
108 $565.70 $232.27 $115,452.66
120 $551.70 $246.27 $112,575.22
132 $536.85 $261.12 $109,524.30
144 $521.11 $276.86 $106,289.47
156 $504.42 $293.55 $102,859.62
168 $486.72 $311.25 $99,223.01
180 $467.96 $330.01 $95,367.17
192 $448.06 $349.91 $91,278.88
204 $426.97 $371.00 $86,944.14
216 $404.61 $393.36 $82,348.08
228 $380.89 $417.08 $77,474.94
240 $355.75 $442.22 $72,308.04
252 $329.09 $468.88 $66,829.65
264 $300.82 $497.15 $61,021.00
276 $270.85 $527.12 $54,862.18
288 $239.08 $558.89 $48,332.08
300 $205.38 $592.59 $41,408.32
312 $169.66 $628.31 $34,067.17
324 $131.78 $666.19 $26,283.46
336 $91.62 $706.35 $18,030.52
348 $49.04 $748.93 $9,280.05
360 $3.89 $792.26 $0.00

Rod
08-11-2004, 11:33 AM
Yes, the sad part is it takes 8 to 10 years before any substantial amount goes towards principal.

Rod
08-11-2004, 11:44 AM
<blockquote><font class="small">Quote Wally_in_Cincy:</font><hr> <blockquote><font class="small">Quote catscradle:</font><hr> I'd suggest spending a couple of hundred bucks and getting an home inspection done.
<hr /></blockquote>

That is an absolute MUST. <hr /></blockquote>

Most loan companies won't even lend money without a home inspection. Usually it's the sellers expense for such but one could always choose there own inspector for a few bucks more. Buying a home is like matching up in a pool game. Nothing is settled, untill it's settled. If you don't like certain parts of the contract and the seller won't bend, WALK! LOL

UWPoolGod
08-11-2004, 12:12 PM
Thanks for the info guys. From the sounds of it I could get a loan to consolidate my debt and lower the total of those payments. But I think to get into a house I would need a roommate for sure. I'll probably wait and pay off some more of my debt before getting into one, but you gave great info.

Wally_in_Cincy
08-11-2004, 12:13 PM
<blockquote><font class="small">Quote Rod:</font><hr> Most loan companies won't even lend money without a home inspection.

<font color="blue">including a termite inspection. </font color>

Usually it's the sellers expense for such but one could always choose there own inspector for a few bucks more.

<font color="blue">It has always been the buyer's expense for me. I would not trust an inspection if the buyer hired them. Of course if the buyer paid for somebody I hired that would be great.</font color>

Buying a home is like matching up in a pool game. Nothing is settled, untill it's settled. If you don't like certain parts of the contract and the seller won't bend, WALK! LOL


<font color="blue">Yep. It's hard to do though. But many times you will actually find something you like better if you continue looking. </font color> <hr /></blockquote>

Rod
08-11-2004, 12:38 PM
[ QUOTE ]
Yep. It's hard to do though. But many times you will actually find something you like better if you continue looking.<hr /></blockquote>

That's the important thing, keep looking. Never be forced into a deal if your instincts tell you otherwise. When people decide they want to buy a house it's a major decision . It's not like when you decide to buy a cue and buy just because you like it.

Rod

catscradle
08-11-2004, 12:58 PM
<blockquote><font class="small">Quote Rod:</font><hr> Yes, the sad part is it takes 8 to 10 years before any substantial amount goes towards principal. <hr /></blockquote>

Want to hear my sad story. My job is being moved to another state too far to commute. I had to get a week-day condo there. With 43k and 6 years to go on my mortgage I had to refi to pay for the condo. It's still a better deal than throwing money into rent there, but what a bummer. On top of that I had to reduce my 401K contribution to meet the monthly nut on the new mortgage. My company would never had dared moved our jobs in a better economy. Sometimes the free market system is great, sometimes it really rots.

Rod
08-11-2004, 01:00 PM
I wouldn't press myself if your beyond or even close to your financial limits. I'd never take out a loan for improvements without a fair amount of equity. Even then it might not be a good idea. If you borrow 10 k for improvments your going to pay 15k appx for those improvments because of interest. That of course depends on the loan.

I think of a home as a long term investment, you gradually improve as years go by. You need to consider where you will be several years from now. Does it meet a longer term goal or is it just something you want now?

When you fix up a home it's best to consider what the masses like, not just you. For instance you could paint the house purple and have purple carpet. LOL Finding a buyer is another matter. Your nice improvement gets painted over and the carpet ripped out. If a potential buyer can stand to look at it long enough to purchase. /ccboard/images/graemlins/frown.gif

Rod

Rod
08-11-2004, 01:13 PM
Although I'm sure you not happy at least you are in a decent position. Some buy and get transfered within a year or so. What a bummer, it pays to know if possible where you'll be in a few years. Unfortunately our crystal balls are not always clear.

Rod

Candyman
08-11-2004, 01:45 PM
Before viewing a property, find yourself a buyers agent. They will work for you and not the seller. If you don't know an agent ask for references. Ask the agent to supply you with all sales comparibles in the neighborhood and similar neighborhoods. If you find a property you really like hire an appraiser to give you a low/high opinion. You may spend $300 bucks, but it could save you several thousand. After you have done this and like what you see, make and offer slightly below the low number. Have a contingency in the contract that you will have your own home inspector check the property. Here again you will have to shell out several hundred bucks, but could keep you from making a serious mistake. Your agent should get you pre-qualified for a loan. Good luck, Lock

dg-in-centralpa
08-11-2004, 03:21 PM
I myself am a real estate broker and have been in the business for 9 1/2 years. There are many excellent points here. Interview several agents and find the best for you. How accessible is he/she, are they full time/part time. I would want a full time agent because they only get paid when the house settles, so they will be more likely to be available when you are. Check your local market, are properties selling at or above full price? If so, don't waste the agents time with low ball offers because you won't get his co-operation. In my area, homes come up for sale and within 2 weeks there are 3-4 offers. An offer of 10K less won't stand a chance. Now if the property has been on the market 5-6 months or more there will be more room to bargain. If you plan on living in the property less than 5 years, take an adjustable rate, otherwise take a fixed.
If you are handy and can remodel, buy a fixer upper, you will get more money when you resell. But be careful not to overdo it. Definitely get a home inspection as well as a termite inspection. Others may be available, it depends on your area. If you don't do a home inspection, at least have a roof inspection. Insurance companies are turning down houses with a roof age of 20 years. I've run into this several times this year. Also check the electric, is it nob and tube, 60 amp, fuses? Here all these would have to be changed to obtain insurance. A good agent will know what is needed and what is not.

DG - Good Luck

Keith Talent
08-11-2004, 04:40 PM
Hey Todd,

We did pretty well, I guess. Scraped together every penny and bought our first (and only) home 5 years ago ... now selling it for more than double what we paid, an increase of 141%.

Which might tell you things are a little out of whack, at least on the coasts ... few investments go up like that unless they're dot-com or Enron stock, and then something ugly tends to happen.

We're looking to rent for a year or so and see if the bubble bursts. For some perspective, you might do a Google on "housing bubble." About the only people denying its existence are people in the business of selling houses.

Luck to ya if you jump in, though. Perhaps the hysteria will continue for a good while.

Popcorn
08-11-2004, 06:47 PM
I don't know what to make of it myself. Houses that only 5 years ago in my area that sold for around $175,000 to $250,000 are going for $450, 000 up to $700,000. How can this be? And I see these people around the neighborhood and wonder how they can pay for it. I bought a 1 1/2 acre lot in a gated community in Grant Florida near Cape Kenney for $26,600 in 1999. A friend was the developer and I figured what the heck. The place is almost built out now and the last few lots left are going for from $140,000 to $175,000. Mine is the nicest lot left, it backs up on a 1000 acre nature preserve and has 290 foot of frontage on a nice curve in the road across from the lake. I couldn't afford to live there even if I wanted to. The cheapest house in the place is over $500,000. The little shack I would want to build wouldn't even be allowed. You have to wonder when this will end, it can't keep up. I am going to sell that lot pretty soon but you have to wonder. I almost sold it a couple years ago when someone offered me $75,000. That has now more then doubled. It's insane.

Keith Talent
08-11-2004, 08:05 PM
My thoughts exactly, Popcorn. I'm not a gambler, but you've got to wonder whether you should play another couple of hands or cash that big pile of chips, right?

How do people do it? I think they must be taking the sort of crazy odds a banker offered us when it occurred to us we might be able to buy an overpriced Brooklyn limestone. See, the Treasury Bill-linked ARM rate's just 4.33%, and only 1.5% the first year ... and if times get tough you only have to pay the 2.9% interest ... and if you rent the upstairs for $1,500 ...

Well, it would all barely fly until the rates go up 2 or 3 points. And then maybe Bin Laden tries something. Then we rent the whole thing and pitch a tent in the backyard, maybe. /ccboard/images/graemlins/grin.gif

Don't see how this can last, when working people spend half their incomes just keeping a roof over their heads.

Sid_Vicious
08-11-2004, 08:07 PM
"I almost sold it a couple years ago when someone offered me $75,000. That has now more then doubled. It's insane."

Insane as the stock bubble, so I'd suggest you consider selling before the next terrorist act occurs here on USA soil...sid~~~soaked in misery with the portfolio he now has, HAD :-(

Not being a doomsday guy but reality is reality

Popcorn
08-11-2004, 09:21 PM
You are exactly right. The only difference is, the people in that little community are a little immune to events. When things are going bad they are just less rich. There will always be a market for that particular piece of property. I am just thinking about selling it though because I can't believe it can go up any more but who knows. It doesn't cost me much to keep owning it for a while. Just some taxes on it and a $500. a year fee to some association they have. This was a fluke although I knew I would make money on it, but not this much. I own several acre in Mount Dora Florida that are not worth one cent more then when I bought it. Unless I put a house on it, I doubt I could even sell it. Land is notoriously a bad investment unless you are going to build or develop it.