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Old 12-06-04, 01:57 PM Thread Starter   #1
Top Hat Theater
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Owning a home


Here I stand, at the crossroads of renting and owning. I want to own a house immediately after I graduate however, know next to nothing about the pitfalls or what to seek out. I do have the income and credit rating to support substantially any mortgage I would need. So I ask all you who own or have owned your home, what advice do you have for me, a long-time renter who will be buying a house in May? What information or warning do you wish you had when you first started out? Any information or advice is welcome.

~THT
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Old 12-06-04, 03:25 PM   #2
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Watch out for new construction. The tax appraisers will appraise the property as non-improved the first year, then crank up the rate the next.
Make the Realtor tell you the taxes, so you can figure it into your budget.
Don't buy more than you can afford.. Figure on having to add on a car payment and additional bills. I don't see your location on your profile, make sure you check the resale rate in the area you are looking to see if you could dump the house in a hurry if worse came to worse.
Don't ever, and I mean ever, get a home equity loan. They are a pit the mortgage companies use to jack up your payments and how long you will owe them.
Biggest thing, a house is the largest investment you will (probably) ever make. Before you buy, picture 30 years of payments on it. make sure you keep your head before you impulse purchase something that can destroy your credit for a minimum of 10 years...
They are great investments, and great to have. Just make sure you completely understand what you are getting into..

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Old 12-06-04, 03:55 PM Thread Starter   #3
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Yep, I've figured out my disposable income already and will plan based on that. I will also put down about 40K or 20% of the mortgage right off the bat.

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Old 12-06-04, 07:14 PM   #4
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Good God man, looks like you been preparing for this! I don't have any experience here, but good luck on the big step.

And pardon me for asking, but what do you do for a living?

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Old 12-07-04, 05:12 AM   #5
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Check into propery taxes, local income taxes etc.....I had to move 25 miles away from the city to be able to afford it. Also, I bought a house that was almost 25 years old and I've watched them building new houses in new subdivisons around me and boy am I glad I didn't buy a new house!!!! First of all they're too close togeather and most importantly, visit a building site for and pick a lot that's just had the foundation poured. I've seen houses be built and moved into in less than 30 days. Not a word of English spoken on the contruction site. I've also seen said houses start to fall apart in 5 years time. The newer stuff is built cheap by cheap labor. Bad news.
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Old 12-07-04, 07:27 AM   #6
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I just bought my First home this year, My advice, spend the $250 on a home Inspection, it can save you a lot of headaches.

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Old 12-07-04, 08:16 AM   #7
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Quote:
Originally Posted by theMonster
Check into propery taxes, local income taxes etc.....I had to move 25 miles away from the city to be able to afford it. Also, I bought a house that was almost 25 years old and I've watched them building new houses in new subdivisons around me and boy am I glad I didn't buy a new house!!!! First of all they're too close togeather and most importantly, visit a building site for and pick a lot that's just had the foundation poured. I've seen houses be built and moved into in less than 30 days. Not a word of English spoken on the contruction site. I've also seen said houses start to fall apart in 5 years time. The newer stuff is built cheap by cheap labor. Bad news.
Just because its like that in your area, doesn't mean that all new houses are crap. Hell it doesn't even mean that house is crap.

I just bought a new home in a sub-division last month. Not a thing wrong with it.

It was also mentioned to get in an inspection, do it. Plain and simple. They go through everything and point anything that could be a problem. My inspector pointed out that the driveway right where it enters the garage is .5 inches lower than the other side.

Houses are expensive. My house payment is 1,650 a month. But I spend over 2k a month easy with all the bills rolled in (water, electric, gas etc…). Not to mention home improvement.

When getting financing, make sure you check around. At first we didn’t. And he was promising us a monthly payment of 1600. Then when it got close to closing, he said my credit was too bad (which it wasn’t) and that we needed to pay $1,896 a month.
If you add everything up, that’s an extra 28k more than I need for the house, which means that was what he stood to make.
We looked for other financing, and lo-behold we were able to do $1,600 a month.

Good luck

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Old 12-07-04, 02:34 PM   #8
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Quote:
Originally Posted by theMonster
Check into propery taxes, local income taxes etc.....I had to move 25 miles away from the city to be able to afford it. Also, I bought a house that was almost 25 years old and I've watched them building new houses in new subdivisons around me and boy am I glad I didn't buy a new house!!!! First of all they're too close togeather and most importantly, visit a building site for and pick a lot that's just had the foundation poured. I've seen houses be built and moved into in less than 30 days. Not a word of English spoken on the contruction site. I've also seen said houses start to fall apart in 5 years time. The newer stuff is built cheap by cheap labor. Bad news.
My dad (SRA real estate appraiser and former home inspector) agrees with you, atleast for the Maryland area.

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Old 12-07-04, 08:35 PM   #9
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I am building a home as we speak. I have too many friends that went through nightmares buying other people's problems. I knocked on people's doors in new subdivisions asking if they had problems with thier builders. I finally found a builder that did things cheaper, better, and faster with the least complaints that way!

Your house is an investment. It is the best way you'll probably make money in your life. If you think of it that way, try and pick out areas where you'll get the greatest return. I picked out my house in New Lenox southwest of Chicago. They just started building a new highway nearby and just because of that my house value went up $40,000 and foundation hasn't even dried yet! If you buy property in the first phase of construction you can easily gain 10%-20% in the first year one the neighborhood starts getting close to filling up.

Watch out for Mortgage companies that make you pay points and all sorts of crazy fees. I have had the best experience with large lenders like Chase. In fact, I am geting a 6/3 Prime Adjustable intrest only mortgage on my new property. What is that? It's a mortgage that I only pay just the interest if I want, (No penalty for paying what you normally would pay in a traditioanl or even overpaying.) For the first 6 months, it's 1% UNDER the prime rate. After that, my rate is adjustable to whatever the prime rate is for up to 10 years. (The prime rate has not moved in the last 5 years more than 0.5%) If prime goes up, my rate goes up but it won't take effect till 3 months later. P.S. Our economy would collapse if prime went up too high too fast. No points, no PMI! This way I bought a $250k house that I already made $40k (if I could sell it for that much) for under $600 a month. (taxes will cost me about $6,000 a year so my total payment will be about $1,100! which is way less than rent.)

Many people are telling you stay away from new houses. It's because there are alot of really really bad builders out there. You can avoid them if you really try hard enough by talking to as many people as you can. New houses are the way to go for making money because you pick the best resale. You can pick the lot size, the way the house looks, everything inside from scratch.

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Old 12-09-04, 04:34 AM   #10
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Eh?, you said you just got it, so like I said before, wait 5 years so that when your tub or pipes start leaking and rot out your plywood flooring (my 25 year old flooring is 2x4 planks, not plywood) or your windows start leaking and rot your plywood floor and pressed cardboard walls, you'll know. Sure, they look and feel fine and even pass inspection when you first buy them, but then they either fall apart in 5 years or start bleeding you dry in repair costs. I'm sure it's not this way everywhere, but a house MUST pass inspection before it can be purchased, where I live. You'll find that most of the newer houses are built with the MINIMUM materials required by housing/buiding code. I mean, perish the thought of spending .50 per sq ft more for 25 years shingles as opposed to 5 or 10. Build it as cheap as you can and sell it for what it'd cost to build a good house and maximize profits....ARRGGGHHHHH

One big thing people neglect to do with these new houses which almost always have vinyl siding is: BUY A POWERWASHER and clean the siding 2x a year (sping and fall) because unlike brick or aluminum siding, vinyl siding MILDEWS!!!!
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Old 12-10-04, 11:58 AM Thread Starter   #11
Top Hat Theater
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I'm a student but will be graduating in May. I have been very successful in my investments and have paid my way through college with those proceeds as well as three years of rent payments. I also work full time so I can make IRA contributions. In June, I will be a staff accountant for Caterpillar. Between my investments and salary, I will be very comfortable until my "needs" get more expensive lol. Thank you everyone for your insights and advice. I want as much info as possible before taking on six figures of debt

~THT
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Old 12-10-04, 05:57 PM   #12
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I was pretty young when I bought my house (25 yrs old). My friends thought I was crazy to spend that much on my house but in essence my mortgage wasn't any more than what We were paying for rent in a nice historic condo. I bought an old house...built in 1939 and have not regretted it one bit. It wasn't exactly what I was looking for but I soon learned what a gem I had purchased. Over the last six years my house has more than doubled in its value and my friends are all pretty envious of my investment because of the rise in home values has pushed a lot of them out of the market.

I am really partial to buying old homes. I like the woodwork, the build quality, and the character they have. Sure I need a bit of elbow grease to spiff her up but I have learned a lot from it and could not get the details I have in my house with a new build because its just too cost prohibative like my huge stone fireplace in the living room.

Also as stated in previous posts there is a tremendous amounts of problems with new construction. My best friend is a laywer who's firm is all they do is litigation of housing construction. The horror stories I hear from him of these homes with mold, leaking, and a many other problems is increadable. But he always comes over and looks at the stucco job and commments on what a great job it is and how I shouldn't have any problems.

My addvice is to buy what you will be happy with. Be it new construction or old. Owning is by far better than renting and you will not regret it. It was the best thing I have done so far and it has payed off as an investment also. Go for it but dont overextend yourself financially as you won't get to enjoy it if you are struggling to pay for it. Also make sure you check out programs from the county you are going to move into as they may have some great lending programs for you. Also fha first time home buyers loans are a nice way to go as you dont have to have a big downpayment. Probably the biggest requirment is that you have a job so you can prove your income.

Good luck you won't regret it....

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