Considering Buying a house; The Eaglestrike-FREE edition

[Ganondorf]

Ok I am looking to buy my first house (yay) and I'm trying REALLY hard not to make some huge mistake. Not really sure who to go to for assistance so you guys get the honors. Here's a little background:

I'm 25 Years Old, still living with parents, and starting my 4th year at a really good job where I've moved up the ladder pretty damn fast. My credit is OK (only real purchase on credit was my car, which I haven't missed a payment on). I only have a degree in dropping out of college after 1 semester (just hated the school and didn't know what I was even doing there), but have always had a really strong work ethic, and I'm a fast learner. Started my current job in the bottom rung of tech support, quickly moved up to senior tech/adviser. Decided I wanted to go the R&D route, so I taught myself SQL > HTML > PHP > Java; learning C, jquery... etc.. I'm now 9 months into R&D at the company, I'm doing well, making a lot of personal progress and business is REALLY good right now. My co-workers are all awesome and understanding, and willing to pass on the knowledge.

Work is about 45 mins from home. I've considered looking for an apartment, but I keep coming to the conclusion that it's money down the drain. Looking around the area, there's a LOT of nice looking houses under 250k, which is reasonable given my salary. So here's where I really need to start digging in and deciding on a direction. Anyone with any personal experience on the subject or with some solid advice would be a HUGE help and greatly appreciated.

1. If I can afford it, should I out-do myself?
I'm currently single, and don't plan on moving in with anyone else. If I can snag an extra bedroom/bath for another 10-20k, is it worth it? I'm in a situation where I'm looking to settle in for the long haul. I'm not against having kids and raising a family some day, so having some extra room would be a good thing, right? Most places available are 2 Bed/Bath anyway, but I've found some 3bed/2bath or +office/den for not much more.

2. Fixeruppers
My brother is an electrician, with friends in plumming, masonry, landscaping, tilework etcetcetc. Dad has a long of experience in home remodeling and maintenance. I'm down to put in the work for something like this (in reality, I always wanted to do this as a hobby, but got off track somewhere; probably when the economy too a huge shit). How bad can these things get? I'm under the assumption that I can get royally fucked if I'm not super careful. I also have a buddy with parents who do this shit for a living, that could give me some help If i went in this direction. Instinct however, is telling me this is a bad idea for a first house...

3. Modular Homes... should I avoid these?
There's a few of these that I've seen for, at least what I assume to be, pretty damn cheap (100k give or take). I started doing some research, but can't find anything really negative about them. Everything I've seen has been really nice, but having them considered along the same vein as a "mobile home" put a bit of a damper on things. I can't shake the feeling that a strong wind is going to leave me with 3/4 walls, or that it's basically going to feel like a trailer once i get inside.

4. Condos/Rent-to-Own.
A good friend of mine is in one of these with his fiance and their daughter. Smart guy, hard-worker and they both make good money, and seem to be really happy with it. When I mentioned this to my boss (who is also helping me with this whole process) he immediately shot down the idea, stating it's a huge loss in the end. Is this true?

5. Should I really even bother?
I'm only just starting my 4th year at this place, which really isn't a long time at all. I'm confident in my abilities, and I'm confident I'll be there for the long haul, but you can never REALLY know what's going to happen. For good reasons, an apartment seems to be the go-to thing to do for a lot of people, but I hate the idea of throwing away the money on something that is in no way really mine in the end. The area I'm looking at is really nice, so I don't think the location will have a groundbreaking effect on whether I go house or apartment.

I'm not looking to make a final decision like... tomorrow, but I need to start sooner rather than later. I'm not dead-set on buying a house, but I'm strongly leaning in that direction. Any advice would be appreciated.

[Sepukku]

Warzone, water bottle, etc.

Now that that is done, I agree - renting is a pretty bum way to have money evaporate with little/no positive gain (other than having a roof over your head, but compared to home ownership, staying at parents longer, etc, it sucks). I can't imagine buying a house when Im single though. What if your chick you meet one day hates the house and/or neighborhood?

[bluefan]

I think condos are the best choice for a first house. Especially if it's just for one. They're cheap, easy and cheap to maintain and generally have decent resale value. So once you decide you want a bigger house, and have touched up the condo a bit, it'll be a much easier transition. That's just my preference though.

Just make sure to bring along the right people when you go take a look at a house. An inspector and someone like your dad and brother. Generally people in the trade can just look around and see what's up.

[Kohan]

Renting isn't always as much of a loss as people tend to believe. In today's market, it can be a cheaper short-term expenditure, and—if you may move within the next few years—it can save you money and time in the future, too, if attempting to resell your home would be a total headache.

http://www.nytimes.com/interactive/b...alculator.html

There are a lot of formerly (and even currently) successful adults saddled with homes they cannot sell. You may not be investing in something you own in an apartment's case, but unless you're fairly sure you will be in that home for a long time, and that you haven't any chance of losing it, you wouldn't be investing in anything by buying a house that will haunt you later, either.

[Skyylya]

Don't overextend yourself. At 25 and single you don't want to be so tied to your house that you can't go have fun. Not sure what your salary/budget is but make sure you're accounting for the things that are outside of the mortgage. Even if it's a new house, there are repairs and things. Home insurance, PMI if you're doing FHA or something, find out what the electricity/water/oil (if you're in that type of area) costs are. Two weeks after my wife and I moved into our house our AC unit broke so we had to spend 4k unexpectedly like right off the bat to get a new one. You just never know and you really don't want to find out the hard way.

I love owning my own home, the freedom of not having to check with anyone to do anything and not report to anyone is great. Apartments, townhouses and condo's are all fine if you don't mind being near people. I can't stand having someone right through a wall so i'll never, not have my own house again.

[Ksandra]

If you don't mind me asking OP, what area do you live in? As Kohan said, there are certain areas where renting ends up being cheaper, and other places where it is not.

I think condos are the best choice for a first house.

I also disagree with this depending on what area you live in. Do you live in an area where most places have HOAs or not? If not, in the long-run a condo could very possible end up being more expensive because they are pretty much guaranteed to have an HOA. Here in Cali, I've seen a lot of them float around an extra $300 a month. The downside being in certain areas (San Diego) most regular houses have an HOA too, but they are a lot cheaper.

Definitely do your research on that.

The other thing is, have you started getting a down-payment ready? Most banks are wanting you to get that 20% down mark, and are becoming more and more strict on who they are giving their loan out to. The fact you've been working at the same place for four years is a plus, but may not be enough if you really don't have any extra money to go with it.


Either way GL!

[Fhqwghads]

My advice:

- Get what you REALLY want.
- Make sure you've got a decent sized bathroom, kitchen, and living room. You want room to grow. You might have a chick move in (or guy if you're into that) and you'll need more space.
- Get one with a nice 2 car garage that doesn't have any sort of support in the middle (like my house - it has a supporting pole right in the middle of the garage, and it pisses me off.)
- Make sure the backyard is what you want. Check the foliage around it. If there was a wind storm are any branches and/or trees going to smash your house?
- Do the neighbor's windows peer into your backyard? For that matter, do they peer into any of the windows of your house? Is the backyard fenced?
- Visit the house you're interested in during the morning at rush hour traffic time. Are there a lot of vehicles zipping by in front of it? Can you hear the freeway from the house? Return at rush hour at the end of the day, too, and observe the same thing.
- Check the route from your house to the freeway, during rush hour. Make sure you can deal with the number of vehicles on the road.
- Is the street level above the house, and the driveway slopes down from the street to the house? Is the house the low point on the street? If any of this is true, it can be a flooding issue during heavy rains and if the street gets swamped when the storm drains are blocked.
- Don't get a fixer-upper as your first house. You'll have enough to do with unforeseen expenses as it is, making the house your home.
- Check the age of the furnace, and air conditioning if it has it. Ask about the age of the roof. These are major expenses that will run anywhere from $5,000-$15,000 to fix.

The biggest thing to remember is do not settle for anything less than exactly what you want. Buying a house means living there for at least 5 years so the money you spend on fees doesn't just go to waste.

No modular home either. Stick built onry.

[archibaldcrane]

What is your yearly income before taxes?

I just bought a house, have plenty of advice but want to make sure I'm not giving it to Eaglestrike the second.

Also, what city/state?

Sent from my Samsung Galaxy S 4G using Tapatalk

[Thoronas]

Rule of thumb is don't buy a house that is more then 3 (maybe 4) times your annual salary. That way you won't overextend yourself. If you can get a nice place with an extra room or two and still not be over extended then you should be ok, in fact it's a smart thing to consider since it means you're able to grow into your house rather then sell it when you need more room.

Fixer uppers aren't a bad idea but make sure you get a damn good inspection on any place you get. Make sure its just the house that needs a bit of work and that something like the foundation isn't sinking or something crazy like that.

Houses in the US are cheap right now, I'd pick a house over a condo any day of the week. Almost all condos have strata fees and depending on the quality of the building can be very expensive. Imagine an extra $400 a month you have to pay just to live there, even after you've paid the place off. No thanks.

Should you bother? Well you need to be comfortable with the fact that you will be locked into living there for a potentially long time. How is the market in your area? Are sales stalled or is the market doing decent?

[Aksannyi]

I'm glad this thread came up. I too am considering purchasing a house. I've been living in the apartment world for far too fucking long now and I absolutely loathe it. I do have the added benefit of the VA Home Loan which is something I am going to look into when it comes to financing. Anyone know what I need to do to get started with the VA? Other than have my DD214.

[Trinsie]

I'm glad this thread came up. I too am considering purchasing a house. I've been living in the apartment world for far too fucking long now and I absolutely loathe it. I do have the added benefit of the VA Home Loan which is something I am going to look into when it comes to financing. Anyone know what I need to do to get started with the VA? Other than have my DD214.

A few things, first you need to know that usually the max loan you can get for VA is $417,000 so don't go above that price range. You will need a VA Form 26-1880 which does require your DD214 like you said and an honorable discharge no other than honorable or dishonorable. This will allow you to get a Certificate of Eligibility for the loan. I am also pretty sure that you have to have an online VA account these days which you didn't used to. You may want to call or visit your local VA center (not hospital but in same places they are the same place).

[Aksannyi]

Not looking for that much house so that's not an issue but I was gonna go to the VA first anyway. Thanks.

[Jaybar]

Anything that is ~1000sqft is suitable and rather cheap depending on the community. They can usually be roomier than you think especially if you are living on your own or with a partner. You'll usually only find these homes near traditional towns and cities which means their property value will be higher than a similar sized house that is in a use-segregated development. They don't consume a lot of utilities, either (larger homes require more energy to heat and cool, etc).

Like others have mentioned, I'm really interested to see what location you are looking at. Is it a community that only has one entrance/exit onto an arterial road? If so, you can expect unwarranted amounts of traffic because there are most likely similar developments that spill onto that road.

Also make sure you aren't in for any surprises at work, but it sounds like you are doing all right.

[Ganondorf]

Rule of thumb is don't buy a house that is more then 3 (maybe 4) times your annual salary.

Well that kinda puts a damper on things, but that's something I needed to hear, considering I know absolutely nothing about this whole process. I'd rather not share exactly how much I make, but I will say it's a little less than 55k/yr before taxes. My office, and the place I'm looking is Doylestown PA. Really nice area, which is why I was surprised to see some of the less expensive homes. I guess I'm just trying to get an idea of how feasible the buying process is in my situation. If ~55k/yr is unacceptable for, let's say a 225k house, then I'm not going to try to come up with any crazy ideas to amass the money for it; and I'll stick with an apartment for a few years, but I'm still grumpy about the idea of dropping 1k/mo in rent in the hole. Thanks for the responses so far.

Edit: Regardless of the situation, I'm still really interested in any advice about house-buying. Even if it's going to be a few years before it happens, it's better I get some idea of what to expect now.

[vagus]

Duo-income is a must for a house for a majority of people. Based on what you've posted OP, i would go for a condo.

Need to get the idea of a "house" out of the mind of most people. The way the economy is in most North American cities a detached-home is not a real option.

[bluefan]

I suppose it really does depend on where you live. In the 'Peg, our houses are cheap. It's not that uncommon for a single person with a 70k+ income to get their own 2-3 bed room house. One of my best friends decided to stick around here instead of Vancouver to finish his studies and just last year bought a house. I remember him telling me that his parents house and property in Vancouver isn't much bigger than his but they've paid a little over twice he did.

[Drex]

1) Not really. More expensive, more work.
2) The problem is generally that the repairs cost more than the increased value, so unless you feel like doing the labor yourself (and getting a value increase that will probably be less than minimum wage relative to the amount of time it took), it's usually not worth it. If you can get some fat discounts via your brother and his friends it could work out for you, but they might want a cut of the money too which could offset the gains. My dad was working real-estate for 20 years and he said fixer-uppers usually turn into black holes.
3) Don't know much about them.
4) Rent-to-own usually ends up as "rent to out on your ass". Condos are great, but they aren't a house. It's up to you if you feel like you are up to a house or not, but a condo can be a good stepping stone. Real-estate is 99% local so you really need to investigate the area yourself (or contact professionals who work in the area).
5) I know it sounds like a slimy pitch, but it really is one of the best times ever to buy a house. Thing is, remember that while home-ownership is sacred in the US, it's not all halos and harps. What if you get the job offer of your dreams in another area and can't sell the house? Rent is a premium on flexibility and freedom. Houses tie you down, especially if it's a huge percentage of your net worth (as it sounds like it will be for you). Also, once shit starts breaking the bills pile up endlessly, and maintaining the house is time-consuming.

[Pirian]

Don't think anyone has mentioned it, but there are potentially huge tax benefits for home ownership.

http://www.irs.gov/pub/irs-pdf/p936.pdf

Fully deductible interest. In most cases, you can deduct all of your home mortgage interest. How much you can deduct depends on the date of the mortgage, the amount of the mortgage, and how you use the mortgage proceeds.

[Kohan]

If ~55k/yr is unacceptable for, let's say a 225k house, then I'm not going to try to come up with any crazy ideas to amass the money for it; and I'll stick with an apartment for a few years, but I'm still grumpy about the idea of dropping 1k/mo in rent in the hole.

Don't think of it that way, then. As mentioned before, you're not making an investment if you try to purchase something with monthly payments you can't comfortably sustain.

Furthermore, any fluctuation in your career could warrant moving, and things may be fine now, but what if there are changes three or four years down the road? Even if you aren't let go, what if your business wants to relocate, and you can't? What if you, armed with your strengthened career history, feel your position has grown stagnant and want to move for another company?

I would personally say you're too young for home ownership, considering your lack of a college education/official certifications and your current reliance on the company you're working for (even though they're treating you well). I've been living on my own for ten years now, and I am only just getting to the point where I feel I may be safe buying a house. The fact that I've rented for a decade is not something I regret at all.

If you want to invest in something, invest in your future by making your skills verifiable. Get technical certifications in the short term, as they're fairly easy to do. In the long term, try going for a college degree which includes subjects you won't feel are a waste of time. It will be a lot easier to do these things while you're in, say, an apartment, as you won't have to worry about maintenance, property taxes, paying for every single utility, and so on.

Also, if you have an image in your head of all apartments being surrounded by people, get that thought out of your mind. You can specifically look for end units or detached units which, by virtue of their being in complexes, still qualify as apartments, but they're basically small houses. This is what I do all of the time.

[archibaldcrane]

Well, looks like there are 6 3+bd/2+ba homes under $240,000 (between $199k-$240k) for sale right now in Doylestown, PA, so you have some options. $55k/year isn't -great- for a house at that price, but also not awful. It's doable, but not ideal. Ideal would be getting a 3 bedroom place and renting out one of the bedrooms to really make it easy on you financially.

http://www.zillow.com/homes/doylesto...t/11_zm/0_mmm/

Regarding fixer-uppers - do you have the cash, after your down payments, after your closing costs, to really be doing 20k+ in renovations? I moved into a house that was flipped (all new floors/stucco/fixtures/bathrooms/etc.) so it was pretty move-in ready. I've spent probably 12k so far on just furnishings (fridge/washer/dryer/dishwasher/sectional couch/window dressings/new bed/garage door openers/bunch of smaller things) - and that's for a place that I didn't have to renovate to live in. Basically, I wouldn't buy a house that you can't move into and live no problem without renovation, and if it's kinda dated and needs some updating (but is functionally in good shape) then you can do those things piece by piece as you need.

You'll want a realtor - got any friends that bought recently? Ask around for who they worked with, if they liked them, etc. The Realtor will get you in to see houses (especially with foreclosed homes, there may not be many open houses and the realtor will use a lockbox to get the key to show you). You don't have to personally pay the realtor anything, they will make their money off commission on the sale, paid for by the seller.

I wish Google didn't scrap their mortgage rate aggregator, it was a really useful tool. Here, use Zillow's: http://www.zillow.com/mortgage-rates/# - if you want a good estimate of your credit score, go to creditkarma.com (doesn't require any cost or CC# or anything, good site). If you have 20% down (45k on a 225k place) you're looking at $840 a month, plus property taxes and homeowners insurance. Now, property taxes in Pennsylvania are on that weird "millage" system, and from what I'm seeing your town is around 152 millage points http://www.buckscounty.org/governmen...lageRates.aspx which suggests a 15.2% property tax rate which is insane - maybe a homeowner in Pennsylvania can clear up why that's wrong (or that property taxes there are completely ridiculous and absurd).

Anyway, if you don't have 20% and then some saved up, I wouldn't buy a house in your situation for 225k. Your payments are going to likely be too high for your situation, unless you are definitely going to rent out a room. With $11,250 down (5%) you're looking at 1k/mo mortgage, plus tax, plus insurance - kinda rough on 55k a year before taxes.