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School me on buying a house

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Old 02-29-2016, 10:19 PM   #41
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Just bought my first house in August 2015. Here are some lessons i learned:

-Home inspection is helpful but do not believe they will find everything. Our home inspector came recommended from a friend. He was OK but more professional than a lot of the others i talked to. They do a lot of basic stuff that someone halfway mechanically inclined could find with a basic checklist. You will only find out the "quirks" when you live in the house. The only reason to use a home inspector is, if they will write an "official" report that you can turn into the sellers. You can either ask for money off or have them fix it. At first we had a few items like some outlets wired hot-nuetral reverse and a dirty furnace. The sellers agreed to fix it instead of giving a credit. I found that credit is way better because it gives you a cheaper price on the house and you can fix it yourself cheaper, unless its something major like a foundation issue or electrical. When we went outside he noticed that an ashbore tree was dying in the front (a huge f-ing tree) that we didn't notice. This leads me to lesson 2:

-Depending on the situation, the sellers can be a total pain in the *** to deal with. The tree in the front yard was dying/dead. It is huge! I've had quotes all the way up to $3k to remove it. The sellers first said it wasn't an issue, then i gave them a quote and they said that the home inspector nor myself were arborist so we couldn't determine that it was dead. When i then asked to have my friend who is an arborist come inspect it, they said no (I'm thinking WTF?). We eventually told them to pound sand and we wouldn't buy the house if they didn't make a concession. They forked up half.

-Lesson 3 and probably the most important: have your appraisal done early! Our lender totally dropped the ball and didn't do our appraisal until 2 weeks before close. We had been under contract for over 45 days at that point. The appraisal came back $8k low and at that point, almost sunk the deal. Both agents shed some points off commission and the sellers ended up taking a $6k haircut. Worked great for us!

-I bought a house in the same price range as you. I am in the Chicago suburbs and could not find a house with a basement in our budget that wasn't F-ed up. I wanted one bad but i talked myself out of it when every basement we looked at had foundation issues, leaks, or mold. It just wasn't worth it. Ill have one, one day. Just not now.

-I was actually better off buying a house through HSA than a traditional loan. I had the lender run both numbers and i had a lower interest rate with HSA. In the long end i would pay more money with the PMI, but i don't plan on staying in the house for more than a couple years. Monthly it saves me about $80. Totally worth it.

-Almost every old house you buy in the midwest with a detached garage will have a cracked garage slab. I live with it.

-Only buy a house if you plan on living in it for 4+ years or you can do things to make money on it. If you just buy a house and then decide to change jobs and move in 2 years, you won't have enough equity in it to cover the cost of selling the house.

Hope that helps. PM me if you have any other questions. I have an old auto teacher that lives in council bluffs and loves it. Best of luck.
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Old 03-01-2016, 01:56 AM   #42
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Good advice on places where the real estate market isn't glowing red hot. Here in Nashville, depending on the neighborhood, you need to bid above asking price with such concessions as no home inspection, no appraisal, bought as is, where is, and you end up in a bidding war with 6 other people.

This of course is just straight up retarded and not the case in every neighborhood though. But just to give you an idea of how hot some neighborhoods are(all of east Nashville, which is several zip codes and square miles for example), houses that were selling for 150k 2014 are now selling for 250-350k now. Depending on the area, IMO you are buying into an unsustainable bubble fueled IMO by infill developers who will buy a crap house, bulldoze it and put two shotgun houses on the lot.
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Old 03-01-2016, 09:00 AM   #43
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Originally Posted by NeedaV8foundation View Post
Just bought my first house in August 2015. Here are some lessons i learned:

-Home inspection is helpful but do not believe they will find everything. Our home inspector came recommended from a friend. He was OK but more professional than a lot of the others i talked to. They do a lot of basic stuff that someone halfway mechanically inclined could find with a basic checklist. You will only find out the "quirks" when you live in the house. The only reason to use a home inspector is, if they will write an "official" report that you can turn into the sellers. You can either ask for money off or have them fix it. At first we had a few items like some outlets wired hot-nuetral reverse and a dirty furnace. The sellers agreed to fix it instead of giving a credit. I found that credit is way better because it gives you a cheaper price on the house and you can fix it yourself cheaper, unless its something major like a foundation issue or electrical. When we went outside he noticed that an ashbore tree was dying in the front (a huge f-ing tree) that we didn't notice. This leads me to lesson 2:

-Depending on the situation, the sellers can be a total pain in the *** to deal with. The tree in the front yard was dying/dead. It is huge! I've had quotes all the way up to $3k to remove it. The sellers first said it wasn't an issue, then i gave them a quote and they said that the home inspector nor myself were arborist so we couldn't determine that it was dead. When i then asked to have my friend who is an arborist come inspect it, they said no (I'm thinking WTF?). We eventually told them to pound sand and we wouldn't buy the house if they didn't make a concession. They forked up half.

-Lesson 3 and probably the most important: have your appraisal done early! Our lender totally dropped the ball and didn't do our appraisal until 2 weeks before close. We had been under contract for over 45 days at that point. The appraisal came back $8k low and at that point, almost sunk the deal. Both agents shed some points off commission and the sellers ended up taking a $6k haircut. Worked great for us!

-I bought a house in the same price range as you. I am in the Chicago suburbs and could not find a house with a basement in our budget that wasn't F-ed up. I wanted one bad but i talked myself out of it when every basement we looked at had foundation issues, leaks, or mold. It just wasn't worth it. Ill have one, one day. Just not now.

-I was actually better off buying a house through HSA than a traditional loan. I had the lender run both numbers and i had a lower interest rate with HSA. In the long end i would pay more money with the PMI, but i don't plan on staying in the house for more than a couple years. Monthly it saves me about $80. Totally worth it.

-Almost every old house you buy in the midwest with a detached garage will have a cracked garage slab. I live with it.

-Only buy a house if you plan on living in it for 4+ years or you can do things to make money on it. If you just buy a house and then decide to change jobs and move in 2 years, you won't have enough equity in it to cover the cost of selling the house.

Hope that helps. PM me if you have any other questions. I have an old auto teacher that lives in council bluffs and loves it. Best of luck.
I think there are lots of good points here. I'm sure the chicago burbs are a little harder to find a home than council tuckey where I live. But I'll make sure to keep an eye out for mold and all the like. Ideally I'll be there for 5-6 years, obviously if work wants to move me that's up to them, but we have some pretty good relo programs and the like so that probably wouldn't be the death of me. I'm really hoping its something I can rent.

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Good advice on places where the real estate market isn't glowing red hot. Here in Nashville, depending on the neighborhood, you need to bid above asking price with such concessions as no home inspection, no appraisal, bought as is, where is, and you end up in a bidding war with 6 other people.

This of course is just straight up retarded and not the case in every neighborhood though. But just to give you an idea of how hot some neighborhoods are(all of east Nashville, which is several zip codes and square miles for example), houses that were selling for 150k 2014 are now selling for 250-350k now. Depending on the area, IMO you are buying into an unsustainable bubble fueled IMO by infill developers who will buy a crap house, bulldoze it and put two shotgun houses on the lot.
I know what you mean, when I was in San Diego there was no way I was going to afford a house 450k for a 3 bed in a questionable location is a little rich for a 25 year old. I actually may be lowballing a bank for a foreclosure this week if everything checks out haha.
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Old 03-01-2016, 09:10 AM   #44
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Don't buy.....just rent. The amount of interest you will pay on a 30 year loan is ridiculous. Plus upkeep of the house, appliances, insurance, property taxes, etc.....

Just rent and have the flexibility to move to a new place in a new area when you want to. Who wants to stay in the same house for 10-15 years.....

.
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Old 03-01-2016, 09:12 AM   #45
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Mortgage interest is tax deductible friend
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Old 03-01-2016, 09:40 AM   #46
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Originally Posted by LS6427 View Post
Don't buy.....just rent. The amount of interest you will pay on a 30 year loan is ridiculous. Plus upkeep of the house, appliances, insurance, property taxes, etc.....

Just rent and have the flexibility to move to a new place in a new area when you want to. Who wants to stay in the same house for 10-15 years.....

.
I've been renting for the last 7 years through college and while I was living in an area that I couldn't afford a house. I can afford a house now, I don't think flexibility is a real justification. If I leave I can rent it out or sell it, if we have another housing bust that would suck, but hopefully I don't have to cross that bridge, I'd be more worried about my stock portfolio then anyways. Besides with how low prices are here I can mitigate a lot of the interest by paying it off early.

In my price range, the mortgage + pmi + insurance + taxes are a few hundred lower than my current rent. Upkeep could get sh*tty, but I'm trying to avoid buying a dump so hopefully not too terrible.

I guess if you're one of those people who is "plagued by wanderlust and just wants to move to Europe for 6 months" it could be a problem, but I'm not one of those people.


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Mortgage interest is tax deductible friend
I've always made too much to deduct my student loan interested so this is a plus for me.
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Old 03-01-2016, 10:36 AM   #47
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Originally Posted by NeedaV8foundation View Post
When we went outside he noticed that an ashbore tree was dying in the front (a huge f-ing tree) that we didn't notice. This leads me to lesson 2:

-Depending on the situation, the sellers can be a total pain in the *** to deal with. The tree in the front yard was dying/dead. It is huge! I've had quotes all the way up to $3k to remove it. The sellers first said it wasn't an issue, then i gave them a quote and they said that the home inspector nor myself were arborist so we couldn't determine that it was dead. When i then asked to have my friend who is an arborist come inspect it, they said no (I'm thinking WTF?). We eventually told them to pound sand and we wouldn't buy the house if they didn't make a concession. They forked up half.

-I bought a house in the same price range as you. I am in the Chicago suburbs and could not find a house with a basement in our budget that wasn't F-ed up. I wanted one bad but i talked myself out of it when every basement we looked at had foundation issues, leaks, or mold. It just wasn't worth it. Ill have one, one day. Just not now.

-Almost every old house you buy in the midwest with a detached garage will have a cracked garage slab. I live with it.
Being a Chicago area resident myself, I understand and agree with these location-specific points. The Ash tree issue is huge around this region, they are dead/dying everywhere and have been for several years now due to the Emerald Ash Borer beetle; my neighbor to the west had to remove five huge trees from his backyard due to this - same for the neighbor to the east. It has literally changed the landscape of the neighborhood. My neighbor to the north has been keeping her one ash tree alive with regular injections that are supposed to prevent the beetle from infesting the tree, but this is hit-or-miss and isn't cheap. Removing these large trees is very costly and something of which locals should be aware.

The garage floor comment is also true. I think this is the case anywhere with frequent and rapid temp fluctuations to above and below freezing, in addition to large tree roots in the vicinity of the garage. I currently have an attached garage without any issues but those foundations are deeper and benefit from the ambient warmth of the house to maintain a more stable temperature.

Basements are tricky. The one before this house was generally tight as a drum, leaked only a tiny trickle in one of those "1-in-100-year" floods, even when other local basements were full of water. That house didn't even need a sump pump to maintain a dry basement. On the other hand, the current house had/has dual flooding issues - both ground and sewer water. We encountered these shortly after moving in, when the sump pump failed and the water table was high enough to cause seepage even in February without any rain! In August of that same year, we had another "1-in-100-year" type flood in this new location and discovered that sewer backup was a problem here. That was a real mess, but a flood control system fixed that. Overhead sewers would be better, but flood control is the more affordable option for a house that's already built. Everything now is fine as long as the sump pump and flood control are working, but even battery backups and double-guard flood control systems can fail.

Overall, I'm not sure I'd want another basement - the storage space is great but the hassle at this house has been huge - unless perhaps it's something like an English basement that's not so deep.

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Originally Posted by LS6427
Who wants to stay in the same house for 10-15 years.....
On the flip side, who wants to move so often? What a massive pain in the ***, unless perhaps you're the minimalist type in terms of possessions. Even then, it's still a hassle and I will only do it, at most, two more times in my life.

I do agree that mortgage interest is oppressively expensive and property taxes in many areas are out of control, but these same factors will effect local rent rates as well - so you really don't save anything by renting unless you're unlucky enough to buy and sell at the worst points of a bubble and bust.

The next house will be a cash purchase for me, and I'll be staying there until retirement relocation (likely to Arizona), so I'm not really in the same position as some other home purchasers here.
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Old 03-01-2016, 11:43 AM   #48
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I'm looking at a lot of newer split-levels (I like the look) with the garage on the first level, here's hoping the concrete is pretty thick! Especially because I want to do a maxjax. The 2 older, homes I looked at had cracks all over the garages, one was detached the other was attached to a ranch. I've got about 6k in reserve dedicated to whatever garage I end up with, but I'd rather spend it on a lift and cabinets than major concrete work. A basement or at least a partial basement is a requirement for me, they aren't frequent, but I'd rather not get caught in a tornado without one.

On your house with flood issues, did you buy it in a flood plain or was it a problem after the fact?
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Old 03-01-2016, 10:18 PM   #49
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Originally Posted by LS6427 View Post
Don't buy.....just rent. The amount of interest you will pay on a 30 year loan is ridiculous. Plus upkeep of the house, appliances, insurance, property taxes, etc.....

Just rent and have the flexibility to move to a new place in a new area when you want to. Who wants to stay in the same house for 10-15 years.....

.
And someone is paying for all that, marking it up and selling it to you...
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Old 03-01-2016, 11:37 PM   #50
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I've been renting for the last 7 years through college and while I was living in an area that I couldn't afford a house. I can afford a house now, I don't think flexibility is a real justification. If I leave I can rent it out or sell it, if we have another housing bust that would suck, but hopefully I don't have to cross that bridge, I'd be more worried about my stock portfolio then anyways. Besides with how low prices are here I can mitigate a lot of the interest by paying it off early.

In my price range, the mortgage + pmi + insurance + taxes are a few hundred lower than my current rent. Upkeep could get sh*tty, but I'm trying to avoid buying a dump so hopefully not too terrible.

I guess if you're one of those people who is "plagued by wanderlust and just wants to move to Europe for 6 months" it could be a problem, but I'm not one of those people.




I've always made too much to deduct my student loan interested so this is a plus for me.

My house is another 700 sq ft plus i have double the yard with a 2.5 x 2 deep car garage and i pay $100 less than i did renting. You won't receive any benefit the first year of owning a house but the second year you will do well on your tax return.

Plus if you are like me and decide you don't like a wall in your house, F-it, its yours, rip that SOB out! No landlord to tell you otherwise.
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Old 03-02-2016, 02:12 AM   #51
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My house is another 700 sq ft plus i have double the yard with a 2.5 x 2 deep car garage and i pay $100 less than i did renting. You won't receive any benefit the first year of owning a house but the second year you will do well on your tax return.

Plus if you are like me and decide you don't like a wall in your house, F-it, its yours, rip that SOB out! No landlord to tell you otherwise.
Exactly. In most of the midwest you can buy a house with double the sq/ft as an apartment and your mortgage will be the same as the rent.

Renting gets you nothing but a place to live for your money. You might lose a little money if you have to sell the house, but living in an apartment you "lose" about $1,000/yr anyway. As long as you buy smart, no one should be losing money selling a house they buy now and sell within 10 years. The economy is still low and going up.
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Old 03-02-2016, 08:32 AM   #52
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**** I only put 3.5% down on my house and my mortgage is $450 less a month than the house next door rents for.
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Old 03-02-2016, 09:26 AM   #53
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**** I only put 3.5% down on my house and my mortgage is $450 less a month than the house next door rents for.
I qualified for 3% down on a conventional mortgage, it sure is tempting, the price ranges I'm looking at it'd still be 1-200 less than rent per month. And it frees up some cash to make changes right after I move in. Did you do an FHA or a conventional?
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Old 03-02-2016, 10:38 AM   #54
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I did an FHA but I bought my house when I was 21 and didn't have a lot of cash. I'm halfway house shopping right now and can't decide if I want to do 10% down now or save up another 10%. It's a lot of cash to save up for sure.
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Old 03-02-2016, 12:47 PM   #55
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Anyone have any experience with HUD foreclosures? Looks like there are a few restrictions, I'm not 100% sure if and when I should be involving a real estate attorney.
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Old 03-03-2016, 02:18 PM   #56
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Yes I just tried to buy one but got outbid. I did a **** load of research. I might be able to answer some questions.
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Old 03-03-2016, 02:29 PM   #57
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Yes I just tried to buy one but got outbid. I did a **** load of research. I might be able to answer some questions.
I've been doing a crap ton of reading too. The thing I'm not super confident about is having the plumbing tested in a winterized hud home since they won't turn on the water...any tips or tricks? I'd guess a plumber can pressurize the lines with air?
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Old 03-03-2016, 07:51 PM   #58
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Anyone have any experience with HUD foreclosures? Looks like there are a few restrictions, I'm not 100% sure if and when I should be involving a real estate attorney.
Like it says on that site, you really need to involve an attorney any time you are considering signing a custom contract (for example if the seller had their lawyer write the contract), or in the case of a foreclosure if the bank wrote the contract. If you are going to use the standard real estate contract from the state government or state realtors association then you should be ok without a lawyer.
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Old 03-04-2016, 10:09 AM   #59
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I've been doing a crap ton of reading too. The thing I'm not super confident about is having the plumbing tested in a winterized hud home since they won't turn on the water...any tips or tricks? I'd guess a plumber can pressurize the lines with air?
Even if it's winterized, they could have winterized it too late. Speaking from experience.

Just go into the deal expecting that you'll have to fix some leaks. If you're handy this will be a pain but still doable. If you're not, just figure it into the cost of the house. Most people don't want to deal with these problems moving into a fresh house, so obviously that's why the cost would be lower.

Be careful getting into the bidding process. They make it sound like there is a counter offer, could be a partner bank (not sure if that's legal), but don't pay anymore than you want to obviously.
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Old 03-04-2016, 10:52 AM   #60
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Even if it's winterized, they could have winterized it too late. Speaking from experience.

Just go into the deal expecting that you'll have to fix some leaks. If you're handy this will be a pain but still doable. If you're not, just figure it into the cost of the house. Most people don't want to deal with these problems moving into a fresh house, so obviously that's why the cost would be lower.

Be careful getting into the bidding process. They make it sound like there is a counter offer, could be a partner bank (not sure if that's legal), but don't pay anymore than you want to obviously.
The winterization was my primary concern especially since some of these houses may have sat vacant for a long time before they were actually foreclosed on. I actually ruled out the 2 foreclosures I looked at pretty quick due to the tiny size of their "2 car garages".
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