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House Questions (part deux!) (UPDATE: I'm a home owner now!)
urahonky
Cynical Old ManRegistered User regular
Cynical Old ManRegistered User regular
Hi guys. About a year ago I made a thread about housing rentals and you guys were a big help. Unfortunately we didn't find anything we liked in the time frame so we did another year on our apartment lease.
And here we are now. I have a 10 month old daughter, wife, and roommate living with me currently. This is making our apartment feel very, very cramped (seriously, there's no straight path to walk anymore) and we need something larger. Below is our current apartment specs:
Rooms: 3
Bathrooms: 2 full
Square Feet: 1500
Rent: $1050
So, obviously, if we got a house with 4 bedrooms then it would solve a majority of our problems. But, as usual, this brings up another problem: Renting a house. If you don't know... Renting a house is incredibly expensive. Basically for a house with > 1500 square feet and 4 bedrooms is nearly $1400. Then we started wondering about mortgage rates and just buying a house. So we checked out the Mortgage Calculator and a $200,000 house with 5% interest and 30 years (with $0 down) is around $1300 a month. A $200K house in Ohio is going to be one hell of a nice house.
My concerns:
- Having to repair anything that breaks ourselves.
- Adding another loan to our names (I'm currently at $50K for my student loans).
- Jump in monthly costs
I make around $55K a year and my wife makes around $35K a year. My roommate makes about the same as my wife I believe.
I guess my questions are:
1. Do you think we're going down the right path? I know that it's hard to say without knowing everything but I feel like we're getting screwed by renting a house. Seriously we looked at a 3 bedroom house on Saturday and he was asking for $1250 a month and when I looked up actual cost of the house it was $80K and built in 1960 so it's straight profit for him.
2. How likely will it be that my wife and I can get a mortgage with $0 down? I THINK we can put up to $3K down... Maybe $4K if we push it. But our credit is good other than my student loans everything else is paid off.
3. Any suggestions on where to begin?
Thanks for any help you can offer guys.
And here we are now. I have a 10 month old daughter, wife, and roommate living with me currently. This is making our apartment feel very, very cramped (seriously, there's no straight path to walk anymore) and we need something larger. Below is our current apartment specs:
Rooms: 3
Bathrooms: 2 full
Square Feet: 1500
Rent: $1050
So, obviously, if we got a house with 4 bedrooms then it would solve a majority of our problems. But, as usual, this brings up another problem: Renting a house. If you don't know... Renting a house is incredibly expensive. Basically for a house with > 1500 square feet and 4 bedrooms is nearly $1400. Then we started wondering about mortgage rates and just buying a house. So we checked out the Mortgage Calculator and a $200,000 house with 5% interest and 30 years (with $0 down) is around $1300 a month. A $200K house in Ohio is going to be one hell of a nice house.
My concerns:
- Having to repair anything that breaks ourselves.
- Adding another loan to our names (I'm currently at $50K for my student loans).
- Jump in monthly costs
I make around $55K a year and my wife makes around $35K a year. My roommate makes about the same as my wife I believe.
I guess my questions are:
1. Do you think we're going down the right path? I know that it's hard to say without knowing everything but I feel like we're getting screwed by renting a house. Seriously we looked at a 3 bedroom house on Saturday and he was asking for $1250 a month and when I looked up actual cost of the house it was $80K and built in 1960 so it's straight profit for him.
2. How likely will it be that my wife and I can get a mortgage with $0 down? I THINK we can put up to $3K down... Maybe $4K if we push it. But our credit is good other than my student loans everything else is paid off.
3. Any suggestions on where to begin?
Thanks for any help you can offer guys.
urahonky on
0
Posts
2. I couldnn't tell you.
3. Since you are buying you can contact a realator in your area. the seller pays your realator's fee.
First, it will probably be more than $1300 a month. Insurance, HOA, etc, etc. I have a 220k house and after everyone gets their cut I pay about $1700/mo, and my insurance is considered "cheap" because I have a brand new roof. I also have a lower interest rate.
Second, shit to fix. If you get anything but the most move-in ready pristine house, you will have maintenance bills in the multi-hundred dollars every single month. And occassionally some thousands. This is not a joke it does happen. I bought a house that I wouldn't call a fixer upper, and I've already put over 8 grand into it in under 7 months. Some voluntary. Some not. Mostly not. This means the true cost of ownership of my house through half a year is roughly 3k/month. That will go down over time, but understand that most people do not leave behind utopia houses in perfect working order. They sell for a reason more often than not.
Third, time. You can't hire everyone to do everything. Houses take more upkeep. I just spent an entire weekend laying paver stones. Can you do that with a kid?
I have substantially more household income with similar debt loads and I feel like I'm right at my limit of comfort sometimes. So I would advise going cheaper.
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Question 2) Combined you and your wife are right on the fringe of state down payment assistance, which is basically free money. Your realtor or broker will know. That will be the same conversation as "what you can afford" because you will not buy a 200k house with 0k. You need or need access to at least 10k for a realtor to take you seriously most likely. access to = state assistance. Also, savings helps a lot. Not to spend it, but just to have it. If you have a 401k with a balance, banks like that.
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Question 3) Get a realistic expectation of your price range and decide if they sell houses for that price that you'd actually want to live in. I price shopped for moooooooooooonths after having my first conversation with a broker.
we also talk about other random shit and clown upon each other
It seems we'll probably be stuck in our apartment for another year if we're to get any sort of down payment on the house going then, huh? I have a 401K started with a bunch of money saved into it but I'm not sure how much that'll help me in this situation. I'll look into seeing how much I have in it.
You should look up housing programs in Ohio, I'm sure they have them. There should be free money out there for you.
we also talk about other random shit and clown upon each other
other questions you need to answer for yourself:
1. Are you going to stay in Ohio? Houses don't start being better than equivalently priced rentals until 7-10 years out.
2. School districts! In line with above, make sure the houses you look at don't require a private school for your kid to not go to school in the ghetto.
3. I will echo Jasc in terms of costs - You should have 5-10k sitting in the bank AFTER you close, and you'll need at least 5% up front, so you'll need to save $25k realistically (10k down payment, ~5k in closing costs as a low estimate, 10k in bank).
To help your current situation - Revisit your stuff - do you need all of it? Can you purge some stuff from your place? Once you've done that, look into better storage solutions for your stuff, as adding things like more shelving can get you some floor space back. Also, if you have seldom used stuff that you don't want to get rid of, consider a storage unit, as for 50-100 bucks a month, you could store your out-of-season stuff, leading to a decluttered apt.
I'll look into those, thanks.
1. Yeah I am pretty sure we're staying here for quite a while. My wife's family is all here as well as my dad and stepmom.
2. Absolutely. School districts are incredibly important if we buy a house.
3. Yeah we're probably in over our head on this with only $4k sitting in our bank account. I suppose we could funnel some of the money that's going to my student loans (about $1k a month) to our savings and hopefully get enough going by next year.
Space-wise I'm not sure what else we can do. It wasn't too bad until our daughter came into the picture. Her room used to be the office so now the office is in the hallway. The living room has two couches/ottoman and a TV with a stand. Kitchen has a table (that we never use) with her changing station. The rooms aren't as cluttered.
We've been here for two years now and I guess it's feeling cramped. I don't think there's much we can move into storage but I suppose that's an option. We could easily clear out her closet by putting the stuff into storage and then move some of the less-used stuff into there. I hadn't thought about that before.
And if you can't walk through your house, watch "Hoarders" and throw out everything you don't absolutely need.
Well he's paying 1/3 of our rent/utilities/food. Plus it's nice to have a babysitter around if we need him.
If you can't afford the room-mate to move on, you can't afford a mortgage.
Take all your monthly income, add it up
take all your bills, including utilities, mortgage, car, food, gas, child supplies, eating out, basic entertainment, etc
subtract that from your monthly income
you should be left with a number somewhere around $1000 (seriously)
reduce mortgage until that number gets to that range
that's what you can afford. If you cannot sock away hundreds of dollars per month, then you will be unable to protect your investment in your house, which is basically the same or worse than renting
we also talk about other random shit and clown upon each other
Oh we can afford him gone but why would we put even more financial burden on ourselves?
Also he won't be able to find a place for the amount of rent he pays.
You think a mortgage and repair bills wouldn't be a financial burden? That makes no sense.
Where did I say that?
You implied it. You want to get a bigger home because you don't have room for your roommate. But a bigger home would cost more. Logically, you could just get the roommate to move.
Let's say a bigger home costs you $500 a month extra in mortgage/repairs. If your room-mate pays $500 a month in rent, you could just get him to move and all would be equal. Plus, you wouldn't have to move.
Buying a home is a great idea for many reasons, but not to get an extra room if you already *have* an extra room.
On top of that it'll make him have to look for a new place to live and I don't want to put him out on his ass.
With a standalone house, you'll get attic space, basement space, maybe a small shed, sometimes a detached garage, and a backyard. All of which are not counted towards the 1500 sq ft floor plan.
All of those extras lets you spread out, making your space feel far larger than it really is, because you'll be able to push your seasonal / rarely used clutter away from the main rooms of your house.
Basically, just looking for a house, instead of an apartment, will solve your problems, even given the exact same floor plan.
The rule of thumb I was given was budget 1-2% the value of your home per year for maintenance. My personal experience has probably been on the low side of that (though last year I needed to buy a new A/C), but I do expend a lot of effort on the yard (eventhough sometimes I'll pay a guy to mow it) and I don't mind getting seriously dirty taking the first 2-3 shots at a plumbing problem.
Yeah his rent will be slightly going up. Right now it's 1/3 the cost of the apartment and then + $80 for the garage (he pays that in full). So right now he pays roughtly $440 a month in rent (without utilities and such). So even if our total monthly rent is 1320 he will be paying the same amount he is now at the house.
I agree and that's one of my hesitations on outright buying a place. However I brought this up with him just yesterday and told him that's one of the primary reasons I'm holding back on buying a house and his response was "Hell I'm just hoping you guys don't kick me out!" so we're on the same page for at least 4 more years until he pays off his car.
So right now we're looking at anywhere between 145K and 175K houses in our area and got a ton of options (I think it was around 35).
We visited a house yesterday for rent... It was beautiful but it was only 3 bedrooms. Even though the living room and family room were large and open we wouldn't be gaining anything from it and the rent was $1350 a month.
In Florida, going from a 3b to a 4b means your house is either going to get way older, or way more expensive, because they don't build 4-bedroom starter homes here
we also talk about other random shit and clown upon each other
The 35 houses our Realtor found were 4 bedrooms. The place we visited yesterday was a rental we found on militarybyowner.com and I scheduled the visit last week before we thought about buying vs renting.
At this point we're going to have to go month-to-month at our apartment complex this way we're not rushing into things.
It's like test driving a Ferrari, even though you can really only afford a Ford.
It makes you want to irresponsibly finagle extra funds to live above your means.
So don't do it. Don't even look at the more expensive homes.
My second biggest tip - minimize your commute.
What's the point of a nice home, in a nice location, if you are stuck in traffic 2 hours everyday?
Commuting time is wasted time that you could be spending with your wife and daughter.
I would not limit yourself to 4BR, because the amount of inventory at 3BR is usually larger than 4BR. Dependent on the age of houses in your area, the 3BR houses could be 3BR + basement + bonus attic space, which is just as good as a 4BR + basement in your situation.
It's the luck of the draw sometimes on what a house will cost to keep up. Some houses are awesome some houses are lemons.
Anecdotal evidence aside, houses are expensive no matter their age, but older homes tend to cost more to maintain. On average. It's why housing association fees consistently rise every year, and you can watch maintenance cost increase year over year by looking at any association's expenses.
Good luck with the hunt, just keep in mind that you guys are the only ones with your best interest truly at heart. Your realtor (even a friend) is there to make a sale, and so is your lender/bank/broker. They say you can afford a $200 mortgage? Only you know that. Work within the confines of reality, given any sudden surprises that may (and will) pop up down the road.
For example, if you move in and need a new furnace six months later, would you be able to swing $8,000 to replace it? A landlord would, and that's the benefit you've been living with while renting.
1972 isn't that old. I live in a house from 1907. It's not just the systems differences, it's the fact that a right angle had apparently not been discovered yet.
I honestly hadn't thought about that @schuss! Thank you! A ton of the houses on our list are between 1960 and 1980.
It will be on the disclosures you'll get when you see the house. Learn what lead paint and asbestos look like, as if people have it, they avoid testing it, as then they can claim ignorance.
Basement with bad support = shifting/cracking house
Messed up Attic = Possible moisture in the walls, roof replacement needed etc.
Look up at ceiling corners and around windows for water damage, as that's the one thing you REALLY don't want to fuck with.
Paint wrong color? Floors need to be redone? Fairly straightforward stuff.
Water Damage? Could get into a host of things.