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From Renter to Homeowner, need help coping with worries
Romantic Undead
Registered User regular
Registered User regular
Hi guys!
I'm a dude in my mid thirties, married with a 2 year old girl. My wife and I have decided that it's way past time that we quit renting our home and looked into buying one for ourselves. We have been looking at houses and have some money saved for a deposit and, on paper, it looks like we're all set to go, but I'm still wracked with worries and I am afraid I might be making a huge mistake.
Background:
- I'm Canadian (Ottawa, Ontario region)
- I'm a federal government employee, making ~60k a year (Canadian, natch), my wife works part time retail in the evenings and takes care of baby during the day. (no daycare)
- I've never owned any property before (unless you count a car)
- I'm not very handy. I would be pretty much relying entirely on contractors to assist with home maintenance, and I know that that can become treacherous at times.
- We've calculated how much a mortgage repayment plan would cost us, as well as property taxes, and utilities (which we already pay anyways where we rent) and we can afford it, but I'm sure there's a multitude of less obvious costs that we're not considering.
- I'm absolutely nervous that, as soon as we move, the house we'll choose will fall apart around our ears and we'll be stuck in a Money Pit situation.
- I have become too accustomed to the no-hassle nature of being a renter: When things go wrong, call the landlord, he'll fix it!
Anyways, just looking for general advice and reassurances. I'm getting conflicting information, some people saying that it isn't wise to buy right now anyways, and that seeing a house as an investment in this economy is largely a myth. Please let me know what you think, PAers!
I'm a dude in my mid thirties, married with a 2 year old girl. My wife and I have decided that it's way past time that we quit renting our home and looked into buying one for ourselves. We have been looking at houses and have some money saved for a deposit and, on paper, it looks like we're all set to go, but I'm still wracked with worries and I am afraid I might be making a huge mistake.
Background:
- I'm Canadian (Ottawa, Ontario region)
- I'm a federal government employee, making ~60k a year (Canadian, natch), my wife works part time retail in the evenings and takes care of baby during the day. (no daycare)
- I've never owned any property before (unless you count a car)
- I'm not very handy. I would be pretty much relying entirely on contractors to assist with home maintenance, and I know that that can become treacherous at times.
- We've calculated how much a mortgage repayment plan would cost us, as well as property taxes, and utilities (which we already pay anyways where we rent) and we can afford it, but I'm sure there's a multitude of less obvious costs that we're not considering.
- I'm absolutely nervous that, as soon as we move, the house we'll choose will fall apart around our ears and we'll be stuck in a Money Pit situation.
- I have become too accustomed to the no-hassle nature of being a renter: When things go wrong, call the landlord, he'll fix it!
Anyways, just looking for general advice and reassurances. I'm getting conflicting information, some people saying that it isn't wise to buy right now anyways, and that seeing a house as an investment in this economy is largely a myth. Please let me know what you think, PAers!
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Part of the home purchasing process, at least in the US, is to hire a professional home inspector. These are persons who know the building codes very well, and do a very thorough one-day examination of the home. I've always been present for the home inspection, which lets the inspector tell you all of the little details that are opinion based and thus wouldn't go into the report. They test everything; from water taps to light switches and outlets, and even the HVAC.
Most home repairs can be handled without the use of an expensive professional like a plumber. YouTube provides tons of how-to videos, mix in a little elbow grease and you'll find you can do much more than you thought! If you look at how to do something and think it's too complicated, you still have the option of paying to have the work performed.
Work I've learned to do myself:
* Basic plumbing, like cleaning the traps and patching leaks.
* Replacing the hood over the range in the kitchen (surprisingly easy).
* Rewired the outside AC unit and built a guard around the wiring (dogs chewed it up).
* Installed about 120 m^2 of hardwood flooring.
As far as your other concerns go:
- Youtube is super helpful for maintenance things. I mean, aside from general stuff, I think most people have to use some kind of contractor at some point. Unless you can replace your own roof.
- I'm fairly convinced that, for the most part, seeing a house as an investment went out the window before our generation (I'm 36) got to the point where we could own a house. But that's a moot point, you buy it because ownership is better than renting for more reasons than sound financial investment.
- In my experience, owning a home is a near constant battle against entropy. You're always going to have something to fix, update, build, or tear down.
- Have a thorough inspection before you buy!
- That old 'Have 6 months worth of living expenses saved up' thing becomes even more important when you own a home. Don't rush into purchasing a house with all your moneys.
Congrats!
I live in Moncton, NB and just bought a house a little over a year ago after renting for a LONG time. I had a lot of the same worries, as did my wife. But I'll try and help out a bit with some of those worries.
One thing to consider as well since this is your first time buying a house is that you guys can claim the first-time home buyers credit on your taxes for next year which will be a nice little bit you can claim (I think it's $5000 or something like that).
I'm not overly handy myself (my wife is actually a bit more so then me) but a lot of stuff is surprisingly do-able for ordinary folks. We were able to replace a sink, faucets and a toilet in our bathroom by ourselves. Stuff like painting is of course pretty standard for most folks. With regards to electrical I would definitely suggest a contractor of some sort if you are in need of anything like that and definitely look into checking references or very reputable folks in your area.
The one huge thing I will say if you are interested in a house is to get a home inspection. It will assuage a LOT of your fears and do not skimp out. I have a guy that I had used for a couple of inspections and has been awesome with us. In face he even deducted $100 the second time we used him which was nice so we got the infrared done as well with him to check the walls, ceiling, etc. It also gives you some leverage when it comes time to put in an offer. You can request for work to be done or money back on closing to do things.
Another thing to consider that isn't really talked about a lot is closing costs. Sometimes you can get the seller to include that in the closing where they will give you a portion back to pay for it or just outright pay it themselves upon closing. Just make sure to have the funds put aside should you need to pay for it yourselves.
If there are any questions you have though feel free to shoot me a PM and I'll do my best to try and help out.
Oh, one last thing since you mentioned utilities. If you are looking into trying to reduce consumption there are two big things I would suggest. 1) LED bulbs. If you can, replace all the bulbs in your home with those when you move in. It might not seem like much but it can really save over time. 2) If the house you buy doesn't already have one definitely look into getting quotes for a mini-split heat pump to see about a purchase plus improvements for your mortgage. We have a Fujitsi that provides heat in the winter and A/C in the summer and it has saved us a ton on power. My usage going from my apartment (which was drafty as hell to begin with) to my house with a heat pump literally got cut by more than half from the previous year.
Hope this helps and good luck house hunting!
Yeah, great point. Our savings aren't where they should be right now, and that's another huge concern for us. One of the reasons we're thinking of buying is because we're starting to feel fleeced on rent, and we're getting frustrated by the fact that the money we're spending there is not ours. We could get a mortgage instead, spend (considerably) less per month on payments than what we're spending now on rent, and that money is still ours.
However, the points you made about saving and the battle against entropy are certainly huge considerations for me. I hate stress and the thought of having to constantly worry about the state of my home, without the cushion of just being able to call someone else to fix it is (to my embarassement) a huge source of anxiety for me.
Oh, by the way, I forgot to mention that I do have some family support. My father is a licensed home inspector, so he'll be assisting us with that, so I have that going for me, which is nice. :P
Things you should leave to bonded/licensed/insured professionals: Roofs, main electric, rough plumbing
Don't ignore problems or they will quickly spiral out of control.
With buying don't buy a house with a mortgage equal to your rent. What you're ultimately looking for is keeping that same 'float' that landlords do for repairs. So the $1000 a month you might pay, for instance, might actually be a $400 a month mortgage with $200 a month in property taxes. Then that extra $400 a month the landlord might use for repairs and profit. $400 a month is a bit steep, but, they need profit and you don't, so maybe shoot for something that gives you $200 extra a month.
Also account for things you don't pay for in rent now. Water/Utilities you're not paying (trash, mail delivery, heat, hot water, LP/Natural Gas), taxes, so on and so forth. So those might run you an extra $100-200 a month, and maybe more.
But all in all, if you make sure you're storing that "extra" away for the inevitable furnace or hot water tank failure, you'll be okay, and will probably enjoy it far more than renting since it's yours. Whoops you spilled wine on the carpet, don't have to worry about them keeping your $5000 deposit and fight in court about it. Nope you can just rip it out and put in hardwoods instead!
As for the rest, I think the other posters have it covered pretty well. If you're planning to stay in the same location for at least five years, it's generally a good idea to look into buying. Rates are nice and low right now, too, so that's really nice.
Furnace
AC
Water heater
Dish Washer
Other Appliances
General age of house (because that is roof electrical plumbing)
If the furnace, AC, Dishwasher or water heater is over 10 years old, just plan to replace them year one. Especially the water heater and dish washer. It's a 600-800 USD job to replace a standrad US water heater in most areas. It's a 15k-20k repair if one of those shits the bed, same with Dish Washer.
AC and Furnace giving out is just really inconvenient because having someone come out when it is 95 degrees to replace your AC, the cost doubles, same with 30 degrees to replace your furnace. Generally when it is moderate out have those done because HVAC people aren't going to be as busy.
If the house is over 30 years old, plan on replacing the roof, probably the electrical, maybe the plumbing.
Houses are not good investment vehicles if you plan on selling the house in 5 years. Houses are great investment vehicles if you are planning on selling your house in 30-40 years. Rent paid is rent lost. Mortgage paid is equity gained.
Things crop up, and the best way to deal with them is to fix them now, not try to wait it out, and the only way you can do that is to have a savings buffer, and the only way to have that savings buffer is to not spend it all on the down payment.
Note that "not spending all your money on a down payment" typically means buying a smaller house than you would like to.
I've had to get a bathroom repaired, replace a main drain pipe, replace a water heater, repair a furnace, and buy a new washer/dryer in the past 5 years. All on a house that I thought was in "move in" condition. Without decent savings that I purposefully didn't use as a down payment on the house, some of those fixes might have been pushed off, which would've been even more expensive accidents just waiting to happen.
As a renter you got 1 guy who might be fleecing you, as a homeowner who will outsource repairs you got every person you contract repairs to potentially fleecing you. Since your dad is a home inspector you should ask him for some referrals to plumbers, electricians, HVAC, roofers and possibly a structural engineer. While you don't necessarily always get what you pay for, good people in trades aren't cheap.
One thing I'd have done differently is after a thorough inspection report from a home inspector (if that didnt report anything major) I'd get a plumber, an electrician, and an HVAC guy to do a once over or survey and brief me to current situation and what may potentially cause problems down the road.
If you want to try your hand at being handy make sure you know when to call a professional. For example, I can tackle the bathroom sink cause even if it takes me 2 weekends it's NBD. There are shutoff valves, and there are other sinks to use in case I get lost in the weeds. If I have to throw in the towel and hire a plumber, well it is not an emergency. If I'm working on the tub/shower and break a valve and have to shut off water service to the house so I don't flood the bathroom or crawlspace, then that has to be handled right now, and I'm at the mercy of the plumber as to time and price.
I don't know how mortgages work in Canada, but in the US you want to save up at least 5% for a down payment and ideally 20% as you avoid private mortgage insurance at that amount, which can drop your payment another hundred or more.
And as a general warning, the market can be really nerve wracking. If it is anything like here, you will be having to jump on an opportunity in a day or less to actually get the house. So prepare yourself for that.
but they're listening to every word I say
My wife and I met with a financial advisour at our bank to see what kind of mortgage we'd be eligible for. At first, it was promising, with our savings and my stable income, the advisour told us we could be eligible for as much as $285k. Unfortunately, I didn't pass a credit check. I only recently paid off a massive credit card debt that I had, and I've missed a couple of payments on my student loans, so there you go. The advisour told us to try again if/when my wife gets full time work. But, in the meantime, this is a dream that will have to sit on the shelf a little while longer.
Thanks anyways for all the advice, guys! You're awesome, as usual!
I know those feels.
Sorry to hear.
Just work on making sure you don't miss any more payments and things should start looking up for you in a year or two.
Yeah, I feel like it's one of those catch-22 situations: I want to find a way to build equity and save money by not having to pay so much rent so I can more easily manage my finances, but in order to do that, I have to already have a stellar financial record.
For the curious, I currently pay $1185 a month on rent, which does not include utilities or renter's insurance. Once you factor those in, that's half of my monthly salary going into basic living expenses.
According to our calculations, monthly payment on a mortgage for a house in the price range we were looking at would be $650 a month (give or take), but then we'd have to factor in property taxes, and whatever maintenance costs we may need to pay. Still much, much less than what we're currently paying, and that money is still, basically, our own. Frustrating that by the time we're able to make that a reality, well, I will have already gotten my debt under control, so this becomes more of a bonus (which is still nice) rather than a relief, (which we could really use right now).
Anyways, we'll refocus our efforts on getting my wife some full time work and getting my student loans in good standing, and we'll try again in a while.
I could go on much longer, but if you have any questions feel free to @ me or send me a PM. This is all still fairly fresh in my mind and there's a hundred small things that you need to keep in mind when buying a new home.