by "Arrivederci" (arrividerci)
Published 01/23/2017 at 11:51
by "Arrivederci" (arrividerci)
Published 01/23/2017 at 11:51
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STARS: 0
Calling all Oppo homeowners – interested in your opinions. Within the next six months, my wife and I will be buying our first home together. We live in the righteously cheap state of North Carolina, so you can buy a lot of house for your dollar. Cost obviously escalates for more desirable neighborhoods and bigger/nicer houses. My wife refuses to live in a house farm (neighborhood where the land was razed and nearly identical houses are plunked everywhere), so it’s unlikely we’ll be considering anything new or building.
Our budget according to the bank is a lot more than we’re willing to spend, so we’re sort of at a crossroads. We can get a home that’s more along the lines of a “starter” in the $200k range and even do something like a 15 year note on it, so it would be getting paid down in a hurry. The only issue there is that it would be something that wouldn’t be as nice, probably a little further on the outskirts of town and minimal room for appreciation.
Conversely, we could go towards the higher end of what we’re willing to spend and look in the $300-350k neighborhood. These would be “forever” houses and would obviously tax our budget a little more and would require a 30 year mortgage.
I guess my question to my fellow Opponauts is whether you faced a similar decision and how it panned out? If you could do it again, would you go cheaper to save money and possibly build equity faster? Or would you go for a house that could be the one you keep long-term, even if it costs you substantially more?
If we buy a “starter” I’d like it to be one we could stay in for 10 years, which means it would be at a minimum 2/3’s paid off at that point. Then we could sell and use that equity as a downpayment on something better. We don’t have any kiddos yet, but this could mean we’d probably be uprooting them from whatever schools they’d be in to a different district, so also for consideration. I see the benefits of both, but don’t know which is best.
"ADabOfOppo; Gone Plaid (Instructables Can Be Confusable)" (adabofoppo)
01/23/2017 at 11:58, STARS: 3
Regardless of which type of home you buy:
Always have it inspected before purchase
Budget for the replacement of at least two major appliances/systems in the same year
THERE IS ALWAYS SOMETHING THAT NEEDS ATTENTION (No, it does not matter that you have a brand new home. Builders take shortcuts all the time)
Buying a house isn’t just the purchase of a new dwelling, it is also choosing your neighbors. Choose wisely.
"Jcarr" (jcarr)
01/23/2017 at 11:58, STARS: 3
How old are you? If you have kids relatively soon, that still leaves you a good 4-6 years before you’d really beuprooting them. Are you sure that at this point in your life you know that a “forever” house would really be forever?
I guess my point is that a lot can change in your circumstances and preferences over the next 5-10 years so you might be better off going with something cheaper and leaving the door open to upgrade/change after some of those big life events have happened.
"Mid Engine" (jdlogan2006)
01/23/2017 at 11:58, STARS: 10
One of the most important indicators of a home’s value is the quality of the schools in your immediate neighborhood. Also, some ‘burbs are safer than others and people will always value security.. I lucked out in this regard on my current home.
The reason I mention basic economics is because your needs will change and it’s very likely you’ll own several homes that will be quite different, depending on where you are in life. Treat a home purchase as an investment and know that nothing is forever.
One more point.. do you have the skills and time to sweat some equity on a fixer-upper?
"Phyrxes once again has a wagon!" (phyrxes)
01/23/2017 at 11:58, STARS: 2
We bought a starter home close to 10 years ago then the market tanked and we are still in it. Now we have kiddos and space is at a premium but we don’t have the means to upgrade at the moment so we are making it work.
Be very careful of the we are only going to be here x years idea.
"Arrivederci" (arrividerci)
01/23/2017 at 12:01, STARS: 0
Good advice for sure - the cheaper home would obviously leave more money in the kitty, both from a monthly expense perspective as well as cash savings needed for a down payment.
"Arrivederci" (arrividerci)
01/23/2017 at 12:02, STARS: 0
I’m early 30's, my wife is late 20's. We’ve got some time, but I also don’t want to be an old dad. I’d say we’ll probably have kiddo numero uno on the way within two years.
When I mention “forever” home, I mean it as one that would suit your basic needs forever (required space, neighborhood, etc).
"ateamfan42" (ateamfan42)
01/23/2017 at 12:02, STARS: 2
If you have kids relatively soon, that still leaves you a good 4-6 years before you’d really uprooting them.
This is a great point. My family moved when I was 10; I didn’t forge real lasting friendships until high school, and I appreciate my parents made the decision to move before I was a teen.
"For Sweden" (rallybeetle)
01/23/2017 at 12:03, STARS: 3
Buy a small house in an expensive neighborhood over a big house in a cheap neighborhood.
"Arrivederci" (arrividerci)
01/23/2017 at 12:04, STARS: 0
By and large, the schools around here aren’t terrible. There are a few districts that aren’t so great, but we aren’t even considering those at all. Security is obviously a concern, but it’s hard to gauge if you don’t know anybody who lives in the areas considered. I hope our agent will be able to assist in that regard.
"Arrivederci" (arrividerci)
01/23/2017 at 12:05, STARS: 0
This is one of my concerns, but when considering means, if you had spent more, you’d probably be in a bigger pickle now, right?
"ateamfan42" (ateamfan42)
01/23/2017 at 12:06, STARS: 1
Always have it inspected before purchase
Do lenders even allow a loan without a pre-purchase inspection?
I just spent several hundred dollars a few months ago for an inspection on a non-ancient home (1988) in great shape. And the inspection was worth EVERY CENT. Unless you know building codes back to front, a qualified inspector is worth a lot.
"Jack Does Cars" (jackdoescars)
01/23/2017 at 12:07, STARS: 0
I may have asked before, but where in NC?
"ateamfan42" (ateamfan42)
01/23/2017 at 12:10, STARS: 1
From a financial standpoint, my approach on almost everything is old school: buy well within your means and needs. Just because you CAN get a loan for a fancier bigger more expensive house doesn’t mean you need to do it.
I just bought my first place (which I hope to be my home for a while) and spent far less than my bank would have allowed, but went for a 15 year loan at a great rate. The income I can save (not going to huge mortgage payments) I can invest for retirement (at a significantly bigger interest rate than my mortgage), or save up for later modifications/improvements to my home (bigger garage, etc.).
"Phyrxes once again has a wagon!" (phyrxes)
01/23/2017 at 12:12, STARS: 1
Absolutely, we bought new it was a spec home as it was the last unit in a section. The original builder price was 360k and we paid just over 300k, it’s now worth 270k or so. But we went new as 10 to 15 year old homes of the same size were the same price.
Had we waited we would have likely not gotten the loan approved.
"Justin Hughes" (justinhughes54)
01/23/2017 at 12:13, STARS: 1
Excellent point, regardless of whether you have or plan to have kids or not - schools are a huge factor. We scored a great deal on our house - locked into its last sale price when we began renting it with first option to buy, then talked them down further with minor issues that, though issues, weren’t showstoppers either. They just opened a new middle/high school in my town, which is already known for its excellent school system. Home prices are skyrocketing, and several new houses are being built on our road alone. According to Zillow the value of our house is already $50k more than we paid in June. We put down 15%, so there’s the PMI thing, but the skyrocketing value plus regular payments have me considering trying to ditch PMI as early as this year.
"Highlander-Datsuns are Forever" (jamesbowland)
01/23/2017 at 12:16, STARS: 1
Location, location, location. I would shop for smaller and better condition over larger in a less desirable neighborhood. DO NOT BUY A FIXER UNLESS YOU ARE A CONTRACTOR.
"Stapleface" (patrickgruden)
01/23/2017 at 12:16, STARS: 1
My wife and I made our own budget when we bought our house in 2010. By that I mean we never did know what we were approved up to. We made a budget and stuck with it. I think it has worked out well for us. Unfortunately for us even though we’ve paid 25K in principal we STILL have no equity because there’s too many damn houses in my development for sale.
Do we want to move? Of course, but it has less to do with our house being a starter house, and more to do with hating NJ and being around other people.
But you really don’t know what you want in a house until you own one for a while. So I would say don’t buy a house you think will be your forever home. You will always find stuff you don’t like, so buy what you can afford now, and if in ten years time it no longer fits your needs then you can find something more in line with what you need.
"AbsintheMinded: NeonHeatDreams" (absintheminded)
01/23/2017 at 12:16, STARS: 1
I will give you my wife and I as examples for you:
At the time of our first home (~4 years ago) we purchased a HUDhome (one that was foreclosed on with an FHA loan). That actually was a really cool experience. I was in my mid-late 20s and my wife was in her mid-20s. We got this house as it was really cheap. Like really cheap. We kept it for two years and decided we wanted more space that was a bit more rural/calm. So we sold that house and bought our new house at the same time. (While my wife was pregnant too, ask me how that was...). We are very lucky to have found the greatest realtor to ever exist and he made it all very easy. The second house was brand new in a developing area around Road Atlanta. They have since opened a new hospital and soon a bunch of new homes and shopping. Our home value has sky rocketed and in a few years we will relocate to our “forever home” in a great school district for my son.
TL;DR- Our first house was a cheaper starter home which we made a killing on when we sold it. (It was after the housing crash and we more than doubled our money), then we bought new. DON’T BUY NEW, IT SUCKS. Now we are going to move to our forever home in a few years when my son starts kindergarten.
"cbell04" (cbell04)
01/23/2017 at 12:17, STARS: 1
Make good schools a priority. Even without kids it will be a huge factor in the houses appeal when you go to sell it. Personally I have kids so it’s a number one issue. I also live in NC and just had a house built (wake county) and while it is in a development its a huge development with a large verity of homes. The up side is lots of stuff to keep you busy in your own neighborhood + resale is typically easy people battle to get into these good neighborhoods with good schools. Also if you’re having kids soon it is an amazing atmosphere for them. My kids have a gang of buddy’s playing outside at all times and that is kinda priceless and sometimes harder to find in the older neighborhoods. Long story short shoot for a middle ground. You will spend more than you want once you see features or locations that you will then desire.
"AbsintheMinded: NeonHeatDreams" (absintheminded)
01/23/2017 at 12:17, STARS: 0
^ This. 100x this.
"Ash78, voting early and often" (ash78)
01/23/2017 at 12:19, STARS: 1
I did the “starter” thing in 2004 before the market got totally overheated. For the past 5 years we’ve had to rent it out and now we’re in our “forever home” (numbers are somewhat comparable to your example here in AL). If I could go back and do it again, I would definitely have stretched to buy more home up front. Moving is a PITA and my view is that if a bank wants to lend you 30 years of money at 4.5%, that’s their risk a lot more than yours. I can’t account for your future changes in tastes and preferences, but if I could have moved into a home and stayed my whole life, I would have done it.
"Stapleface" (patrickgruden)
01/23/2017 at 12:19, STARS: 0
One thing I can suggest to figure out how a neighborhood is is to go there on a Friday or Saturday night. Just hang out in the car for a while. You’ll get to see how loud it gets, the traffic, kids outside, things like that. You can tell a lot just by observing at prime times.
"Stapleface" (patrickgruden)
01/23/2017 at 12:23, STARS: 2
(No, it does not matter that you have a brand new home. Builders take shortcuts all the time)
Yeah, no kidding. My house was built in 1999. My wife and I moved in March 2010. The windows in this house are worse than the ones in the log cabin I lived in before (that was built in the 30s). They would have been better just putting Saran Wrap over the holes where the window would go.
"Arrivederci" (arrividerci)
01/23/2017 at 12:24, STARS: 0
Always good advice. Problem with a lot of the little houses in nice neighborhoods is that they’re really crappy and the owners still want a fortune.
"MasterMario - Keeper of the V8s" (mastermario)
01/23/2017 at 12:25, STARS: 2
One thing to consider is interest rates. They are likely to be going up for the foreseeable future. What you have to ask and decide on is whether taking a larger 30 year loan at a lower interest rate better than taking what would probably end up being two 15 year loans, one at a lower rate and one at most likely a higher rate. That’s the risk you need to determine really as far as financing goes.
If both options are within reach and you aren’t taxing your budget too much I would go for the forever home. Moving sucks.
But, it’s really up yo you guys. If you think it’s more than likely you will move eventually, than the starter home is probably the better choice. If you’re confident you’ll stay in the area forever then I personally would go for the forever home.
"Arrivederci" (arrividerci)
01/23/2017 at 12:25, STARS: 0
Great idea!
"Arrivederci" (arrividerci)
01/23/2017 at 12:26, STARS: 0
Damn, nice! I don’t see that happening anywhere around here, no matter where we buy. Most prices have been relatively stagnant.
"merged-5876237249235911857-hrw8uc" (merged-5876237249235911857-hrw8uc)
01/23/2017 at 12:27, STARS: 1
We underspent on a 5 year starter house, and now we are on year 10, and have added three more to our family. We live very comfortably not having to worry about a huge mortgage and are within 5-8 year of paying it off. We’ve been looking at bigger homes, but we have reconfigured our current one to bunk the two oldest in one room and the newborn in the other bedroom. It’s a little snug, but not bad enough that we “have” to move. It’s afforded us to live very comfortably and I’m glad we didn’t overspend from the beginning. One less thing to stress about early in our marriage. So that’s my advice, work up your own budget, screw what he bank tells you, and figure out what your real budget is. It’s just not worth it.
"ttyymmnn" (ttyymmnn)
01/23/2017 at 12:28, STARS: 1
We bought what you might call a starter (3BR, 2 BTH, garage, nice sized yards) in a good neighborhood 15 years ago (paid $135k, but this is TX) and we’re raising our 3 boys in it. It’s a bit tight, but we make it work. It’s also in a good neighborhood with a good school district. We’re not very adventurous, and we’ll likely end up dying in this house eventually, unless the foundation rots away and the ceilings fall in. Once my boys move out, we’ll have all the room we need!
I’m a pretty cautious guy. Considering the change in the White House and on the Hill, how safe are your jobs? I would hate so see you get upside down on something bigger. And, paying off a home in 15 years would be awesome. Ours has a 30-year note.
On the other hand, I am an advocate of buying the nicest thing you can afford and buying it once. That works with cars and appliances, but not always with houses, something you’ll be paying for for a very long time.
So, I guess I haven’t really been any help at all. Good luck!
"merged-5876237249235911857-hrw8uc" (merged-5876237249235911857-hrw8uc)
01/23/2017 at 12:30, STARS: 0
Schools will help you on the resale end of things as well, so don’t discount that in your search. Also, as you may be there longer than you plan, it’s good to buy into the best schools you can afford to without stretching your budget.
"ttyymmnn" (ttyymmnn)
01/23/2017 at 12:30, STARS: 0
The other thing that I realized is that when I got the house I had to buy rakes, hoses, a lawn mower, etc., all the things you never needed in an apartment and all the things that your dad already had in the garage.
"Arrivederci" (arrividerci)
01/23/2017 at 12:31, STARS: 0
Didn’t see your last point re: sweat equity. I can do all the simple stuff as well as electrical work and simple plumbing if necessary. I’ve demoed and updated a half bathroom by myself before, and that wasn’t too bad. Laying the glass tiles and grout was the worst part.
I’d honestly prefer something that needs a little work - one of the houses I *adore* at the top of our budget (ask is $335k) was built in 1980 and hasn’t been updated a lick. If this place was fully updated, there’s no way it sells for less than $500k, given comps in the area (literally one of the top two areas in town). The only kicker with that neighborhood is that the elementary school sucks - the folks who live there are all so rich they send their kids to private schools.
"Meatcoma" (mastapoof)
01/23/2017 at 12:32, STARS: 1
We bought ours when the market was in the dump. We bought ours on a short sale, got it super cheap and have 4 years left on the 10 yr note. I can’t wait until it’s paid off and I have more disposable income!
"Arrivederci" (arrividerci)
01/23/2017 at 12:33, STARS: 0
Thanks for the advice! I really doubt we’ll get as lucky as you were with your first, and we’re definitely not buying new. :)
"Pistol Whipped Cream" (heynickhere)
01/23/2017 at 12:35, STARS: 1
We bought a starter home 3 years ago for $175k. Only 1500 Sq feet. We don’t live in a nice neighborhood but we have been able to save a lot of money while in this house and pay down other debt (school). I think we will have all our debt paid off in the next year or so then we will probably look for something a tiny bit bigger in a much nicer (more central) part of town. We get OpenDoor offers bi-weekly and it says our house is worth up to $240k now so we are happy we bought when we did.
"Arrivederci" (arrividerci)
01/23/2017 at 12:36, STARS: 0
Haha, well I appreciate it all the same. I’d say our jobs are as secure as anybody’s right now. We both work for Fortune 500 corporations, and if the Orange One is business-friendly, we should be good. Hers may be slightly more tenuous because retail is having a hard time, but my company is very strong.
I sort of ascribe to the same thoughts you have of buying once, but the thought of building equity more quickly is tantalizing, even if it means we’ll have to plan to buy again in the future.
The challenge is going to be how we direct our realtor - we have a meeting with her tomorrow and I don’t know if I should tell her to focus on the low end or the high end? Would it be unfair to her to ask for both?
"Arrivederci" (arrividerci)
01/23/2017 at 12:38, STARS: 0
Thank you - good logic for sure. My wife is from NJ and had the same sentiment you have. Though she was amazed by how affordable houses are here. Her parents recently sold her childhood home in NJ for $1.4M and moved to Boston.
"Arrivederci" (arrividerci)
01/23/2017 at 12:39, STARS: 0
Good ideas - schools are definitely a big consideration and my wife is adamant on having a neighborhood that feels like one.
"Pixel" (Improbcat)
01/23/2017 at 12:39, STARS: 1
There is no such thing as a “forever home”. I bought a house about 5 years ago with my then girlfriend. 1500 sq ft, 2 car garage, small yard. I’d bought it specifically with the intent of being in it “forever”.
That relationship ended a couple years ago. My current partner has a 3 year old kid and I am not kid people enough to want to live with one so young, so we currently live nearby but not together. So now I am dreaming about small 2-family house or a house w/inlaw apt so we can live together but I can still have my private non-kid space.
I guess I’m saying don’t strain your budget for your “forever place” when you don’t yet know how many kids you are going to have, or any of the hundreds of other things that could affect where you live, how much space you need, etc.
Buy something with a little room to grow and in a good school district so you won’t *need* to move in the next decade and go from there.
"Scott" (merl3noir)
01/23/2017 at 12:39, STARS: 2
I would always advise going with a less expensive home. First of all there will be expenses that you may not have considered. I’m not sure how much you know about buying a home, so forgive me if I explain things you already know. Be sure to calculate your escrow into your payment price. You need to know how much all those expenses will be, property tax, school tax and property insurance. I know people that purchased a house and over 50% of their payment is escrow. Also realize that what you pay in escrow will likely increase over time.
Are you putting down 25% on the down payment? I highly advise that you do, otherwise you will need mortgage insurance that will raise your monthly payment even further.
Also, if you can find out what the seller is paying in utility costs. I love my house, but my first winter was very cold, and I discovered that the house had virtually no insulation. It nearly bankrupted me as I paid over $6k in heating costs my first winter. It took me 3 year to finally get out of that hole, and a big part of getting out of that hole was a mild winter last year.
Also realize that you will be footing the bill for all maintenance and up keep. Figure on buying lawnmower, weed eater, garden hoses, maybe a chainsaw and tools. You need to have enough savings to pay for these things.
So after considering those ‘hidden’ costs of home ownership and a mortgage you should have a better idea how much you REALLY can afford. Personally I would not go for a 15 year mortgage. You can always pay extra principle ( always try to pay double my principle) on the mortgage, and that gives you flexibility. If something comes up you can just pay the principle that is due and use the money you save for what ever the unexpected expense was. But if you take on a bigger payment to build equity faster, you may find things are tight and you have no easy way to adjust it. You either have to refinance, ask for mortgage adjustment, or risk default.
If you really want to be set, buy a multifamily. Let tenant pay most or all of your mortgage, while you save your money for that dream home. And when you get that dream home you will have a property with equity you can barrow against, and an extra source of income.
"So Shiney. So Chrome! So Frunky" (badams109)
01/23/2017 at 12:39, STARS: 0
I bought a starter home way under what the bank said we could afford and I would do it again. We bought one that had been upgraded a little. Roof, siding, windows, kitchen, and bathroom had all been done within the last 10 years. We paid good money to upgrade the furnace and add central AC. The one thing I would advise is keeping your monthly bills low enough that only one paycheck can handle it. My wife and I both work and with the mortgage and a massive student loan payment we both needed to be making good money to keep everything
paid and our house was cheap. It was stressful when I was laid off. Thankfully we can now abide by our
“
one paycheck
”
rule. You might also want to round your mortgage payment up to the next $100 mark. Example: if your payment is $965 just write the bank a check for $1000 every month and add that extra $35 to the principle. It
’
s only a little but in the long run you could save some interest and pay off the house sooner.
"Arrivederci" (arrividerci)
01/23/2017 at 12:40, STARS: 1
That’s another thought I had but failed to note in my post - locking in a historically-low long term rate is also a good idea. The second 15-year note would probably be quite a bit higher (but low compared to a 30 year at that time).
Also agree 100% on moving - I’m dreading it already.
"Arrivederci" (arrividerci)
01/23/2017 at 12:44, STARS: 0
It’s weird - clearly we all wish we knew what the future holds, if I knew our incomes would increase for sure, I’d probably be more keen on the stretch. They should, but that’s obviously no guarantee. It’s like the time I almost bought a 911. I could’ve afforded it on my old salary at the time, but it would’ve been a bit of a stretch. Now I’m sitting here about two years later and have a salary almost $20k higher and it would’ve been easy (not to mention used 911 prices have been damn near stagnant). Such is life.
"Stapleface" (patrickgruden)
01/23/2017 at 12:44, STARS: 0
I don’t specifically know where you are, but North Carolina is my target area for moving/retirement (hopefully long before then) for sure. I’d just like to be inland enough so I wouldn’t have to worry too much about Hurricanes.
Property is cheap, and it’s a beautiful area.
"smobgirl" (smobgirl)
01/23/2017 at 12:44, STARS: 0
Previous owners “updated” the windows on my 1906 house and I would be way better off with the originals. Particularly in the summer - old houses without a/c were designed with the ability to lower the top halves for a reason!
"Arrivederci" (arrividerci)
01/23/2017 at 12:45, STARS: 0
Nice! That’s great you’ve gotten that equity. The most I read responses and logic, I’m thinking that may be the way to go - if we can build equity from both the shorter 15 year term as well as get a bump in value, that would be amazing.
"Arrivederci" (arrividerci)
01/23/2017 at 12:46, STARS: 0
10-year note! Badass! I tried hard to see if I could make the numbers work on that, but couldn’t quite do it. We’d be down to about $150k range, which doesn’t buy too much around here.
"Arrivederci" (arrividerci)
01/23/2017 at 12:46, STARS: 0
Yeah, our definition of fixer is going to be “needs paint, updated flooring and maybe appliances”.
"Arrivederci" (arrividerci)
01/23/2017 at 12:47, STARS: 0
We’re in Greensboro.
"Arrivederci" (arrividerci)
01/23/2017 at 12:48, STARS: 0
Good call - even the starter homes would be at least 3 bedroom. We’re in a townhouse that we rent now and need at least this much space for all of our junk. :)
"Arrivederci" (arrividerci)
01/23/2017 at 12:48, STARS: 0
Great advice - thank you.
"Arrivederci" (arrividerci)
01/23/2017 at 12:49, STARS: 1
Great advice - right with my reasoning for the smaller home.
"smobgirl" (smobgirl)
01/23/2017 at 12:49, STARS: 0
I have a starter that I bought at the bottom of the crash. It made more sense as a single woman, but my plan was (and still is) to hold onto it as a rental property if/when the time comes to move.
"TheRealBicycleBuck" (therealbicyclebuck)
01/23/2017 at 12:50, STARS: 1
Water is a big issue down here in Louisiana. While I won’t offer a lot of advice on financing, I will encourage you to be very observant about the drainage. Deep ditches means lots of water which may mean potential flooding, even if you aren’t in a flood zone. One couch stuck in a regional drain culvert can ruin everyone’s day (ask me how I know). Avoid houses that are at the bottom of the hill or are at the bottom of the local drainage. If the driveway is downhill into the garage, skip that one and find another. On the lot level, pay attention to the roof drainage and where it falls. A lot of houses have two roof sections that form a hip that drains near the front door. Avoid that. Look for evidence of water splashing onto the brick or siding. That’s bad. They may have had the house power-washed, but there’s always some evidence left behind. If it’s a brick house that’s slab-on-grade, look for spots where the soil is close to the weep holes. This usually happens when enthusiastic homeowners or landscapers build beds too close and too high. This can funnel water into the house, but it also provides convenient access to other critters like termites. Watch for areas where mold or lichen is growing on the house. That’s a sign of low light and high moisture. Again, that’s a bad thing for the house. Look for gutters that are pulling away from the house, whether along the facia board or the downspouts. Those are places where there was debris built up and water was sitting in the gutters. Overflows can lead to rot. Make sure all gutters are pointing away from the house and have proper drainage. A french drain around the house is a good thing. If it has a basement, look for evidence of seepage. That’s another indicator of poor drainage.
If you haven’t guessed by now, water and houses don’t mix well.
"Arrivederci" (arrividerci)
01/23/2017 at 12:52, STARS: 0
Good advice for sure - I’ve bought a home before, so I have that little experience. From it, I do have all the fun tools necessary to keep a home running (mower, leafblower, chainsaw, table saw, etc).
We’re aware that utilities will go up and are hyper aware of insurance and taxes. The city we’re moving into has a much higher tax rate from where I owned my last house (taxes there were sooooo low!).
We will be putting at least 20% down to avoid PMI - I made that mistake the first time and hated seeing a fair bit of money going to nothing.
"ttyymmnn" (ttyymmnn)
01/23/2017 at 12:53, STARS: 1
I don’t think it would be unfair at all. It’s her job. Who knows? Maybe you’ll find something in the middle.
As a parent, though, I would reinforce what others have said about schools. We have an Austin address, but we live in the county and attend schools in a suburban district which is significantly better than the Austin schools. Our home is also about 35 years old, not a cookie cutter, and the neighborhood has sidewalks and parks nearby. Many newer developments have neither. We both came from older neighborhoods in Norfolk (yes, VA), and, as silly as it may sound, sidewalks were a requirement for us.
"Arrivederci" (arrividerci)
01/23/2017 at 12:53, STARS: 0
Great advice - thank you!
"Stapleface" (patrickgruden)
01/23/2017 at 12:53, STARS: 0
A million times this. One of the reasons I hate the windows in my house right now. I want double hung so badly. Since I have four dogs, I can’t open my windows but a couple inches (one flying beagle taught me this wasn’t smart). If I could lower from the top, I’d have them open all summer long (provided there was no rain). I try not to use my central AC because I’m cheap.
"Mid Engine" (jdlogan2006)
01/23/2017 at 12:56, STARS: 1
Be glad you’re not in the Seattle area, the housing market is insane. Bought my 2500 sq ft house two years ago for $400k, it’s now worth $540k. And that’s without all the work I chose to put into it... houses don’t last a week in this market.
When I bought the house I was single, now that I’m married (again) we’re itching to get out of the ‘burbs. I can’t stand having neighbors basically stacked up on top of each other, and the young families with the screaming kids, etc.. I’m not the old man yelling about his lawn or clouds, but I would much prefer a few acres and some privacy. I have a very strong need for a big assed shop with multiple lifts, because cars. Since I bought “low” in an area with great schools I can sell really easily and profit, we’ll likely find a parcel of land at some point this year.
"Highlander-Datsuns are Forever" (jamesbowland)
01/23/2017 at 12:57, STARS: 1
Our most recent house was livable when we moved in but it needed a lot of work. I’m in $15k or so already and still haven’t finished the flooring on the main floor or redone the upstaris bathroom. We are probably going to leave the kitchen as-is so I can afford to send my kids to college.
"Arrivederci" (arrividerci)
01/23/2017 at 12:59, STARS: 0
Actually was having a discussion with a co-worker re:Seattle the other day - I don’t know if it’s true, but he said there’s something like only 80 houses for sale in the entire city under $500k. We’d have to live out in the boonies there.
"shop-teacher" (shop-teacher)
01/23/2017 at 12:59, STARS: 1
As someone who bought a cheap house that we intend to stay forever in, I wish I had spent a bit more on something that didn’t need so much work. Even doing most of the work myself, it’s costing me a damn fortune. Also, now that I’ve got kids, finding time to work on the place has become very difficult.
Kudos to you for thinking long term, and not buying as much house as you can get financed for. We never even asked how much we qualified for, and our mortgage broker wanted to hug us for that.
"Arrivederci" (arrividerci)
01/23/2017 at 13:00, STARS: 0
My wife desperately wants the fancy kitchen. I’m trying to temper her expectations :).
"Scott" (merl3noir)
01/23/2017 at 13:01, STARS: 1
Sounds like you have a pretty good idea of what is involved, but at least it is there for others that might not know these things. I’ve known too many people that ended up house poor, because they bank said they could afford a certain amount and that’s what they looked for.
"Arrivederci" (arrividerci)
01/23/2017 at 13:04, STARS: 1
Good thoughts on the idea of a fixer-upper - the most work we’d probably be willing to tackle would be paint, flooring and maybe a small bath remodel or something. Nothing too major.
"Arrivederci" (arrividerci)
01/23/2017 at 13:05, STARS: 0
Agreed - the bank says we can afford a lot more than we think we can.
"Mid Engine" (jdlogan2006)
01/23/2017 at 13:06, STARS: 0
I’m not aware of ANY houses under $500k in decent neighborhoods (thanks Amazon). As you migrate south of Seattle (Pierce County) you can find affordable real estate, but there are crime issues that you have to be willing to tolerate. The Puget Sound area was not ready for the influx of high tech workers and the highways are parking lots, while the housing prices go up with no end in sight. As I mentioned earlier, glad I bought where, and when, I did.
"Meatcoma" (mastapoof)
01/23/2017 at 13:08, STARS: 0
I’m in the midwest, dollars go much further. We were looking in the 150k range of houses and our house wasn’t in the city we were looking in but like 15 min away, they were asking 105k and we offered 89k and they took it. We were completely surprised and I look back on that to this day thinking wtf... County estimates it at 146k right now without knowing that I’ve put in heated tile floors in 2 bathrooms and hardwood throughout. I’d rather not pay taxes on that. Maybe I’ll inform them when I’m within a few years of selling.
Wife wants a houseboat in san diego after the house is paid off. She’s quirky but I can handle that. Hard to work on my cars on a houseboat I think.
"Pistol Whipped Cream" (heynickhere)
01/23/2017 at 13:22, STARS: 0
Looking back I would have liked to do a 15 year term but the 30 was nice for now so we could pay off other stuff. Next house will be a 15 year for sure.
"Jack Does Cars" (jackdoescars)
01/23/2017 at 13:40, STARS: 0
Greensboro is nice. I bought my V70 at Foreign Accents. I’ve noticed Greensboro is a lot cheaper than where I live in Raleigh.
UNCG is on my shortlist for colleges.
"Land_Yacht_225" (nadenator)
01/23/2017 at 13:51, STARS: 0
Your idea of a 15 year quick equity plan is good, but hanging around for 10 years is probably a bit unnecessary. When we moved to Durham two years ago, we were taken to the cleaners on our house in Wisconsin because the last houses to recover from a market crash are in the 4,000+ square foot segment. So between a trashed value, and home equity line of credit, we had nothing for a down payment. So my dad, for the first time in his life, used his veteran status for a VA loan and we bought a much smaller (2,500 sq ft) new construction house in what I would call a mid-tier development (no cookie-cutter, lots owned by several different builders who left most of the natural foliage in place for privacy, common design elements but no two houses are alike) which was a new, low cost expansion of a well known golf-course community. Conservatively, the value of our house has gone up $35,000 in the past two years and we’re looking to put it on the market and move back up to a more appropriately sized house in about 3-4 months.
Believe it or not, if you’re looking to build quick equity, a short stint in a house farm in the right location is your best bet. My cousin lives in Holly Springs, and she has friends who have built 4 houses in the last 10 years because new developments are springing up like crazy as the population of Raleigh commuters explodes. And they net about $20-30k every time. Believe it or not, there is value in being the person to wait for the house to be built. Most people don’t have the patience for that and want something turn key.
My advice is to find a neighborhood with good predicted growth and build a model that prices in your desired range FULLY LOADED (watch HGTV, nobody wants a house without crown molding) then sit on it for a few years while the neighborhood is finished. Then jump out into something that you actually plan on staying in.
"haveacarortwoorthree2" (haveacarortwoorthree2)
01/23/2017 at 14:06, STARS: 1
Bought starter home even though we could’ve splurged on a much nicer one. Stayed in it 6 years, used “splurge” money to instead pay off all student loans, then moved to substantially larger “forever” home (which we then could pay off early because no other significant debt). Would do again 10/10 times. I liked having the flexibility to not be house poor — I wasn’t stuck in a crappy job just for the paycheck, we had the flexibility to move when we wanted, didn’t have to worry about housing prices crashing if we bought a house close to our upper limit, etc.
"MrH4242" (mrh4242)
01/23/2017 at 14:16, STARS: 1
Go cheaper for sure. I spent just a bit under $200k in Ohio on a starter home years ago. Getting married soon, and we’re starting to look into potentially building a home. The numbers make it really really hard to justify. We’d rather live in our current place for awhile, save, travel more, etc, and we have the cash available to do so by staying put.
"Chan - Mid-engine with cabin fever" (superchan7)
01/23/2017 at 14:22, STARS: 1
There are various schools of thought:
1) Buy the “better” house, i.e. the one that is more likely to appeal to a wider market in the long term and will appreciate
2) Buy the house that is either the one you desire or the one that can be made into what you desire, which is the “forever home” mindset
Since you seem to be educated on the technicalities for both philosophies, it’s probably more of a personal question for you and your wife—there is no right or wrong.
But I can say this: Do most of your planned home improvements before having kids. Ideally, even spend a few months enjoying your mostly-improved (it can never be complete, I’ve learned) house before having kids.
"ZHP Sparky, the 5th" (e30s2k)
01/23/2017 at 14:31, STARS: 1
We just bought our first home about 3 months ago. We too were pre-approved for quite a bit more than we were willing to spend. We stuck to our original budget, but to the higher end – mostly because we knew it would mean we’d get in to a house that is a bit nicer and we could realistically work with for 10+ years. We were also looking at houses that were fixer-uppers or “could” get us to where we need at some point – but oh god are we glad that we didn’t go too far down that path. Home improvements are very expensive, there’s a lot of permits etc. involved, and owning a home is always more work than you imagine at first…so it could end up on the backburner forever. We have a friend who bought an old house going through earthquake retrofitting, putting in new windows etc on an old house – holy crap that stuff is expensive. Also, really pays to get a good inspection done by an inspector that comes highly recommended, and use it to leverage your offer if you can. We discovered some flooding in our crawl space in our otherwise pristine house – even the sellers were surprised to hear about it…so make sure you’re not overlooking stuff thinking “oh this house looks great!” and keep your head straight as you go through the buying process. Congrats on getting to where you’re at, home ownership at the end of the day is great – and it feels amazing paying yourself instead of throwing away money in rent, adding value to your asset, etc. Good luck on getting through the process.
"davesaddiction @ opposite-lock.com" (davesaddiction)
01/23/2017 at 14:44, STARS: 1
I would limit yourself to what you can afford with a 15 year fixed mortgage.
What do you value more: a big, fancy home, or the freedom and peace of mind that will come with being completely free of debt?
"Tapas" (tapas)
01/23/2017 at 14:47, STARS: 1
This ^
Parts of Houston get flooded every other year and the areas underwater in the news sure as shit aren’t random. I don’t know what it’s like in your city, but it’s worth looking into.
Get a 100 year flood map and 500 year flood map of the city. (It will tell you which areas can be affected by floods that are as rare as once in 100 years and once in 500 years.)
This will also affect your home insurance rates and the coverages you will need. (You gotta buy flood insurance if you’re in certain zones.)
It can be hard to find something that’s reasonable, doest flood, is in the right neighbourhood, schooling district, blah blah blah. But at the very least, go for something that is built a few inches above normal.
"Arrivederci" (arrividerci)
01/23/2017 at 15:20, STARS: 1
Having made mistakes in my past - the latter, oh so much the latter.
"Arrivederci" (arrividerci)
01/23/2017 at 15:20, STARS: 0
Great advice - thank you!
"Arrivederci" (arrividerci)
01/23/2017 at 15:22, STARS: 0
Agree massively on your last point - while we don’t have kids yet, I know how much of a time crunch they can be. If an improvement isn’t done before they arrive, it probably isn’t getting done.
"TheRealBicycleBuck" (therealbicyclebuck)
01/23/2017 at 15:22, STARS: 0
When my house flooded, I was living on the NW side of Houston in Cypress. Hello, Tropical Storm Allison! The cause of our local flood was the aforementioned couch in the primary culvert draining out neighborhood.
"TheRealBicycleBuck" (therealbicyclebuck)
01/23/2017 at 15:22, STARS: 0
When my house flooded, I was living on the NW side of Houston in Cypress. Hello, Tropical Storm Allison! The cause of our local flood was the aforementioned couch in the primary culvert draining out neighborhood.
"Arrivederci" (arrividerci)
01/23/2017 at 15:22, STARS: 0
The more I consider it, the more I think I’m leaning this way.
"Arrivederci" (arrividerci)
01/23/2017 at 15:23, STARS: 0
Great advice and feedback from your experience - thank you!
"haveacarortwoorthree2" (haveacarortwoorthree2)
01/23/2017 at 15:47, STARS: 1
BTW, if your wife is anything like mine, a “forever” home probably means about 15 years anyway! My wife has been agitating about moving for a couple of years now, but moving from our 1600 sq.ft. home with one kid was bad enough. Moving from our current home with three kids is a non-starter for me.
"Under_Score" (tomtheatum)
01/23/2017 at 15:52, STARS: 0
This. All of the schools in my district are 9's according to the school thing on Zillow, and my house has jumped over 50% in value since my parents bought it brand new nearly 20 years ago.
"AbsintheMinded: NeonHeatDreams" (absintheminded)
01/23/2017 at 16:07, STARS: 1
It wasn’t meant as a humble-brag. Rereading it now makes me think it did. It was simply a rare moment where the stars aligned and my wonderful wife made the decision to stop paying rent and just buy a house.
I can definitely recommend getting a house that might need some work though, with the caveat that you have both the time and desire to work on a home. It takes a ton of time, but you learn SO much. Kinda like getting an old beater of a car and getting it back into running condition. Plus, if you do it right and in the right area, you can make a decent sum. Additionally, should you sell it after two+ years, you can sell it without a tax penalty under the Homestead tax exemption. A win win
"AbsintheMinded: NeonHeatDreams" (absintheminded)
01/23/2017 at 16:09, STARS: 0
Additionally, check out hudhomestore.com should you want to get something like we did. Great deals can be had, you just have to understand that the homes will most likely need work, and that work is normally disclosed on the inspection paperwork but you will definitely want to get it professionally inspected.
"Arrivederci" (arrividerci)
01/23/2017 at 16:12, STARS: 0
Didn’t consider it a humble brag at all - I’d love it if we could have that same set of circumstances, but given the market around here, it’s been posting pretty minimal gains year over year. And thanks for posting about the Homestead Act - I didn’t even know that was a thing.
"davesaddiction @ opposite-lock.com" (davesaddiction)
01/23/2017 at 17:23, STARS: 1
Yup. My wife and I should be debt free at some point this year, and I’m going to work very hard to keep it that way for the rest of our lives.
"Tapas" (tapas)
01/23/2017 at 21:42, STARS: 0
That sucks :( flood planes are a bitch
"Steve is equipped with Electronic Fool Injection" (itsalwayssteve)
01/24/2017 at 08:42, STARS: 0
$200K will buy a lot of house in the Triad.
"Arrivederci" (arrividerci)
01/24/2017 at 08:56, STARS: 0
It can if you buy in the suburbs around the city, but my wife only wants to be in the city. Within the city, it will go far in undesirable areas, mostly southeast. My only requirement is a garage, beyond that, I really don’t care a whole lot, but in the older neighborhoods she likes, the houses at this pricepoint generally don’t have garages, though you may find a carport.