Oppo home owners, I have questions

"Sampsonite24-Earth's Least Likeliest Hero" (sampsonite24)
08/10/2016 at 14:34 • Filed to: None

My wife and I are looking to move out of our house due to the increase in crime in our town and 2 S.W.A.T situations and a police chase that drove through our front yard in the past month. We have found houses in a town south of us that we like and could afford but we are completely new at this and really have no idea where to start. So home owners of oppo what do we do? We also aren’t opposed to renting if it means getting out of our current town faster but would prefer to buy a home.

Mexico Blue 918 for your time and advice

DISCUSSION (34)

OPPOsaurus WRX > Sampsonite24-Earth's Least Likeliest Hero
08/10/2016 at 14:38

talk to a realtor and a bank or 2. you should have a realtor before going to the house cuz the selling realtor can try to claim you as theirs which is a dumb thing they can do.

Dave the car guy , still here > Sampsonite24-Earth's Least Likeliest Hero
08/10/2016 at 14:46

Consider the fact that if your city is getting worse will the housing value drop in the future. The other consideration is what kind of renters would you get, is it worth the risk? My fear would be having a home turn into a crack house and need gutted for a restoration after a drug bust.

MontegoMan562 is a Capri RS Owner > Sampsonite24-Earth's Least Likeliest Hero
08/10/2016 at 14:47

Do you own or rent your current home?

If own: contact realtor ASAP to get it listed. They’ll also tell you if there’s anything you should adjust before listing it for sale.

If rent: make sure you don’t have a penalty to break lease and get out of town.

As for buying a lot of realtors will knock off a percentage point of their commission if you sell and buy through the same one. That means sell current place and buy new place with the same realtor.

Now, you definitely need to get in touch with whoever will be your lender. Start shopping for the best rates you can pull with your credit score and make sure it’s a fixed mortgage. If you think you might be able to afford a 15 year mortgage don’t do it. Get the 30 year and pay extra when you can if you want it paid down more. That way when the roof leaks or a car breaks down you’re not over-committed in monthly costs.

If you’re comment about renting was about renting out current place, I would highly encourage you to just sell it. Even at a loss. In the area you’re describing you’ll probably get crap tenants that won’t keep it in good shape and you’ll be dumping money into it and not even living in it and if crime is going up the value will continue dropping. Get out of it now.

E92M3 > Sampsonite24-Earth's Least Likeliest Hero
08/10/2016 at 14:47

Best thing to do is to contact a realtor that knows the area. You won’t have to pay them anything, seller pays the commission assuming you buy something. You want a realtors expertise, someone who knows what part of town is in demand, which school system is the best, etc. Even if you don’t have kids yet, always buy in a good school district. Property values grow more in those areas. Should you one day decide to sell or rent it out, it will happen much faster if buyers want to be in that district. Not to mention a realtor can gauge how desperate the sellers are by talking with their realtor. My house was on the market for almost a year when I bought. The sellers had an offer the first week, but rejected it thinking they could get more. 6 months went by before they got another offer. Then that one fell thru. By the time I came along they were ready to get rid of it, and I bought if for $50k less than the first offer they received. They had also done some upgrades in that time period. Ultimately they were tired of paying $500 a month in utilities, and maintenance, and had already moved out of state. I wouldn’t have been able to find out that info by myself.

jvirgs drives a Subaru > Sampsonite24-Earth's Least Likeliest Hero
08/10/2016 at 14:49

I think Lifehacker posted something about this the other day.

Galileo Humpkins (aka MC Clap Yo Handz) > Sampsonite24-Earth's Least Likeliest Hero
08/10/2016 at 14:50

Definitely get a realtor first. A lot of them will help you choose a bank/lender. Ask around, anyone you know who might know a realtor, people at work you know who own, etc. Finding the right realtor is important.

Assuming all goes to plan, don’t expect this to be nearly as quick as just ending your current lease and signing a new one. From first showing to closing on our place (a few months ago) the total time window was about 9 weeks. Most of that was because of the bank, our process was very tedious as our financial situation is more complex.

Justin Hughes > Sampsonite24-Earth's Least Likeliest Hero
08/10/2016 at 14:50

What they said - find a good realtor. They can help. We ended up snagging a six month rental on the house we live in now, and locked in at a purchase price at the time we moved in. This past spring we managed to buy the place at our locked in price (actually slightly less due to minor issues we found with the house), and home values in the area are skyrocketing thanks to a brand new school in town.

Different situation for you, I know, but if you’re not ready to buy right now, maybe a short term rental and option to buy later would work for you.

Sampsonite24-Earth's Least Likeliest Hero > MontegoMan562 is a Capri RS Owner
08/10/2016 at 14:52

Right now we are living in my in laws old house as they moved the year my wife and I got married. My renting comment was more along the route of renting to own a home

MontegoMan562 is a Capri RS Owner > Sampsonite24-Earth's Least Likeliest Hero
08/10/2016 at 14:55

Ahh, so it’s there’s to sell or continue renting out then.

Personally I lean on the buy side of things rather than rent. Same policy I have about buying as opposed to leasing cars. If I’m putting money into something I want it to be an investment and be able to get money OUT if I want to.

It all depends on what you can afford/get approved for though.

So to sum up then, find a lender (tons of mortgage options out there these days don’t be afraid to call a smaller bank or credit union to try and get a good rate) and then try and find a realtor. Zillow even has Realtor reviews/ratings these days.

Sampsonite24-Earth's Least Likeliest Hero > Dave the car guy , still here
08/10/2016 at 14:55

That’s no an issue. My in laws own the home we live in now and when we move they plan on just selling the thing

ADabOfOppo; Gone Plaid (Instructables Can Be Confusable) > Sampsonite24-Earth's Least Likeliest Hero
08/10/2016 at 14:56

Find a good Realtor. Ask cow-orkers/family/friends you trust for recommendations. You can invite the prospective candidates and ‘interview’ them. Nothing is binding unless you sign a contract, so ignore the pressure sales and find someone you like. You will need to share very personal financial details with this person, so you need to like them for it to work out.

Talk to your bank. Talk to your friends’ bank(s). Talk to any other bank. Most can give you a fair estimate of what they will approve you for without needing to pull your credit info. If the bank says they need to run your credit just for preliminary approval, then you probably don’t want to work with them.

Your Realtor will also know of other means for which to apply for a mortgage. There are FHA loan if you are moving to a rural area. Veterans can get mortgages through USAA I think.

Depending on the housing market in the area you want to move to, renting might not be the best choice. Often times you can have lower mortgage payments then rent, which is a way better use of money since you should be building equity. Rent is never going to do that for you.

If you “own” your current house, you might be able to rent it out and still buy another property. That takes quite a lot of savings before most banks will approve it, but it can be a source of income after a while as well.

Sampsonite24-Earth's Least Likeliest Hero > MontegoMan562 is a Capri RS Owner
08/10/2016 at 14:57

Yeah my in laws are just talking about selling the house once we move out and I’ll look into zillows realtor stuff. Thanks :)

Steve in Manhattan > Sampsonite24-Earth's Least Likeliest Hero
08/10/2016 at 15:00

I am a lawyer and former appraiser and real estate agent. GET A HOME INSPECTION. Find the best one in your area and find out what you're up against. Even in a new home, the builder may have done some things wrong.

Rock Bottom > Sampsonite24-Earth's Least Likeliest Hero
08/10/2016 at 15:01

Contact a realtor. Ask people in your area that may have used one recently if they can recommend a good one (there are some bad ones). A good realtor will know what the house value trends are in neighborhoods in your price range, and coupled with your desires (size, garage, schools, etc) they should be able to find several matches for you to choose from. Don’t rush things, if you have a place to live for now. Take your time until the right house pops up.

Beware, some realtors may try to pressure you into buying a house that one of their realtor friends are listing. Resist the pressure to buy anything unless you love the house. Also, they should be able to show you the prices of houses like yours in the area that sold. A good realtor will then be able to explain any differences in those values and the value of the house you’re looking at. It’s a good way to gauge if the seller is out of their mind with the asking price.

Mostly, just don’t rush it. This is the biggest purchase of your life, you better be damn pleased with it! Drive the neighborhood to get a feel for the condition of the other houses and front yards. Make sure you want to live with these people!

ADabOfOppo; Gone Plaid (Instructables Can Be Confusable) > MontegoMan562 is a Capri RS Owner
08/10/2016 at 15:04

Having tried and failed at being a Realtor for a while, I strongly caution against using Zillow. They make a lot of claims, but they consistently fail to update their data quickly enough.

It’s a good site for general ideas but you really need a Realtor to get the best and most recent data and figures.

Note: I am not dismissing Zillow in principal. I agree that public data should be available to the public without needing to pay for an intermediary to access it.

Roundbadge > Sampsonite24-Earth's Least Likeliest Hero
08/10/2016 at 15:05

Good advice posted already...I’ll add a few.

You’ll save significantly if you can put 20% down. If not, you can still get a mortgage, but you’ll have to pay PMI. That lasts until you get 20% equity in the property.

Don’t forget to take any property taxes and homeowner’s insurance into consideration when you’re calculating your mortgage. Just because the lender says you can afford a $250K home doesn’t mean you should jump right to that. Escrow for property taxes (if applicable) and homeowner’s insurance will likely pump up your mortgage payment more than you expected.

People LOVE to beat the drum for the 15-year mortgage, but I fully endorse MontegoMan562’s suggestion of going for the 30-year and paying additional against the principal. DO BE AWARE that some mortgages and loans are written with a penalty for pre-payment, so ask your lender if you’ll be penalized for paying ahead.

CobraJoe > Sampsonite24-Earth's Least Likeliest Hero
08/10/2016 at 15:09

Owning a home is more expensive than renting, and not just in the mortgage. (Maybe if you’re renting a house it’s closer to home ownership costs than an apartment) Only trying to bring that point up, it really surprised me when I first bought a house.

Be sure to get it inspected, there are some things you can request the owner to fix before purchasing and there are some things you could reduce the price for, but the real benefit would be learning about a cracked foundation or water problem long before you’d have to pay to fix it.

Make sure you’re ok with the place for roughly 10 years minimum. You’ll be paying a lot of interest on the mortgage in the early years, so you won’t have any of the pricipal paid off if you wanted to sell it in 5 years, and that means there’s very little money to put towards the next house you’d want to buy. That means you should have a rough plan ahead for the next 10ish years. Will you hate your commute for those 10 years? Will you have kids? Will they need rooms and where will they go to school? Do you do your own car repairs? Is the garage big enough? Is there a decent community? Restaraunts? Grocery shopping?

Plus, expect it to take 1-2 months to move in AFTER you find your house and sign the contract to buy it. That’s as fast as paperwork can travel, and that’s if the house you want is on the market at the time. It took us around 6 months to sell our house and buy a new one.

MontegoMan562 is a Capri RS Owner > ADabOfOppo; Gone Plaid (Instructables Can Be Confusable)
08/10/2016 at 15:11

Oh Zillow’s terrible for having up-to-date listings. Absolutely terrible, if you won’t commit to that I will haha. I only recommended to look in there for Realtor Ratings because people can review their Realtor experience.

Nah, you gotta get into the MLS if you want real-time trustworthy info.

Future next gen S2000 owner > Sampsonite24-Earth's Least Likeliest Hero
08/10/2016 at 15:13

Don’t rent to own a home. Rent or buy.

Talk to your relatives about their realtors, talk to a bank. Don’t buy for the max amount the bank will lend you. Figure out what you are comfortable paying, then back out taxes and insurance. That will leave you with a reasonable monthly payment you can extrapolate into your house budget.

Make a list of needs and wants. Stick to it. Don’t forget to figure out running costs. Newer homes will be cheaper to run than older homes.

You need to be honest with yourself about your budget. Things break. Hail storms happen and trees fall on the roof. Leave yourself some breathing room. Don’t fall into the trap of, well this is a stretch now but in the future it will be easy to swing the payment.

Budget, figure out how much you really enjoy eating out. Figure out where the fat is in your monthly budget, what can be cut, what can’t.

Did I say make a budget, an actual verified with receipts budget. Figure out if you can live comfortably within a nice big house payment. Ramen only tastes good for so long.

I hate being house poor. Banks will loan you about 30% of your net pay towards a mortgage payment, this probably won’t include taxes or insurance. My mortgage payment - taxes and insurance included -is only 22% of my actual take home pay, it comes out to 12% of my net. My house isn’t as nice as my friends, but I have a motorcycle, boat and a shiny new truck in my driveway and they don’t. Needs/wants.

TL/DR: Needs/wants, budget, leave yourself breathing room.

ADabOfOppo; Gone Plaid (Instructables Can Be Confusable) > MontegoMan562 is a Capri RS Owner
08/10/2016 at 15:17

I just wanted to make sure your point was clarified.

I find that word-of-mouth works a little better than a rating website. People are crazy and you’ll have the assholes who smear their agent for not making all their crazy dreams come true, and for free.

Honestly, if you (the OP) find an agent that isn’t being recommended by people you know, ask them for referrals. Any good agent should have a few people who can vouch for them and their abilities .

Ash78, voting early and often > ADabOfOppo; Gone Plaid (Instructables Can Be Confusable)
08/10/2016 at 15:20

Ditto...values are crap, but the realtors who advertise there tend to be the most web-savvy and responsive. In my experience.

WiscoProud > Sampsonite24-Earth's Least Likeliest Hero
08/10/2016 at 15:33

They key to find a house you like, the money for a down payment, and the funding.

Finding a house you like greatly depends on how long you intend to be there. The first house my wife and I bought was on the smaller side, and while it worked we quickly began to desire more space. As a result, our current house is significantly bigger.

The money for a down payment can be tricky if you don’t have it already saved up. People throw out the 20% needed to avoid PMI, but if you don’t have it, its not a huge deal. We only put 5% down on our current house, but are doing tons of reno and plan to refinance when its done in an effort to get rid of it. For our first house I took a loan from my 401k (you pay yourself interest back) to use as a down payment. For the new house, we simply rolled our proceeds over.

For the funding I would talk with a few different banks to get a couple of preapprovals. For me, the rates were all pretty close, but that’s not always the case. For our first mortgage we used our main bank, as they gave us a reduction in interest for auto payments. For the second, we used an outside finance company. Both have worked out very well.

I will say that when you're trying to figure out what you can afford, don't forget to add real estate taxes, PMI, and home owners to your estimate. The numbers that sites like Zillow show for payments typically exclude these. Depending on where you live, they will likely add several hundred dollars per month to your payment.

MontegoMan562 is a Capri RS Owner > ADabOfOppo; Gone Plaid (Instructables Can Be Confusable)
08/10/2016 at 15:35

Great advice!

davesaddiction @ opposite-lock.com > Sampsonite24-Earth's Least Likeliest Hero
08/10/2016 at 15:36

Avoid PMI like the plague. Don’t buy more house than you can truly afford (considering insurance, utilities, maintenance). We didn’t have 20% to put down, so did 10% down, an 80% mortage (fixed!), and a 10% second mortgage. Doing it this way means a higher payment (to cover the 2nd) for a while, but worth avoiding PMI if it works for you to do it this way (make sure you understand the fine print on the 2nd).

If not ready to buy, rent and save until you are.

Sampsonite24-Earth's Least Likeliest Hero > davesaddiction @ opposite-lock.com
08/10/2016 at 15:47

What’s pmi?

davesaddiction @ opposite-lock.com > Sampsonite24-Earth's Least Likeliest Hero
08/10/2016 at 15:51

Private mortgage insurance. Our first home was an FHA loan that came with PMI, and while the idea of it all is noble, I guess (helping people get into their first home), it completely kills any equity you might build into your home. You end up pretty much just paying PMI and interest on the loan, and never eat into the principal.

nermal > davesaddiction @ opposite-lock.com
08/10/2016 at 15:58

How long ago did you buy your house with an 80/20 mortgage? From my understanding that has gone out of style.

PMI isn’t all that bad - Generally $50 - $100 / month extra, which is also tax deductible. Basically you’re paying a higher interest rate for having less than 20% down.

davesaddiction @ opposite-lock.com > nermal
08/10/2016 at 16:01

We bought in ‘07 - 80/10/10. The killer with PMI is that it pretty much negates the equity you’d be building in your house until you get 20% of your principle paid off.

nermal > davesaddiction @ opposite-lock.com
08/10/2016 at 16:09

Ahh that makes sense. You got it right before everything started crashing.

How does PMI negate equity? Lower down payment = higher risk for the bank. PMI lowers the risk for the bank. I guess you could be paying the cost of it into principal, which would lower that quicker.

davesaddiction @ opposite-lock.com > nermal
08/10/2016 at 16:27

Yup, and then refinanced at 3.125% =) We got lucky, for sure, and in a market where values didn’t plummet. Zillow says our house is worth 20% more now than it was when we bought it, whatever that’s worth - ha.

PMI just means that you build equity much, much more slowly. Early payments on a mortgage are always mostly versus interest, with a little going to principal. If that little is made littler by PMI, it just makes it that much more laborious to get equity built up.

nermal > davesaddiction @ opposite-lock.com
08/10/2016 at 16:45

I did pretty much the same thing, except mine was bought with an FHA loan and PMI. Refi’d after 2 yrs and dropped it.

davesaddiction @ opposite-lock.com > nermal
08/10/2016 at 16:51

Our first home was FHA w/ PMI, too. Sold after 3 years and got into the one we’re in now.

just-a-scratch > davesaddiction @ opposite-lock.com
08/19/2016 at 15:00

Avoid paying PMI if you can, but it’s not the end of the world.

just-a-scratch > Roundbadge
08/19/2016 at 15:10

I’m with roundbadge on the 30 year fixed rate. Sure, they have a slightly higher interest rate, but the monthly payments tend to be much less. It’s pretty common to have a loan with no early payoff/pre-payment penalties. Just watch for that. If you plan to pay more than the required minimum payment, avoid those penalties.

Paying more than the minimum monthly, especially in the early years of the loan, has a disproportionate effect on how much you’ll pay in interest, and how long until you pay off the loan. Payments in excess of the minimum typically apply that excess to the principal. Therefore, less debt is available to compound interest upon.

I’m a big fan of the fixed rate. Interest rates are low right now. If you get a fairly low interest rate and keep it, you don’t have to stress about what’s going to happen in the future. I don’t expect today’s rates to hold out for the next 15-30 years. I think they’ll go up. So, I say eliminate future risk and get a good rate now.