Thinking about buying a house - HELP!

Discussion in 'Teacher Time Out' started by MrsTeacher2Be, Jun 19, 2009.

  1. MrsTeacher2Be

    MrsTeacher2Be Companion

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    DH and I are going this afternoon to get pre-approved for a mortgage so we can start house hunting. Actually, we've already looked at a few houses, one of which we are both totally in love with. It really is fabulous - 3100+ square feet, gorgeous pool with brand new liner, 2 story, HUGE master suite, 4 bedroom, 3.5 bath, tons of storage, basement rooms (not included in square footage), central vacuum, big deck, etc. The only downside is, of course, we're not sure if we can get it financed since it is on the upper end of our budget (I think).

    I know there have been a few AtoZer's buying houses lately, and I'm totally new at this. Any advice? Anything we should be paying attention to that we may not have thought of yet?
     
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  3. dizzykates

    dizzykates Habitué

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    I would be very cautious if it's on the upper end of your budget. Banks will approve you for anything, I don't care if they say they are reformed. They approved me alone for a mortgage I could only dream of and I know full well I couldn't afford the mortgage we have without my husband.

    The house sounds lovely! Sounds like a beautiful place to live with lots of room to grow so you know you'd be there a long time which is always good. However, have you considered maintaining that much space? Do you have the time/energy/means to do that? How about the water bills for heating and filling the pool? Can you afford to run the pool if you have it?

    I don't mean to be a downer, I just know I would love such a house, but that I can't afford it without putting myself if serious financial jeopardy.
     
  4. Crzy_ArtTeacher

    Crzy_ArtTeacher Comrade

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    I bought my first home last July and some things I learned was to go by the house at different times of the day, if it's in a more urban area go around rush hour. Also, do a strict budget out before to see what you can actually afford. Things change too as you live in the house longer, things like taxes can go up.

    As mentioned above I know how much work my little home has already been, that seems like a HUGE amount of space. Consider the heating/cooling expenses that are related to a house that size.
     
  5. JustMe

    JustMe Virtuoso

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    I second this caution. We were approved for nearly half a million. How ridiculous (for us)! :eek:

    I also agree with the suggestion to consider heating and cooling not only of the home but factor in the expenses of the pool, if you do in fact choose a house with a pool. I don't have one, but you hear contradicting reports on their expenses.

    This sounds obvious, but don't buy a house without a second look. So many people do that, when on the first round you usually give a very "surface" examination of the home.

    HAVE FUN! Keep us updated.
     
  6. catnfiddle

    catnfiddle Moderator

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    We're supposed to look at houses tomorrow, but our new buyer's agent (and I recommend you find one) seems to have misheard me over the phone. I requested that our maximum be $220K and she has us looking at houses that are over that. Ah well, perhaps I'll just use this as an interview to decide if I want to work with her.
     
  7. Jem

    Jem Aficionado

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    We're planning on purchasing this summer and I just got off the phone with our realitor-great timing for this thread!

    I'm putting in our mortgage application next week, as we need two check stubs on my end for my new salary to count. We def. need it to count. We're looking at houses that are listed at about 100k over what we can afford, simply because nothing is selling for list price out here. It doesn't cost anything to throw an offer out there. So what if they're offended? Maybe they'll take it, and we'll get a great house for a great price! I have three that I'm showing my parents when they come in a week, but all add about 20 minutes to my already 70 minute commute. They are much larger for the money, though.

    This rambling does nothing to answer your question. I'm so anxious to move out of this tiny condo and into a place with a garage for Sprout that I could scream. I seriously had to CRAWL over the coffee table to get to my computer. I'm not sure how I'm going to get out of the couch cubby hole area after I write this. And I still have a Liberty full of stuff to bring in. It's SERIOUSLY time for more space.

    Oh, and we learned last night after meeting with our CPA that a house is a serious business write-off. So starting a small business is a great idea if you're looking to save some money on a house. It's complicated, but it does work out in the end.
     
  8. Hoot Owl

    Hoot Owl Aficionado

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    Offer WAY less than what they're asking, it's a buyer's market everywhere. If the asking price is $300K, offer $225. Never, never, never buy more of a house than what you can afford. You will be miserable.

    Be patient!
     
  9. GoldenPoppy

    GoldenPoppy Habitué

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    I surely hope the CPA said that the expenses associated with the portion of the house that you use for business can be deducted, not the expenses of the house itself.

    You're right in that it is complicated, both in the IRS filings and the red flags that it sets up since the deductions are so often abused. It also has serious ramifications at the time you sell the house - you have to pay capital gains on the percentage of the profit that was generated from the "business" part of the house.
     
  10. Blue

    Blue Aficionado

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    I used to run a business out of my house. The deductions really helped.
     
  11. Jem

    Jem Aficionado

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    Oh yes, deductions only on the part of the house used for the business. I'm looking for a detached garage or a basement.
     
  12. MissWull

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    I agree with the poster who said that is a HUGE amount of space. I know it must seem nice to have such space, but unless you really need it...definitely think about cleaning, maintaining, heating/cooling, all of this could drive you nuts in the long run, if you werent ready for it.
     
  13. INteacher

    INteacher Aficionado

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    No one has mentioned the most dreaded word . . . taxes. Make sure you know how much the property taxes will be before you buy anything.
     
  14. giraffe326

    giraffe326 Virtuoso

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    I purchased my home for $120K, and I was approved up to $160K by the bank. In my mind, I figured I could afford things in the 130's, with 140K being the absolute cut-off.
    I am now struggling to make ends meet. I have a 2nd job and am still broke and looking for a roommate. I don't know what I would have done if I'd have went 20K higher.
    I feel like I am starring in a remake of The Money Pit! It is one thing after another. And everything that breaks is not covered by my home warranty :mad:
    So, beware. Definitely do not get into something you can barely afford!

    My mortgage is actually $45 less than my rent was, BTW. My house is only 300 sf larger than my apartment, however my utilites have nearly tripled due to having more exterior walls. Plus, I have spent $5K in repairs since moving in on things that have broken.

    Make sure to leave a cushion!
     
  15. Peachyness

    Peachyness Virtuoso

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    I agree about having enough money for repairs!!!

    We bought a house back in April. It's a gorgeous house. Four bedrooms, beautiful Mexican tiles throughout the house, nice pool, awesome kitchen that had been completely remodeled. We bought it with visions of how cool it'll be to live there. Well, it's June and we still haven't moved in because of all of the things we need to do to the house that we didn't see at the time. We bought a short sale house and they were still living there.

    Oh, and we did offer about 20K less than what was aksed. Bank first declined and counteroffered with a higher amount! I was so crushed! We sent in another offer for 5K more, and that they will pay $5K of the closing cost. They accepted the offer the second time! So, even if you find your dream house and they decline your first offer, offer again. I think this bank was trying to get something before they gave up for a much lower amount.
     
  16. chemteach55

    chemteach55 Connoisseur

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    We were approved for 800,000 when we bought our house. My hubby and I looked at the mortgage lender and laughed. That was ludicrous. We ended up spending 150,000 on a 3,200 sq ft house with triple garage on an acre of land. We remodeled everything for another 80,000. We would now love to sell and get a smaller house as 2 of our 3 children are moving out in August. Our house is very large in terms of having to clean it. We also found that the extra storage area only means that you collect more junk.
     
  17. Jem

    Jem Aficionado

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    Have you guys used www.redfin.com? It's how we find our open houses each weekend, and it shows you what the house sold for the last few times it was on the market. That is VERY interesting. Right now a lot of sellers are taking losses. Also, if you use a redfin Realtor, they will split the closing costs with you so you actually get cash back. We're using a local Realtor because I need the in-person help at the moment, but we seriously considered it.
     
  18. MrsTeacher2Be

    MrsTeacher2Be Companion

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    Well after sitting down with DH and the checkbook, I realized we can actually afford much more house than I thought, so this one is more towards the middle of our budget.$195,000 just sounds like such a high number lol. We're definitely going to think more about the utility bills, and we found out about the taxes (really not bad at all, about $400 a year after we file homestead). IF we decide this is the house, we'll probably offer like $165,000 to start. The realtor said they're very motivated, and hinted that they might take less than asking price. They're elderly and it's just way too much house for them.

    Here's the weird thing - we went to the bank to get pre-approved yesterday. That's fairly normal, right? I mean, we need to know what our budget is before we go any further. But the folks at the bank looked at us like we were nuts when we told them why we were there. Then we find out they only do 20 year ARMs with a balloon after 3 years. Ummm... No. Thanks but no thanks. In this market, there's no way I'd go for an adjustable rate mortgage or a balloon, just too volatile. You just never know what's going to happen in life, and I'm not risking losing our house over a balloon payment. Yuck.

    Jem - I know you've got to be dying for more space! Good luck!
     
  19. MsMar

    MsMar Fanatic

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    Oh gosh, why would anyone want an ARM? I think the rates right now are back at 5 1/4 after being almost at 6 for a few weeks. We're house hunting as well and have been paying very close attention to the interest rates. And yes, getting pre-approval is a normal thing, why would they think it was odd? Definitely not the bank to go with!
     
  20. smalltowngal

    smalltowngal Multitudinous

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    I wish you the best of luck!! I'm surprised that the banks are even still offering ARMs! Crazy!! When we bought our house 3 years ago, we were pre-approved for a certain amount. We found a house that was perfect for us. We offered lower than the asking price. There was another offer on the table so we went a little higher than they did. The couple was an older couple who had health problems and wanted to get out quickly so they even paid closing costs. Right now its the perfect size; however, if we have another baby/adopt then it might be a little small.
     
  21. Peachyness

    Peachyness Virtuoso

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    We went to our credit union to be pre-approved. Later, they sent us the information regarding how much we are pre-approved for and the different loan plans we could choose from. I was so confused about the whole balloon thing. I called and kept having her to explain it. It didn't make sense and sounded so sketchy. I'm glad we went with a different bank!
     
  22. INteacher

    INteacher Aficionado

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    Holy CRAP - only $400 for propery taxes??? Man we pay that much to register our cars!!!
     
  23. smalltowngal

    smalltowngal Multitudinous

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    INteacher~that's after homesteading. Homesteading greatly reduces property taxes.
     
  24. INteacher

    INteacher Aficionado

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    We have homestead also and my property taxes are about 5 times that amount. We pay almost $3000 a year - 3600 sp ft house with 1 1/2 acres.
     
  25. MrsTeacher2Be

    MrsTeacher2Be Companion

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    WOW! That's nuts! The crazy thing is, at $400 for 3100 sq. ft on 1 1/2 acres, my county is higher than any surrounding counties. I can't imagine taxes as high as yours!
     
  26. kalli007

    kalli007 Companion

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    Whats the tax rate there? Ours is like 2.7 percent or something.....
     
  27. Jem

    Jem Aficionado

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    What is homesteading?
     
  28. Peachyness

    Peachyness Virtuoso

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    I was going to ask that too. I did a quick search, but it didn't make sense as to what you guys were saying.
     
  29. INteacher

    INteacher Aficionado

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    In our state, if you still have a mortage on your home you can recieve a discount on your taxes. Currently our taxe rate is 3.2% on the assessed value.
     
  30. dizzykates

    dizzykates Habitué

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    Wow...I would love to find a house like that for $195,000. Unbelieveable!! But very lucky for you :)
     
  31. catnfiddle

    catnfiddle Moderator

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    Agreed. We've ruled out otherwise affordable houses because the property taxes are over $3K a year.
     
  32. cMcD

    cMcD Groupie

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    Yes! Pay attention to property taxes! That's one of the main things we looked at when we were house hunting. The property taxes in Indiana are horrible. Everything is so messed up right now. I should know because we're closing on our house tomorrow (YAY!!!) and 3 days ago I get a call saying that all the exemptions fell off the house (because it is a flipped foreclosure home) in the beginning of the year. So our property taxes were going to be $3,100 for a 1661 sq. ft. home on .20 of an acre!!! We were expecting to pay around $1,200 a year. But luckily we got all that figured out, and we're looking at $1,200 again.

    Misc. advice: Make sure you factor in your mortgage insurance (if you have to get it). You have to get mortgage insurance if you put less than 20% down. Also factor in your home owners insurance on the property. Watch the interest rates. When we initally were pre-approved in April our interest rate was something like 5.75%. Our lender said that we could lock it in if the rate dropped before we purchased the home. It went down in May to 5.25% and we locked it in at that.
     
  33. INteacher

    INteacher Aficionado

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    This is what I was saying - but I guess if you don't live in a state with high property taxes it really doesn't matter. Our taxes have gone up every year :(
     
  34. Jem

    Jem Aficionado

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    Oh my good gosh. I decided to go check out the taxes on the houses we're considering at the moment... (redfin.com shows you this).

    Our current favorite? Are you ready for this? $11,000/YEAR!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

    Sheesh. Our second favorite is down at just over 2k a year.

    The one we're looking at this afternoon is at $12,000/year.

    That just can't be right. Can it??
     
  35. smalltowngal

    smalltowngal Multitudinous

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    Wow, Jem, that seems extreme!
     
  36. czacza

    czacza Multitudinous

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    Oh,yeah, it can be right...Taxes can add A LOT to your mortgage payment.
     
  37. Ima Teacher

    Ima Teacher Maven

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    My property taxes and insurance are worked into the mortgage payment. I don't have to worry about either. The mortgage company pays them automatically every year. If the amount charged is less than what I've paid in, I get a refund check. If it is more, I can either pay the difference or work it into the payment for the following year.

    Make sure that you always set aside some "oh sh*t" money because those moments ALWAYS come up!

    Shop around for mortgages, too. My original mortgage was a 30 year fixed rate at 6.5%. Two years later, I was able to refinance to a 15 year fixed rate at 4.2%, and it only increased my house payment by $100 a month.

    I know several people who had really good luck making LOW offers on houses because the seller knew they were serious about buying and not just looking. My house was originally on the market for $119,000. It didn't sell for almost a year, and they dropped it to $98,000. That's when I looked at it. The house was in good shape, but did need some work. It was older and needed several cosmetic fixes and couple of bigger repairs. I made a list of the things that had to be fixed . . . and the price to get them fixed . . . and then made an offer of $79,000. They countered with $82,000, and I took it.

    I made sure to talk to neighbors, too. They were able to give insight into local utilities, taxes, etc.
     
  38. chemteach55

    chemteach55 Connoisseur

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    In Louisiana, the first 150,000 of the appraised value of your home is homestead exempt and you pay no tax on it. We paid 159,000 for our home and it has never been revalued for tax purposes so we only pay taxes on 9,000, which was a whopping $58 for last year.
     
  39. MissWull

    MissWull Cohort

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    Oooh, I'm liking this redfin website, thanks Jem!

    On most of the houses we've looked at, the property taxes have been $3,000 to $6,000...it's ridiculous.
     
  40. MrsTeacher2Be

    MrsTeacher2Be Companion

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    Wow, you guys are making me quite excited about our low, low Mississippi taxes! :lol:
     
  41. Peachyness

    Peachyness Virtuoso

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    I think my taxes on my new house will be around 2000 a year. My house that I"m in now was lowered to around 1500. It was over 3000 when I first bought it. Luckily, it was lowered due to its value being much lower.

    I've learned that I will NEVER EVER buy a home where the ownders allowed the pets to run around in doors. We have spent many many hours scrubbing down the walls with TSP (three times) and we bleached all of the floors (at least 2 times). We also ripped out all of the carpets, which was a shame because they were new. Today, we put a heavy duty, expensive primer on the walls and floors to not only prep for the new paint, but to lock in any remaining pee pee smell. It's been horrible, but today, we had some people over and they were shocked at how nice the house smelled. It was really bad. So, never again will be buy a house with indoor pets again!
     

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