Crazy Bimmer

Within 6 months I plan to finally move our after failing to launch.

Whats the basics i need to know? How do i know what I can afford? I been playing around with the calculators and can handle putting down 10% but people say to put down at least 20%... that needed?


I also would like to do what soopa has done. Buy an older house and gut it out into something I would like. Its a better option for me anyways since most new homes are further from work than i would like. Do loans cover remodeling or should I plan to have cash on the side for that stuff?

I gave myself 6 months since I have lots to learn and dont want to rush into anything and make my head pop.

Im sure I have lots more to ask..

Whiskers

You sure you are ready for a fixer-upper???

Crazy Bimmer

How hard can it be

I dont want a place with structure damage or anything... I have done basic stuff before like dry wall, cabinets, toliets, sinks.. etc...

Whiskers

I would get something built within the last 10 years....

Crazy Bimmer

Also my credit is good.. not excellent. Would it be a bad move to have my father co-sign? Or does that not work while buying a house.

Crazy Bimmer

well im thinking of somthing under $225k. Besides townhouses i cant find anything in that range thats 10 years or newer.

Unless i want to drive an hour to get to work. Could get a place like Nickypass... his area aint bad and close to everything. But i sorta want a house.

iTimmy

A project like Adam's takes a LOT of cash and even more patience. Most mortgages will not cover remodeling costs for the first few years, i.e. you can not borrow more then the house is worth at closing. If you could come up with 20% down, just put 10% down and use the balance to start your improvements. It depends how much of a details freak you are, if your OCD like Adam then it will cost a lot(I think he's around $30k in his kitchen, and even he will admit he had to cut a few corners).

Not long ago I had a similar dream, I found a few interesting places I just don't want to tie up ALL of my free money(and more importantly time) in my house, so I am taking a break for a few years.

What I found best was to walk through as many homes as I could and take notes of what I liked and what I didn't. I would pay extra close attention at friends houses, go to open houses, look at floor plans as often as I could. If you want to check out different floor plans I like this site http://www.dreamhomesource.com entire your criteria and it will show you different floor plans that fit your criteria, even if none of them are what your looking for, you may get a good idea for your crib.

Another thing I started doing long ago, was purchase house shit when ever I felt I had the scratch to spare, I try to pick up one large item a month. Outfitting your kitchen with flatware, dinnerware, cookware, glassware, etc... can be real expensive even to get moderately nice stuff. Same goes with furniture, if you don't have much an empty house is not much fun. Its best to just save as much as possible and do what your doing, start getting ideas and create a budget of sorts so you know what lines you have to stay in.

One thing I will advice, is don't cut corners thinking you will just go back in a few years and replace what ever it is you did on the cheap - you won't, no one ever does. Even if it means doing with out for a little while make sure you do things right the first time.

Crazy Bimmer

Oh yikes, i didnt mean i want to be exactly like Adam.

No way i could afford all that hi-end stuff. Just the idea behind getting an old house and fixing it up a bit is what i want to do... buying stuff at Sears works for me

GreenMonster

Soopa's feeler thread is here:

https://acurazine.com/forums/money-investing-17/time-buy-house-whats-first-302139/

Get yourself to a bank and get pre-approved, you're going to need to know how much they are going to let you borrow, so you can figure out how much money you can spend on a house... Then start looking at houses (realtor.com, etc), or find a buyers broker that has a lot of contacts in the area you're interested in buying in. I got a referal from my cousin and used the agent she recommended...

I spent about 1/2 what the bank was going to let me borrow

Crazy Bimmer

Bingo. Great thread, thanks!

Shit scares the curry out of me

iTimmy

Street Spirit

What do you do for work, Jesal?

And obviously, the more money you can put down - the better the mortgage!

GreenMonster

Nah, it's kinda scary in the begining, but it gets fun after awhile... The search is alot more fun then dealing with the maintenance and upkeep

And if it's the money thing that's worrying you, don't let it... You Patels are surposed to be good with money

doopstr

So, who else is moving in?

Silver™

Usually works the other way for me.

moeronn

Most of the info you need seems to already be posted in Soopa's thread. Good luck.

Scrib

Try to buy new.

I assume you're looking for a maintenance free home? You could always move down this way... I could use a good mexican to help me out on the weekends.

teg_to_bike

<20% down and your paying teh PMI.

NSXNEXT

iTrader: (2)

Jesal, before you do anything........watch this......
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ric

Go to a bank or a mortgage broker, lay out your credit history, income, job security, etc, and do it honestly. Listen to what they say about what you can afford, both in terms of total capital outlay and monthly costs. Think about the implications for your lifestyle, and then formulate a plan. THe more you put down, the lower your mortage will be; it is a clear correlation. If you are young, a large mortgage is not necessarily a deterrent. (when we bought our house, we did so with 10% down; the couple that bought it did so with 100% financing.)

Then think about all of the hidden costs of a house - ongoing maintenance, furniture acquisition, etc. Dial that into your monthly budget.

There are two schools of thought that have already been laid out on this thread; some feel that new house purchase is the only way to go. BUy new, no damage, warrenty from the contractor/developer, and life is good - or - buy a fixer-upper and either live in squalor or fix it up. I tend to be of the latter school, since I prefer the quality of construction that comes with older residential construction, and the concept of fixing up a place is not very challenging for me as an architect.... it also means that, when we bought, we looked at stable neighborhoods with an established sense to them.

If you do look for a fixer-upper, your best bet is what is referred to in the realtor trade as a "grandma" house", a place lived in by someone for twenty/thirty years withouth having changed out the kitchen or bathrooms, but has maintained the basics - roofs, painting, etc. Thus, you're paying for a basically solid infrastructure that needs deep cosmetic work. The worst is to buy a place that has kitchens and baths that are adequate but not very exciting; you pay good money to then rip them out and replace them.

TXXXX

I thought the lender will require you to buy mortgage insurance if the down payment is less than 20%.

juniorbean

iTrader: (5)

Yup, it's called PMI. It sucks, is not deductable, and you have to usually fight to get it removed.

Do whatever you can to come up with 20% down. Even if you personally can only come up with 10%, get a home equity for the other 10% and mortgage 80%. Do whatever you possibly can to avoid PMI. In our first house we could only come up with 18%, so we took a home equity also to make sure we had 20% down, plus some cushion for improvements.

mamboking

There is a way to get out of this on your purchase. It is called a 80/20 loan plan. Basically you have 2 loans. One for 80% and the other for the rest.

http://www.bankrate.com/brm/news/mor...20031113a1.asp

juniorbean

iTrader: (5)

I agree with this as well. Not only is it a great way to get into your first home, but any problems are resolved by the builder within the first year... which is nice.

Additionally, it may be more money, but the odds are you'd have more time to save. Again using our first home.... we were looking at spending about as much as you are. We never thought we could afford new. We inquired about the new units anyway, and the base on them was $100k over our budget. Figured it was too much... but when you factor in that we had an additional year to save up (during construction), it really wasn't that big of a deal. We were conservative with our options, only added $30k to the base... but added nice stuff, and we were set.

Another thing about buying new is that generally you make more money. When the new homes are priced, they are usually priced for less then what you could buy in the resale market. Once the community is done, the values catch up to market value and your house appreciates quickly at first, then settles with the market. It's a lovely thing

eclipse23

Why not start with a condo or townhome to not burden yourself w/ the yardwork and all that?

It's hard enough to start with a fixer upper, even worse since it's your first place 'off the tit'.

I'd look at a 30 year old or so condo and remodel it. It's less money, less overhead and you get a feel for home ownership. You can then flip it and move into a townhome or even your own house.

Food for thought.

GreenMonster

225?? shit, I gotta move out to IL....

I was just checking online on 2 houses around the corner from me that are forsale. I like watch prices to guage what my house is worth. I've been driving past 'em 2 everyday to and from work, so my curiosity got the better of me.

One is alot nicer then mine for 400, one comparable to mine for 300... It's gotten crazy around here...

soopa

OK - First... ignore all the condo & cookie-cutter guys... they don't know what they're missing.

Second, do like Greenie/ric/etc have said and go to your bank get pre-approved. That should be your first step. Even with poor credit, you'll be able to get a loan for more than you can afford at a decent interest rate.

Next, go to a mortgage broker... a good one... and get pre-approved through him. You'll typically find them a bit more flexible in what they can offer. Most importantly, in regards to how much you should put down.

Remember, it's normal to put anywhere from 0 to 30% down. If you're looking for a fixer-upper, keep as much cash in the bank as possible... you'll need it.


Personally, I say avoid new houses. "Maintenence free" is a myth. Sure, the furnace/water heater are new... but they're relatively inexpensive if you really ever would need to replace them - IMO. Otherwise, new homes have just as many - and in some cases more - problems then older ones.

Most new "development homes" you're paying for perceived value and limiting your profit potential.

Like you said, you have some experience doing the basics (and more) around the house. Obviously your brother(s)/family do too. There's not much around the house that's difficult to tackle.

So far I've put between 40-50k cash into my place, but like you said... I spent money in a lot of areas you don't need too. If you're happy with GE appliances (and no reason not to be) then you can save a ton. My appliance budget was a good $10k more than it could have been had I just gone with a single GE drop-in range.

Also, I've spent alot of money on mistakes I made, tools I've bought, and various things I didn't need.

In reality you could do what I've done for 25k. I just had no prior experience, and was using this as my sandbox.

In the end, doing what I did, you're going to walk away with a house with a significantly higher value then you purchased it for.

$225k sounds like a good "maximum" for someone our age. I had set my limit at 275k, but ended up purchasing for only 180k. Sure, there were nicer houses I could have afforded... but I wouldn't have been able to have as much fun with them. Now I have a house, with a dirt cheap mortgage payment, thats several times nicer then the 275k houses I was finding out there.


Remember, this will be your first house, and you're not going to live there forever. Buy something you can comfortably afford, something you can dick around with, and something that will help you hone your tastes for when the time comes to buy or build the house you'll spend the rest of your life in.


Again - fixing up an old place is difficult, takes alot of time, and costs alot of money... but it's incredibly rewarding. You'll end up with something unique, not a typical "builders home" that all look the same from CA to ME. You'll also come away with alot of experience and a - if you do it right - a MASSIVE payout at the end of the day.

Crazy Bimmer

Hell no. You live in the boonies. If i wanted that i would move far west near Aurora.

Crazy Bimmer

I actually enjoy yard work but havent done much at my parents house lately since they went nuts with the landscaping and I couldnt keep up with it. But once its my own i wont mind doing it.

I figure im young and have time to spare to take care of things around the house. I could look into a condo and remodel it but i enjoy my privacy and dont want to bother anyone with my surround sound bumping at 2am.

I will look into a condo though also. Im having a hard time finding a place in a location i like for my price. Ideally I would like to stay in the 180k range if I can.. but not sure that will happen with a house. Condo.. i will have better odds.

This is why I gave myself 6 months. I need to figure out what I want and can handle.

Crazy Bimmer

EXACTLY.

I just dont want my house looking like everyone elses on the street. Old houses just seem to have more character.

Should I go to the bank now and get pre-approved even if im not looking to buy yet? I first need to fix few things on my credit report that i noticed that are wrong.. time to bash some heads.

GreenMonster

Smart move on checking your report

Yeah, goto your bank and get pre-approved. That will at least let you know how much you can borrow, so you'll know what the budget will be. You'll want to clean up your credit report before shopping around for whoever you're going to get a mortgage from...

I ending up using another place for a mortgage, but your bank is a good place to get an idea of what you're going to be looking at budget wise...

I think I got preappoved in Sept '00, started looking seriously in April 01, found a house in June 01, but had to wait till the sellers found "adequate housing" before I closed in 0ct 01... Just to give you an idea of how long I went from pre-approval to purchase.

Oh, yeah, credit report "fixes" can suck... I had to get some stuff removed recently due to me and my brother incorrectly getting wacked w/ some shit from my fathers estate. I'm so glad I've finally got that shit behind me.

Crazy Bimmer

How much work history does someone need to get pre-approved for a loan?

Or do they not care as long as you have current steady income...

Slimey

I'm sure the answer is 'it depends'. I got the loan for my first house before I was actually working...just had a letter from my employer stating that I had a job and got pre-approved for a huge loan.

Having dealt with both mortagage brokers and personal bankers, I'd go with a personal banker if you have one. No offense to those that post here, but mortgage brokers are too much like other salesmen -- just interested in the sale rather then the ultimate service.

Lister00169

I would trust a commercial personal bank than a broker. The broker is commission driven, while most personal bankers want to lock you in long-term interest loans.

Credit Unions will give you better rates, but their criteria is usually more stringent than commercial banks.

BTW, I suggest you move to Shermer, IL. "...where all the honies are top-shelf, but all the dudes are whiny pussies - except for Judd Nelson, he was fuckin' harsh"

Crazy Bimmer

Im actually thinking Streamwood IL for those who know the area.

soopa

This is why I say go to both.

I went to a large bank, my local credit union, and a mortgage broker (who, granted, was a friend of a friend).

I wasn't at all interested in going through a broker, but after comparing the offers from all... the broker gave me the better deal and the better service by far.

The broker was the only agent that (unlike lawyer, real estate, etc) was with me from start to finish.

Don't make assumptions, explore your options.

zeroday

I know what I will be missing; rediculous energy bills considering it's just me, yard/driveway/house maintenance headaches, families with annoying kids everywhere, my daily 2 hr commute to/from work. Single family homes aren't for everyone. I'm selling my SFH within the year for a condo in the city.

Nicky Pass

Do a condo or townhouse first. I was gonna buy a small "fixer upper", but it costs alot. Then you have to shovel your driveway in the winter....moe the lawn, trim the hedges, buy all of the stuff to do that. Then you'd have to buy all of the stuff to remodel the house...and get permits if its anything involved. A house is also ALOT more to furnish. You'll be like the guy in Boiler Room...a nice car, a house....but nothing in the house. I live in a coach home now, and its pretty cool....and I get my own garage. My next move is gonna be a big townhouse (1500 sq ft atleast).

Crazy Bimmer

How can you take out an home equity loan to make the 20% downpayment if you didnt get the house yet? Isnt that taking out two loans then?

zeroday

you put 10% down, get a home equity loan on the 10% for the remainder. essentially means you will have two mortgages, but with interest rates like they are, i'm not so sure it'll be cheaper than paying PMI.