Advice on Buying a House

[RedEye]

Any resources anyone would offer? I feel like good advice on buying a house is hard to find. Everyone wants a piece of the pie, and I don't know who to trust to be disinterested. I've read about the 28/36 rule, but people seem to be all over the place about what is a responsible amount of debt to carry. Anyone I do know doesn't know enough about where I live to be of help.

[westofyou]

Find the best mortgage broker in your area, choose what you want over the realtor's wants

Be prepared to live there long enough to be able to care for it

[WrongVerb]

I've bought two houses in my life.

Price range: 3x your household yearly salary is reasonable.

Get approved for your loan amount before you go shopping. That will narrow things down further.

Be sure to price any HOA fees into your overall affordability.

Both my homes were new construction, and I definitely prefer that over something with age. But that's personal preference. It was nice getting exactly what I wanted without having to worry about significant repairs or alterations.

Don't do something crazy like a teaser rate or adjustable rate. I figure if you have to do financial tricks to buy a home, then you're buying too much home.

Understand the neighborhood you're buying into. That includes traffic patterns, proximity to schools, shopping, and recreation.

Understand any HOA restrictions if there is an association.

Finally, be certain you're in it for the long haul. It's hard to get out from under a home if things go south in your life regarding job, marriage, finances, etc.

[RedEye]

Thanks, guys. We've actually got a contract on a house now, but are getting sticker shock and cold feet. The house is just five years old, so almost like new construction. The mortgage will be a 30-year fixed and we took a loan from my wife's 403b retirement account to put 10% down. Even so, paying back that loan + the PMI of not reaching 20% is going to add about $600 to our monthly payment. That's hard to stomach with all of our other expenses, so we are thinking of pulling out. I'm just wondering -- is this kind of stress what others went through?

[Sea Ray]

Any resources anyone would offer? I feel like good advice on buying a house is hard to find. Everyone wants a piece of the pie, and I don't know who to trust to be disinterested. I've read about the 28/36 rule, but people seem to be all over the place about what is a responsible amount of debt to carry. Anyone I do know doesn't know enough about where I live to be of help.

It's hard to give much advice without knowing your situation, such as what are your reasons for wanting to be a homeowner at this point in life? Do you have a family? how long do you think you'll be in the house? Do you want the privacy and control of a house?

Those questions aside, let me start with a couple lessons I learned on house #1...Make sure you put enough down to avoid mortgage insurance. I think that's 20%. Private Mortgage Insurance (PMI) is a huge ripoff. It's a fantastic deal for the insurance co and you get nothing for it.

When you close on the house, be firm that you get the house the minute you sign the papers. My first realtor told us that it was customary to put in the deal that you (the buyer) would not take occupancy until 30 days later. Well that's a great deal for the seller. He has his money and he can stay another 30 days but you're out your down payment and closing costs yet you've got to spend another month renting wherever you are.

Since the last Trump tax cut, very few people benefit from deducting mortgage interest. That incentive to buy a house is pretty well gone. Remember that you're looking at putting at least 1% of the house value into maintenance on an annual basis.

Finally my advice is not to buy a new house. You pay a healthy premium for brand new and I don't think it's worth it. There is a new street in my neighborhood and they're priced at least $100K over what the "used" houses cost and the brand new ones don't have the improvements that people might have done in owning a house for 20 yrs or so, such as built-in cabinetry, shelves etc.

[Sea Ray]

Thanks, guys. We've actually got a contract on a house now, but are getting sticker shock and cold feet. The house is just five years old, so almost like new construction. The mortgage will be a 30-year fixed and we took a loan from my wife's 403b retirement account to put 10% down. Even so, paying back that loan + the PMI of not reaching 20% is going to add about $600 to our monthly payment. That's hard to stomach with all of our other expenses, so we are thinking of pulling out. I'm just wondering -- is this kind of stress what others went through.

You're seeing how much that PMI sucks. I'd talk to your realtor about options to get out from under that. I had a neighbor who sold to a young couple that couldn't afford the down payment so they worked out a deal where they raised the price of the house high enough to cover what was needed and then money was transferred back to the buyer at closing to cover the 20% down payment.

[RedEye]

Since the last Trump tax cut, very few people benefit from deducting mortgage interest. That incentive to buy a house is pretty well gone. Remember that you're looking at putting at least 1% of the house value into maintenance on an annual basis.

We just realized this today, actually. It was like punch to the gut. I knew I didn't like the Trump tax cuts for other reasons, but this really hurts.

- - - Updated - - -


You're seeing how much that PMI sucks. I'd talk to your realtor about options to get out from under that. I had a neighbor who sold to a young couple that couldn't afford the down payment so they worked out a deal where they raised the price of the house high enough to cover what was needed and then money was transferred back to the buyer at closing to cover the 20% down payment.

Whoa. Now THAT'S creative. Is it legal?

[Sea Ray]

We just realized this today, actually. It was like punch to the gut. I knew I didn't like the Trump tax cuts for other reasons, but this really hurts.

- - - Updated - - -



Whoa. Now THAT'S creative. Is it legal?

Sure it's legal. There's no harm to anyone. You're just a little more in debt but that's your choice. No one's putting a gun to your head. It doesn't change a thing for the seller provided the realtor's commission is figured into the calculus.

[Sea Ray]

If you're just now learning about the Trump tax cut and PMi, I wish you'd started this thread sooner but let's not cry over spilled milk. Let's move forward and let's see if we can help you get into your first house! You've started the dialog. I and others will be glad to help you out from here :thumbup:

[RedEye]

If you're just now learning about the Trump tax cut and PMi, I wish you'd started this thread sooner but let's not cry over spilled milk. Let's move forward and let's see if we can help you get into your first house! You've started the dialog. I and others will be glad to help you out from here :thumbup:

Thanks. I actually did know about PMI, but for some reason I thought we wouldn't have to pay this time. We owned a house from 2007-2013 under very different circumstances, so I had a vague memory of it. I think this time around there were some deceptive financial instruments available out there early in our search that got me thinking that it didn't apply to us.

I admit I had no idea that the Trump tax cuts were so bad for home owners.

[Kinsm]

Whoa. Now THAT'S creative. Is it legal?

As long as the seller is willing to deal and the final sale price is below the mortgage lender's appraisal you can ask them to do pretty much anything.

If it's an older home, I find that cash allowances for new appliances or even a riding mower if it's a large lot are big perks to ask for. If you see a piece of furniture in the home you can always ask for it too.

I once asked a seller who was unwilling to come down an additional 5K$ on an already reduced counter price, to throw in his almost new 6K$ john deere gator and a 4K$ montezuma toolbox that I saw in his garage as a condition to buy, they agreed.

[Redsfaithful]

These are general, some will not apply to you since you already have a house picked out, but putting them out there anyway:

1. Buy in the best school district you can afford, whether you have kids or are planning to have kids or not. If/when housing ever crashes again, it doesn't hit as hard in good school districts.

2. Don't pay 3x your household salary if you can avoid it. Why leave your margin of error so low? This can eliminate the whole issue of PMI. If someone thinks they don't have 20% for a down payment, well what if they buy a house that costs half as much? 1/4th as much?

3. Just assume nobody in the transaction is looking out for your best interests, including your realtor. If someone actually does turn out to care and helps you in a real way, great! Probably they won't. Probably they would make less money by looking out for you, so it's easy to understand how that happens.

4. Buying a bad house on a good street is a decent strategy on a lot of levels.

5. Never, ever, ever do the opposite of #4 unless, like #1, you plan on living there very long term. Even then, probably don't.

6. We live in an eternal hellscape where you have to press every advantage possible, so consider buying a duplex and renting out the other half. Very, very hard for your life to completely crash down around you in such a situation, and if things go well it's a first step towards building a little bit of wealth.

7. Specific to Atlanta, really look long and hard at the HOA you're probably about to join.

8. 15 year mortgages are cool.

[cumberlandreds]

We bought a townhouse in 1994 and just recently sold it. I don't know where you live but in the DC area it is very much a sellers market. The prices have gone crazy here and we got more than we asked for our TH. If its like that in your area you may want to wait a bit and let the market cool.

As for the PMI, I don't know what the laws are now but in our case we were able to drop that after a while. As long as you have been on time with payments you can ask your lender to waive that after a while. I don't remember exactly when we did that.

Watch out for the HOA if you have one. It didn't take long before I despised our HOA. They were all too glad to take your money but they did selective enforcement of the rules and regs they set down. Plus I just didn't like being told what to do about certain things for my own home. IMO they are a waste of money and do little to really help a home owner out.

Buy a single family home! Don't do a townhouse like we did. You can't control who moves in next to you for one thing. We got some very bad neighbors next to us who grew progressively worse as time went by. HOA wouldn't do anything about them either even though they were not following many of the rules they had set down. Having bad neighbors can make your life miserable and you don't want your home to be a burden to live in. It should be a refuge and place of peace. By all means take that into consideration first when you look at the area you want to buy into.

Also make sure your monthly mortgage payment are not so much you that you can still live fairly comfortable. Ours was too much for a long time and we got ourselves into way too much debt. If not for my dad helping us out for a while we would have had to have sold our house at a loss or most likely had it foreclosed. You really don't want to go down the heavy debt path because it will affect every aspect of your life.

Once you buy just keep up on the routine maintenance. Change the filters,watch for leaks etc.... It will pay off in the end. If we hadn't have done that all along we would not have got the price that we ended up getting.

[Griffey012]

Thanks, guys. We've actually got a contract on a house now, but are getting sticker shock and cold feet. The house is just five years old, so almost like new construction. The mortgage will be a 30-year fixed and we took a loan from my wife's 403b retirement account to put 10% down. Even so, paying back that loan + the PMI of not reaching 20% is going to add about $600 to our monthly payment. That's hard to stomach with all of our other expenses, so we are thinking of pulling out. I'm just wondering -- is this kind of stress what others went through?

I purchased my first home 5 years ago, I was struggling to save money (thanks student loans) and was only about to muster a 5% down payment, and was stuck with PMI. However, I looked for a cheap house (1X-1.5X salary) in what I was confident would be an upcoming neighborhood. As a result I was able to comfortably afford a 15 year mortgage and within a bit over 3 years I was able to refinance and get rid of the PMI because I was at an 80% LTV.

My thinking was that in 5-7 years when my student loans would be paid off I could reassess and purchased a nicer home and will have built some equity. If I am happy there, then I can stay and put some money into upgrading the house. I also looked at it if I wasn't happy with the area or house, I could never get too far underwater since it was cheaper and wasn't stretching me thin, and also it would be able to be a quality rental property if need be. Turns out the area has started taken off, property values are rising, and it is in a good location. I'll be sticking around for the foreseeable future and am currently starting to do some upgrading.

I would suggest picking a home that won't stretch you thin financially, the bells and whistles are nice, but they won't be so nice when the new wears off and they offer less financial comfort.

I'd also only buy a house if the ultimate goal is debt free home ownership (I'll never touch a 30 year mortgage). I wouldn't recommend owning because you are looking for home value appreciation, to me it is an added bonus.

Just my two cents.

[Boston Red]

My only advice is to never make only your minimum mortgage payment unless you have other higher rate debt that you're trying to pay off at the same time or if you absolutely cannot afford it. $15, $20, anything, but the more the better. Particularly early in the mortgage, because you're paying so little principal in the minimum payment in the early years of your mortgage that even a little bit of extra principal makes a huge difference. I will save well over $100k in interest on my mortgage by making additional principal payments. Now, given the way the stock market has gone in the last decade, I'd actually be far ahead if I'd have taken that money and invested it, but I like the guaranteed return of paying off interest-bearing debt. I'm a bit risk-averse like that.

Also, if you're committed to the strategy above, I also disagree with the advice to avoid ARMs. I've had ARMs on both my homes, and they've worked out great. You generally get a substantially lower rate locked in for the first five years, and if you're able to (and committed to) aggressively paying down principal those first five years, the interest savings can be enormous, and it severely reduces the risk of your rate going up (because there will be less principal to charge that higher interest rate on). In the recent rate environment, we've had our rate adjust down a number of times (and will again next March), but you certainly shouldn't count on that.

Also, the new tax law isn't "bad" for homeowners (at least not in relatively low tax states like Georgia). It's just not advantageous for homeowners. Everyone gets the benefit of the higher standard deduction, so you get to take the deduction whether you actually pay mortgage interest or not. You're not going to be worse off because of it. You just (likely) won't see a mortgage interest deduction on a Schedule A.

[Sea Ray]

Also, the new tax law isn't "bad" for homeowners (at least not in relatively low tax states like Georgia). It's just not advantageous for homeowners. Everyone gets the benefit of the higher standard deduction, so you get to take the deduction whether you actually pay mortgage interest or not. You're not going to be worse off because of it. You just (likely) won't see a mortgage interest deduction on a Schedule A.


Good point. Everyone gets the benefit so only in the sense that you don't have to have a mortgage in order to enjoy the benefits do homeowners get screwed. I think the idea is to lower the number of people who have to itemize 'cause that's a hassle and often an expense of hiring an accountant. For example when I was itemizing I was deducting $18K. Since now every married couple gets $24K, I'm no longer deducting my interest but I've benefited to the tune of $6K in deductions.

[BuckeyeRed27]

Thanks, guys. We've actually got a contract on a house now, but are getting sticker shock and cold feet. The house is just five years old, so almost like new construction. The mortgage will be a 30-year fixed and we took a loan from my wife's 403b retirement account to put 10% down. Even so, paying back that loan + the PMI of not reaching 20% is going to add about $600 to our monthly payment. That's hard to stomach with all of our other expenses, so we are thinking of pulling out. I'm just wondering -- is this kind of stress what others went through?

I think you should wait. Taking retirement account loans for anything that isn’t a total emergency (this isn’t) is a bad idea and as others have said PMI is a rip off. Unless you just know you are getting a large amount of cash to do a quick refi and the housing market is going to explode in the area you are looking, but otherwise that PMI is an anchor.

Renting offers a lot of flexibility. I think you should really budget your expenses and plan on spending a year or two really saving and get a bigger down payment.

[RedEye]

Renting offers a lot of flexibility. I think you should really budget your expenses and plan on spending a year or two really saving and get a bigger down payment.

Yeah, this is a large part of my thinking as well.

The counter argument, which we've been bouncing around in our conversations, is that a house is also a home, and our kids will have a better quality of life if we are in one for the next ten years or so (they are boys, ages 10 and 5).

We have two decent paying jobs, but we lost our nest egg on our first house in the recession and haven't been able to muster much savings since then due to various other circumstances out of our control (medical bills, etc.) We now qualify as first time buyers again since we have been renting since 2013, but the market for Atlanta area, at least inside the perimeter in decent school districts, is a glut of way overpriced rentals and single family houses and townhouses beyond our reach.

So we realize that taking a hit on the 403b isn't the ideal way to do this, but it does give us the opportunity to own a home now, when it counts most for our family's experience of these years.

And so we go round and round and round...

[RedEye]

Good point. Everyone gets the benefit so only in the sense that you don't have to have a mortgage in order to enjoy the benefits do homeowners get screwed. I think the idea is to lower the number of people who have to itemize 'cause that's a hassle and often an expense of hiring an accountant. For example when I was itemizing I was deducting $18K. Since now every married couple gets $24K, I'm no longer deducting my interest but I've benefited to the tune of $6K in deductions.

Am I understanding correctly that, we a family of four, will qualify for $24K for being married and $12K for each kid to equal $48K?

Though I'm a bleeding heart liberal, I actually don't mind the loss of the additional house benefit from a philosophical point-of-view. The previous system was so skewed toward home ownership that it basically didn't make sense *not* to buy a house. I think that's part of what led so many people to reach for houses they couldn't afford. Heck, we were using our (misunderstanding of) the tax credits to talk ourselves into taking on a higher monthly payment. Now that we know that can't happen, we're rethinking that risk.

That said, what I'm upset about is that this "evening" of the tax code back away from home buying advantages hasn't yet been complemented by more regulation of the rental market. So now people like us, middle to upper-middle class, are squeezed between over-priced rentals and a housing market that no longer offers the advantages it used to. Kinda sucks, to be honest.

[BuckeyeRed27]

Yeah, this is a large part of my thinking as well.

The counter argument, which we've been bouncing around in our conversations, is that a house is also a home, and our kids will have a better quality of life if we are in one for the next ten years or so (they are boys, ages 10 and 5).

We have two decent paying jobs, but we lost our nest egg on our first house in the recession and haven't been able to muster much savings since then due to various other circumstances out of our control (medical bills, etc.) We now qualify as first time buyers again since we have been renting since 2013, but the market for Atlanta area, at least inside the perimeter in decent school districts, is a glut of way overpriced rentals and single family houses and townhouses beyond our reach.

So we realize that taking a hit on the 403b isn't the ideal way to do this, but it does give us the opportunity to own a home now, when it counts most for our family's experience of these years.

And so we go round and round and round...

I can’t tell you what makes emotional sense for you and your family. If you believe that you will get some perceived value out of home ownership that renting doesn’t provide that’s fine. But home is wherever you make it no matter what type of arrangement you have to get the keys and I don’t think what you laid out makes good financial sense. You also already bought a home at the top of a market and I’m a little afraid you are about to do it again.

[Boston Red]

I can't speak to the rental regulation (other than I suspect that I would think what you want is bad :) ), but don't let the changes to the Code fool you. The "home buying advantages" haven't been taken away. You just don't have to buy a home anymore to take advantage. Don't let it mess with your brain/decision making on buying your home.

[RedEye]

I can’t tell you what makes emotional sense for you and your family. If you believe that you will get some perceived value out of home ownership that renting doesn’t provide that’s fine. But home is wherever you make it no matter what type of arrangement you have to get the keys and I don’t think what you laid out makes good financial sense. You also already bought a home at the top of a market and I’m a little afraid you are about to do it again.

Yes, I agree with you. We have to *at least* get the monthly payment under control, or we are going to be stressed constantly about making ends meet.

I requested termination papers this morning. Back to the drawing board, in a lower price range.

You guys are confirming my own hunch about what we need to do. This is very helpful, thanks.

[Sea Ray]

Am I understanding correctly that, we a family of four, will qualify for $24K for being married and $12K for each kid to equal $48K?

Though I'm a bleeding heart liberal, I actually don't mind the loss of the additional house benefit from a philosophical point-of-view. The previous system was so skewed toward home ownership that it basically didn't make sense *not* to buy a house. I think that's part of what led so many people to reach for houses they couldn't afford. Heck, we were using our (misunderstanding of) the tax credits to talk ourselves into taking on a higher monthly payment. Now that we know that can't happen, we're rethinking that risk.

That said, what I'm upset about is that this "evening" of the tax code back away from home buying advantages hasn't yet been complemented by more regulation of the rental market. So now people like us, middle to upper-middle class, are squeezed between over-priced rentals and a housing market that no longer offers the advantages it used to. Kinda sucks, to be honest.

To my knowledge there is no standard deduction for kids. So your standard remains at $24K. They doubled the tax credit on kids from $1K to $2K.

These are all personal choices for you and your wife to make but I'm going to weigh in anyway...:)

Given what you've told me, I'd consider splurging on a house for your kids benefit. We splurge on our kids all the time. It's part of being a middle class parent. If you wait till you can afford it the kids will be in college and before long you'll still be waiting. My parents told us that if they had waited till they could afford kids they'd never have had us. We "all" go into debt to do what's best for our kids. That's just a big picture view from Sea Ray. Your mileage may vary...

[goreds2]

Not sure if I saw this advice. In my opinion, a FREE home warranty is good if the sellers grant you one. Do not renew and have to pay for one after it expires. All they do is band aid an issue if something is broken. It would take a very lot for them to totally replace a HVAC unit or kitchen appliance etc.

Try to get out of debt or reduce it the best you can.

Keep your car after it is paid off. Reduce eating out and ordering to go. That will help big time in reducing debt and allow you to pay extra on your mortgage. Get that baby paid off in 15 years!

You are the landlord now and will have to pay for any breakdowns etc. Best wishes,

[RedEye]

Given what you've told me, I'd consider splurging on a house for your kids benefit. We splurge on our kids all the time. It's part of being a middle class parent. If you wait till you can afford it the kids will be in college and before long you'll still be waiting. My parents told us that if they had waited till they could afford kids they'd never have had us. We "all" go into debt to do what's best for our kids. That's just a big picture view from Sea Ray. Your mileage may vary...

Totally. This is actually the other little voice in my head — that old “you only live once” and “your kids are only young once” argument. It’s been doing battle with the other “financial responsibility” voice for months now.

We terminated the contract today.

I agree that splurging has value in these circumstances, but we need to make a more calculated splurge. We are still in the market, but renewed our lease for 6 months on the apartment in order to look for a house in a lower range. It will be a splurge no matter what, but it doesn’t have to imperil our well-being to quite this extent.


Sent from my iPhone using Tapatalk

[TRF]

Thanks, guys. We've actually got a contract on a house now, but are getting sticker shock and cold feet. The house is just five years old, so almost like new construction. The mortgage will be a 30-year fixed and we took a loan from my wife's 403b retirement account to put 10% down. Even so, paying back that loan + the PMI of not reaching 20% is going to add about $600 to our monthly payment. That's hard to stomach with all of our other expenses, so we are thinking of pulling out. I'm just wondering -- is this kind of stress what others went through?

We did almost this exact same thing. My wife and I are employed by a college that opted out of Social Security in the 80's so we have a 403B in place of it that we can borrow against. We borrowed against mine for debt consolidation and hers for the down payment.. Our new house payment is $900 more than our old payment, which we are still paying. My son lives in the house and he makes the payment.


Not sure if I saw this advice. In my opinion, a FREE home warranty is good if the sellers grant you one. Do not renew and have to pay for one after it expires. All they do is band aid an issue if something is broken. It would take a very lot for them to totally replace a HVAC unit or kitchen appliance etc.


Completely disagree with this. The house we bought sat empty for 2 years and in the first year alone, the warranty saved me about $500 in AC repairs. we renewed it in April. 2 weeks ago, our water heater basically dumped water all through my house. It's located in a utility closet in the middle of the house. Called the warranty, and they replaced it for $75. Warranty is about $600 per year billed monthly. Totally been worth the $50 per month. And while they have repaired the AC, it's about 30 years old. Only a matter of time before it breaks to the point of replacing it, but I don't have the scratch for a completely new system.

[RedTeamGo!]

Don’t make the mistake I made and buy a 100 year old house. Constant repairs.

[klw]

Instead of a PMI, look into doing a FHA loan in which you pay a fixed amount at closing for mortgage insurance. When we bought our last house we did it. With us it would then pay for itself after three or 4 years, so it only makes sense if you are planning to be there a bit. On ours we also did a very low down payment loan, if not 0, but we both had credit scores at or above 800 so we had options. Look around and see what may be available to you.

Also get an extensive home inspection and make sure you test for radon and also get more than a basic water test- ex test for arsenic, lead, radon in the water as well. Do not assume that because it is municipal water that you can avoid this. We had one house contract we got out of because the well water had arsenic and radon. To treat it to safe levels was going to require a $14,000 system. In that state, 25% of wells would fail an arsenic test (per the state health dept page).

Having a trust worthy inspector can't be stressed enough. We had 6 house contracts fall through in 18 months a decade ago with 5 being for problems discovered in the inspection- from Asbestos, to faulty wiring, to water, to mold,to underbuilt supports, etc. It was always something different and not stuff we would have discovered on our own. With the last two we have bought, there were minor things found and the inspection report served as a guide for planning repairs and upgrades.

[Roy Tucker]

- Rainy days will happen. You don't get to choose when they occur. Be prepared. Have contingency plans. Don't overextend yourself and get house poor. Somebody will always have a nicer house than you. Get over that. The banks are willing to lend you a lot more money than you realistically can afford. Don't go nuts.

- Get a 15 year loan. You want to pay off your loan in a reasonable amount of time. 30 years is a really long time and you don't want to be making house payments into your 60's. You'll be paying for college then :-)

- Like others said, make more than you're normal payment if you can afford it.

- Depending on your family plans, buy space, not options. Options can be put in relatively cheap. Paint, wallpaper, new woodwork, trees, bushes, etc are just materials and sweat equity. Adding new rooms costs a lot.

- Speaking of which, do your own work. Get familiar with being a handyman. And be patient. Don't expect the house to be "done" in a couple of years. Landscaping takes time too. Learn how to split plants. There is a lot of reward that comes from making your house nice by the sweat of your brow.

- I second the buy a house in a good school district and a good neighborhood. I live in Mason OH and houses last on the market here less than a week and rarely even that. But we've built great schools. Selling a house here usually is a bidding war.

- Keep up with maintenance. The longer you let it go, the worse it gets.

[WildcatFan]

Don’t make the mistake I made and buy a 100 year old house. Constant repairs.

Mine's 90 years old. I've mostly learned to hate plaster.

[bucksfan2]

Just a couple of thoughts to add.

-The 15 year mortgage is a great idea. The payments aren't all that much higher because the rate is lower. If you can afford it, do it, if not, consider a refinance down the road (although rates will probably be higher.) If you stick with a 30 year mortgage, aim to make an extra payment once a year. Those tend to pay benefits down the road.

-Not a fan of borrowing against your retirement fund, but can't speak to others financial situations.

-My wife and I bought our first house right around the market crash. We got what we thought was a great deal, it kinda was, but we also stayed in the house for close to ten years. If it is a mass produced house, you will replace a lot of things. If there is carpet, you will replace carpet. A lot of homes people skimp on windows, just realize those may not be the most efficient. In our first house, we replaced the counter tops, we added a room and shower in the basement, replaced all the light fixtures, updated our master bath, and we painted every single room in the house, multiple times. Learn how to do a lot of household repairs and you will save a ton of money. Google "how to fix ........" and there is good youtube video showing you how to do something. Even on the house we built recently, there are repairs we are doing.

-I don't ever consider something to be my dream home. Things change, jobs change, what you wanted years ago no longer apply.

-School districts matter, especially for resale value.

-I never view my home as an investment, I view it as a home. Do the things you want to do to make it your home.

[Kinsm]

Don’t make the mistake I made and buy a 100 year old house. Constant repairs.

Nothing wrong with that if you build that into the offer price. I bought a Craftsman from 1924, basically have rebuilt the inside of it - but that's why I offered so little to begin with - I knew it had to be done.

Hate to break it to you all, but a lot of new homes are made cheaply too.

[dfs]

Like Roy Tucker I live in a suburban community known for it's schools. We moved here when my daughters were of middle school age and our previous community repeatedly failed to pass school levies. My girls wailed about it at the time, but thanked us once the school year started. They are in their mid-20's now and have successful classmates in all walks of life. While the home we bought was a little more pricey than the one in our old community, it's a LOT less house. Taxes were the same. Similar neighbors. Buying for school district is a good idea and a long term investment in your kids in this part of the world, just expect less house.

The home that we bought is now 60 years old, but was constructed by a fantastic builder. While the house needed cosmetic updates, I have spent FAR less in time and money maintaining this house than I did previous cookie-cutter national builder homes elsewhere. I hate to be a "get off my lawn you kids" old man, but things used to be built for permanence while now 10 years is seen as long term. I don't know HOW you find that kind of construction, but I'm glad I did.

It's become a popular punchline, but location really does matter. I'm a minute from a highway exit and I did not realize the value of that when purchasing. My commute is done the second I'm off the highway where if we had purchased further from that exit I could be looking at an extra 15-45 minutes for each leg of each commute depending on the time of day. For work and recreation I'm at that highway interchange 4 times many days. That means a home further from the exit would cost me a couple of extra hours commute a day. I enjoy time in my car, but not that much.

[North]

Don’t make the mistake I made and buy a 100 year old house. Constant repairs.

Regardless of age, it's a good idea to add an endorsement to one's homeowners policy to cover repairs to the water pipe and drain pipe between your house and the mains. Mine costs me $103. Includes a lot of other things, too...notable ones being paying for 2 years of temporary housing, and $40,000 cover costs associated with new ordnanaces and laws.

Not bad for 28 cents per day.

EDIT...a thought about property damage insurance for vehicles. It pays to check what the coverage level is for property damage. Today's cars are SO expensive. Repairs are SO expensive. Average new car cost in America passed 30k several years ago.

A typical full coverage policy may have $20,000 property damage coverage. That's not enough these days...you hit another vehicle, the repairs, the totalling...you could be sunk. Bankrupted. You can up the coverage pretty cheaply.

15471

[RedEye]

Thanks to all for the input. Very helpful to take RZ's temperature on this. Not a lot of real estate experience among my family and friends, so I find it difficult to get real advice like this from the people I can talk to in-person.

With our scars from the 2008 recession, we are scared to get back on the market at all, and especially averse to being house poor again. That's why we terminated our contract before the 10-day window was up. We may be done with this for awhile; seems like we are priced out of the places we actually want to buy in Atlanta.

[Strikes Out Looking]

We sold our house last summer after owning it for 26 years - it was someone else's turn to cut grass, rake leaves and shovel snow. Plus we wanted to get out in a buyers market. We are renting for a while before we move into an even smaller property (likely a condo) in a few years and will move even closer in to the heart of DC.

Roy had good advice about doing your own housework - but I would add also know your limitations. Not being handy, I had to use plumbers, electricians and others for various projects over the years - however, I did two things that I recommend: 1. Watch and learn what they do - over time, you will actually learn to do some of the things you never thought you could do and 2. If you use someone for a long time and grow dissatisfied with their work, move one.

Good luck, eventually you'll find that property.

[WrongVerb]

We sold our house last summer after owning it for 26 years - it was someone else's turn to cut grass, rake leaves and shovel snow. Plus we wanted to get out in a buyers market. We are renting for a while before we move into an even smaller property (likely a condo) in a few years and will move even closer in to the heart of DC.

Roy had good advice about doing your own housework - but I would add also know your limitations. Not being handy, I had to use plumbers, electricians and others for various projects over the years - however, I did two things that I recommend: 1. Watch and learn what they do - over time, you will actually learn to do some of the things you never thought you could do and 2. If you use someone for a long time and grow dissatisfied with their work, move one.

Good luck, eventually you'll find that property.

My buddy in Alexandria is looking now for a house in the 'burbs. They currently own a 2/2 condo. If they get to the point they're ready to sell, should I try to connect you two?

[BernieCarbo]

Thanks to all for the input. Very helpful to take RZ's temperature on this. Not a lot of real estate experience among my family and friends, so I find it difficult to get real advice like this from the people I can talk to in-person.

With our scars from the 2008 recession, we are scared to get back on the market at all, and especially averse to being house poor again. That's why we terminated our contract before the 10-day window was up. We may be done with this for awhile; seems like we are priced out of the places we actually want to buy in Atlanta.

There is very good information here regarding actually buying a house, but I am really glad for you that you held off. You mentioned before about the stress of it and borrowing from retirement, and no one needs that. Also, people really need to get over the idea that buying a house is part of life. It doesn't need to be. I mean, I built a house when I moved here, but it's because I needed a shop and lab built onto it, and rental properties usually look down on that stuff. But if it wasn't for that, I would have rented forever. Let the house be someone else's problem.

Also, you really have to look at the true cost of buying/owning a house. My son and DIL, who are in their mid-20's, have a life plan where they want to retire in their early 40's. After college, the first thing they did was rent a nice apartment in a new development. People said they were stupid and should buy a house as an investment, but they are not stupid. If you get right down to it, there is more to owning a house than just the mortgage. These are just a few things that come to mind:

1. Mobility. A great job or opportunity come up two hours away? Moving is a cinch, especially in a newer place where the places are in demand and the property administrator or will work with you.
2. You know exactly what it's going to cost month to month.
3. You don't have to worry about anything. Hell, my DIL called maintenance to kill a spider once (and yes, she is still very embarrassed about it).
4. You can save tens of thousands of dollars on all the crap you don't need to buy. Right off the top of my head, you don't need to buy a lawn mower, garden tractor, garden hose, rakes, shovels, ladders, bags of stuff for water treatment, flowers, patio furniture, gas grill, and a thousand other things.
5. A good place will provide all of the amenities- they have a pool, fire pit, grill station, pool table, an awesome workout center, and a party room they can reserve for free. It's all literally within a one minute walk. And because they don't have to worry about taking care of anything, they have much more time to enjoy it.
6. Again, zero maintenance. They don't have to worry about a hot water heater, broken window, upgrading the kitchen, or even spreading mulch. The grounds are impeccable, and the place is adjacent to a city park.

So, they pay $1300 a month for everything except for electricity, and they sock half of their combined income away every month and there are never any surprises. They would like to have a child in a few years, but the place is a two bedroom and will serve them fine. They are going to have a very comfortable stress-free life, and more power to them.

My gf has one of those suburban cookie cutter homes, and although it is really nice, and she has been smart with her money, she will admit that she will just break even. Every spring she has to buy a bunch of mulch, this summer the garage door broke, her water heater broke, and she is just now replacing the kitchen countertops because she knows no one would want a ca 2001 kitchen 20 years later. This doesn't even count all of the other stuff I mentioned above, as well as the time and effort maintaining the place.

So, I guess what I'm trying to say is if you really want a house, that's fine, but it's almost like it's something that's expected now, and it doesn't need to be. And although a lot of people will brag about how much money they made, a lot of people really get screwed, and even the ones that make money probably aren't including all of their Home Depot receipts. Good luck to you.

[goreds2]

https://www.daveramsey.com/blog/how-much-house-can-i-afford

How Much House Can I Afford?

[REDREAD]

Am I understanding correctly that, we a family of four, will qualify for $24K for being married and $12K for each kid to equal $48K?


Unfortunately not.. The 24k is a standard deduction for married filing jointly.
There is a deduction for dependents, but that is not as much. I don't remember the exact amount.
They do still have the child tax credit (or at least they did last year), which is a big help for parents with kids.

You have gotten good advice overall here.. But since the primary reason you are buying a home is to give your kids a better quality of life, I would not be so worried about the loan from your 403. Yea, it's not ideal but
it makes sense to have the home while the kids benefit.

Another thing to check.. this is obvious, but check on property taxes.. Overall, they have skyrocketed over the last 25 years or so. Maybe Atlanta is not so bad, but my county has gone way up.

[Sea Ray]

There is very good information here regarding actually buying a house, but I am really glad for you that you held off. You mentioned before about the stress of it and borrowing from retirement, and no one needs that. Also, people really need to get over the idea that buying a house is part of life. It doesn't need to be. I mean, I built a house when I moved here, but it's because I needed a shop and lab built onto it, and rental properties usually look down on that stuff. But if it wasn't for that, I would have rented forever. Let the house be someone else's problem.

Also, you really have to look at the true cost of buying/owning a house. My son and DIL, who are in their mid-20's, have a life plan where they want to retire in their early 40's. After college, the first thing they did was rent a nice apartment in a new development. People said they were stupid and should buy a house as an investment, but they are not stupid. If you get right down to it, there is more to owning a house than just the mortgage. These are just a few things that come to mind:

1. Mobility. A great job or opportunity come up two hours away? Moving is a cinch, especially in a newer place where the places are in demand and the property administrator or will work with you.
2. You know exactly what it's going to cost month to month.
3. You don't have to worry about anything. Hell, my DIL called maintenance to kill a spider once (and yes, she is still very embarrassed about it).
4. You can save tens of thousands of dollars on all the crap you don't need to buy. Right off the top of my head, you don't need to buy a lawn mower, garden tractor, garden hose, rakes, shovels, ladders, bags of stuff for water treatment, flowers, patio furniture, gas grill, and a thousand other things.
5. A good place will provide all of the amenities- they have a pool, fire pit, grill station, pool table, an awesome workout center, and a party room they can reserve for free. It's all literally within a one minute walk. And because they don't have to worry about taking care of anything, they have much more time to enjoy it.
6. Again, zero maintenance. They don't have to worry about a hot water heater, broken window, upgrading the kitchen, or even spreading mulch. The grounds are impeccable, and the place is adjacent to a city park.

So, they pay $1300 a month for everything except for electricity, and they sock half of their combined income away every month and there are never any surprises. They would like to have a child in a few years, but the place is a two bedroom and will serve them fine. They are going to have a very comfortable stress-free life, and more power to them.

My gf has one of those suburban cookie cutter homes, and although it is really nice, and she has been smart with her money, she will admit that she will just break even. Every spring she has to buy a bunch of mulch, this summer the garage door broke, her water heater broke, and she is just now replacing the kitchen countertops because she knows no one would want a ca 2001 kitchen 20 years later. This doesn't even count all of the other stuff I mentioned above, as well as the time and effort maintaining the place.

So, I guess what I'm trying to say is if you really want a house, that's fine, but it's almost like it's something that's expected now, and it doesn't need to be. And although a lot of people will brag about how much money they made, a lot of people really get screwed, and even the ones that make money probably aren't including all of their Home Depot receipts. Good luck to you.

I agree owning a house isn't the slam dunk it once was but let's look at your kid's situation. You can easily get a $200K mortgage plus prop taxes for $1300/mo. 30 yrs later you'll have a house that's worth at least $400K that you own free and clear. Your $1300/mo rent will likely be about $2500/mo and you're in your mid 50s. And God bless them if they have a kid and plan to retire while the kid's a teenager. Everyone I've ever known that retired young never had kids. That changes a lot.

[BernieCarbo]

I agree owning a house isn't the slam dunk it once was but let's look at your kid's situation. You can easily get a $200K mortgage plus prop taxes for $1300/mo. 30 yrs later you'll have a house that's worth at least $400K that you own free and clear. Your $1300/mo rent will likely be about $2500/mo and you're in your mid 50s. And God bless them if they have a kid and plan to retire while the kid's a teenager. Everyone I've ever known that retired young never had kids. That changes a lot.

You are ignoring what I said about the additional expenses of owning a home and things like more mobility and opportunity. How about a lawn tractor that someone buys for $500? What would that $500 be worth if it was invested instead? And that is just the tip of the iceberg. Sit down and add up every single thing you bought during the last ten years that you wouldn't have bought if you were renting and you will see what I mean (note that their rent even includes internet and cable, so that is over a grand a year right there that they are saving). And running the numbers game when talking about how much rent will cost in 30 years works both ways, because they would be making much more too.

They will easily be able to retire. They have run the numbers, and that is their goal. As for kids, they are as expensive as you want to make them.

[Sea Ray]

You are ignoring what I said about the additional expenses of owning a home and things like more mobility and opportunity. How about a lawn tractor that someone buys for $500? What would that $500 be worth if it was invested instead? And that is just the tip of the iceberg. Sit down and add up every single thing you bought during the last ten years that you wouldn't have bought if you were renting and you will see what I mean (note that their rent even includes internet and cable, so that is over a grand a year right there that they are saving). And running the numbers game when talking about how much rent will cost in 30 years works both ways, because they would be making much more too.

They will easily be able to retire. They have run the numbers, and that is their goal. As for kids, they are as expensive as you want to make them.

There's only so much space and I like to keep my posts short. I also didn't talk about paying rent from age 55-85 either. Let's be generous with maintenance on the house. Let's say you spend $10K yr on lawn services, fixing things etc. You're up to $300K. Interest on the money, say you get to $400K. You've still got to pay rent for the rest of your life.

Most folks would likely reinvest the equity in their house and move up a couple times and they'll likely end up with a really valuable house to sell as they're pricing retirement communities.

To each their own. If you're in a good situation renting; don't have low-life neighbors with whom you're sharing a wall, good landlord etc, I can see the appeal of not having maintenance worries, but in the end it's hard to justify putting equal amounts of money into rent that could be spent on mortgage if you're planning this from your late 20s.

[RedTeamGo!]

Eh, different strokes for different folks.

Renting is great for some, owning a house/mortgage is great for others.

Bernie, I respect your perspective on things, but holy smokes man, you are seriously the biggest know-it-all I’ve ever come across. No offense, as you certainly do know a lot.

[Larry Schuler]

Eh, different strokes for different folks.

Renting is great for some, owning a house/mortgage is great for others.

Bernie, I respect your perspective on things, but holy smokes man, you are seriously the biggest know-it-all I’ve ever come across. No offense, as you certainly do know a lot.

You deride him for his philanthropy yet you'd be the first one to complain if he was charging you for the definitive perspective on all things.

[BernieCarbo]

There's only so much space and I like to keep my posts short. I also didn't talk about paying rent from age 55-85 either. Let's be generous with maintenance on the house. Let's say you spend $10K yr on lawn services, fixing things etc. You're up to $300K. Interest on the money, say you get to $400K. You've still got to pay rent for the rest of your life.

Most folks would likely reinvest the equity in their house and move up a couple times and they'll likely end up with a really valuable house to sell as they're pricing retirement communities.

To each their own. If you're in a good situation renting; don't have low-life neighbors with whom you're sharing a wall, good landlord etc, I can see the appeal of not having maintenance worries, but in the end it's hard to justify putting equal amounts of money into rent that could be spent on mortgage if you're planning this from your late 20s.

If you stuck $10k into investments instead of house maintenance, you would have at least $1 million after 30 years, not $400k. That's what I mean about looking at the true cost of owning a home. If someone wants to reinvest equity and move up and have a really valuable house to sell, that's great if it works and they have run the true numbers, but my son couldn't make the numbers work.

Also, I said that my son and DIL moved into a new property with all of the amenities. The neighbors are awesome, the property manager is cool and responsive, etc. I'm not talking about renting from slumlords.

Again, all I meant in my post is to consider all the options. Don't buy a house just because it's expected of you, or for some investment. If it's something that someone really wants, go for it. But renting doesn't have to be a drag, and it's great if you want mobility and flexibility.

[BernieCarbo]

Eh, different strokes for different folks.

Renting is great for some, owning a house/mortgage is great for others.

Bernie, I respect your perspective on things, but holy smokes man, you are seriously the biggest know-it-all I’ve ever come across. No offense, as you certainly do know a lot.

I'm not a know it all, and don't take it that way. But I do know what works for me, and hate to see people dig themselves into a hole simply because they didn't think outside the box, and I see that a lot in the midwest, probably because of the inherent German conservatism. But I've been around, lived in multiple countries, saw what other people did to make do with far less than what we have, and took away a lot of little things from that to make life work for me. I didn't even go to college until I was 36 and started from nothing, so I didn't have much room for error and still wanted my family to have a happy stress free life. I pulled it off, but man, even if I suggest that a young couple get a used refrigerator instead of going into debt at HD, they act like I want to send them to a concentration camp or something. Honestly, I couldn't care less what other people do with their lives, but I see so many that are stressed out and unhappy with money and feeling guilty about not spending time with the kids and fighting all the time (hence, 50% divorce rate), I'm going to pipe up when someone says "it has to be this way and that way". It doesn't.

[Redsfaithful]

Yea, it's not ideal but
it makes sense to have the home while the kids benefit.

I wanted to chime back in to add that, while I haven't gotten there yet, I think there's no reason why couples wouldn't live much more cheaply once kids are graduated from school.

Your spending in life should look like a parabola I think, low in your 20s (putting aside college spending), highest when kids are in high school/college, and then back to lowest as you head into retirement.

I think people get into trouble when they keep spending into their 50s and 60s instead of downshifting.

Not that you want to take on debt willy nilly right now, just that yeah, I think it actually can be ok to spend a little more during this 20 year or whatever stretch. It's all a good excuse to talk about what you and your partner envision for your life after the kids and what that spending would look like.

[goreds2]

https://pics.me.me/when-millenials-buy-houses-i-bought-a-house-today-26871071.png

[North]

https://pics.me.me/when-millenials-buy-houses-i-bought-a-house-today-26871071.png

:laugh:

That deserves a trophy AND a certificate.

[SunDeck]

These threads always make me feel like I've been bumbling my way through life; I couldn't begin to calculate how much I've spent on my home each year for maintenance or whether it's been or will be a better investment than renting. I do have a couple observations:

Location is the biggest thing and buying a home means making one's best guess about the current value of location (school quality, convenience to amenities, relative crime rate, etc.) and the future value of the location. I'd say most of our equity, which is significant, has been the result of luck and good instincts.

One reason I've preferred owning is it allows me to freeze the monthly cost of owning the home in the past. In 10 years $1,300 will not buy a person nearly what it will today, yet it will pay for the exact amount of their home's square footage as it did when they purchased it.

Learn to do some work yourself but know your limitations. I'm always shocked when we learn how much it costs to have someone do something that is relatively easy. Of course, when I started out my hourly rate was $0.00. Ive since updated that to $1,200 and contractors seem cheaper :-)

The last point is about value. As I've gotten older and lived through the struggles of parenting, deaths of friends and family members, and as I've tried to understand what all this means, I have come to the conclusion that saving for retirement is abstract, not rooted in a reality of complete information. It's a crap shoot. That's not to say one shouldn't try, but my recommendation is to remember it's also important to extract as much value out of the present as is possible. But that value doesn't need to break the bank either.

[North]

What a wonderful piece of advice. I'll pass it along to young folks when/if it the subject comes up. :thumbup:

[hebroncougar]

I’m kind of in a weird place. I’m going to retire in the next 4-7 years. We sold our house at what I thought was peak last spring. We are renting a very nice house, not losing any tax break because of the huge standard deduction now. But....I don’t live renting as much as I thought I would. So now I’m debating buying, but I’d lose the fee to sell it when I retire, and move south.


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[BuckeyeRed27]

I’m kind of in a weird place. I’m going to retire in the next 4-7 years. We sold our house at what I thought was peak last spring. We are renting a very nice house, not losing any tax break because of the huge standard deduction now. But....I don’t live renting as much as I thought I would. So now I’m debating buying, but I’d lose the fee to sell it when I retire, and move south.

Sent from my iPhone using Tapatalk

What do you mean lose the fee?

[hebroncougar]

What do you mean lose the fee?

I’d have to pay someone 6% to sell it when I retire and move.


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[BuckeyeRed27]

I’d have to pay someone 6% to sell it when I retire and move.


Sent from my iPhone using Tapatalk

Oh ok. Yeah I mean with your time frame though, I don’t think the commission is that big of a factor. Potentially 7 years from now is a really long time.

[hebroncougar]

Oh ok. Yeah I mean with your time frame though, I don’t think the commission is that big of a factor. Potentially 7 years from now is a really long time.

That’s where I struggle. Is the home going to appreciate more than the $$ I’d be paying to sell it in that time frame.....I’d be looking in the 350k range. If it’s closer to 4 years. I doubt it. Even after 7.....I know homes are at an all time bubble right now.


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[Redsfaithful]

That’s where I struggle. Is the home going to appreciate more than the $$ I’d be paying to sell it in that time frame.....I’d be looking in the 350k range. If it’s closer to 4 years. I doubt it. Even after 7.....I know homes are at an all time bubble right now.


Sent from my iPhone using Tapatalk

Depends on location, there are neighborhoods where I think your downside is less. On some of these tract house cookie cutter subdivisions with average schools, I think your odds of getting hit are higher.

[SunDeck]

That’s where I struggle. Is the home going to appreciate more than the $$ I’d be paying to sell it in that time frame.....I’d be looking in the 350k range. If it’s closer to 4 years. I doubt it. Even after 7.....I know homes are at an all time bubble right now.


Sent from my iPhone using Tapatalk

Or look at it this way, the buyer's paying the commission. :-p

[Sea Ray]

Or look at it this way, the buyer's paying the commission. :-p

The buyer? Not really. It's the seller. I'm particularly curious about how this works when a house that's selling is not using an agent. Invariably the way these things work is that the buyer has an agent and that agent's commission is paid for by the seller at closing. If you're the buyer, why not get an agent? You're not paying for him

[Boston Red]

I don't know. If I'm a FSBO, unless I'm desperate I can guarantee I'm factoring that commission into the price I'd accept for the house if I agree to work with a buyer's agent at all.

[Sea Ray]

I don't know. If I'm a FSBO, unless I'm desperate I can guarantee I'm factoring that commission into the price I'd accept for the house if I agree to work with a buyer's agent at all.

In reality you end up taking the best offer and it doesn't matter if there's a commission involved. It pretty much works like this: You price it high. The buyer lowballs it. You counter and pretty soon it becomes clear what the buyer will pay. The amount he will pay won't change based upon a commission. As a seller you'll also hold out for the highest price you can get, regardless of commissions. For example if you got an offer of $300K, you'll try to get $310K out of them regardless of whether you have to pay his realtor's commission or not. You're not going to quit dickering just 'cause he agreed not to use a realtor.

[Boston Red]

I mean, I'm absolutely taking a lower offer if it's better than an otherwise "higher" offer net of commission.

[Yachtzee]

I can't offer much advice on buying a home, since I've only bought one in my life and we're still in it 18 years later, so I'm not the most experienced home buyer. So the financial aspects I would leave to more the more seasoned veterans here. I can offer some caveats based on what people I know have experienced.

I would agree with the idea of buying a lesser home in a better school district. Our house is a little on the small side, especially the bedrooms, so it makes a good starter home. We've seen a lot of our neighbors move on to larger homes down the road. When the housing bubble burst, our neighborhood had its fair share of foreclosures, but things bounced right back up when the economy got better. People are always looking to buy into a nice school districts, so if you have to sell for some reason, there's a good chance you'll find a buyer quickly. Meanwhile, people I've known who bought in bad school districts, even though they put lots of time, effort, and money into updating their house, have had problems trying to sell, and often end up buying a new house and then renting out the old one. Of course, many of them have actually been able to cover the mortgage, maintenance, and a nice tidy profit when they're handy and can take care of repairs themselves. I actually know a couple people who have done well enough that they ended up buying a few more properties to rent out. But you do have to factor in costs like attorneys fees if you need to go through eviction proceedings. So I recommend against buying in a poor school district unless you're ok with the prospect of becoming a landlord down the road.

Buying vs. renting can seriously depend on where you live. Living in someplace like the LA or Chicago, buying a home can be just plain out of reach. My wife and I moved back to Ohio from Chicago primarily because trying to buy a home anywhere near the city was hugely expensive. When we left, the price for a studio condo was more than a 4 bedroom, 2 bath house a nice suburban Ohio school district. I can't say what Atlanta is like, but in Ohio, when you factor in cost per square foot and what you can get for your money here, buying is typically much cheaper than renting. Actually, I have a couple friends, one who works for a company based in LA, and one for a company based in Connecticut, who have jobs that pay them LA and NY Metro salaries, but since they travel a lot for work, their companies allow them to telecommute for office work, they do quite well for themselves and were able to pay off their mortgages in a relatively short period of time. Of course, part of that too was sticking with a reasonably priced house in a decent neighborhood and resisting the temptation to upgrade to an overpriced McMansion, or in the one guy's case, resisting his wife's desire to own a "Century Home" in a historic district. Century homes look really cool, but not only does it cost a lot to maintain a 100 year old home, I've heard that when you do repairs or improvements, you have to get the local historical society to sign off on things or risk losing the "Century Home" designation.

Also with owning vs. renting, you don't have to worry about the landlord selling your home out from under you. I had to move twice as a young adult when the apartments I was living in went condo.

[SunDeck]

The buyer? Not really. It's the seller. I'm particularly curious about how this works when a house that's selling is not using an agent. Invariably the way these things work is that the buyer has an agent and that agent's commission is paid for by the seller at closing. If you're the buyer, why not get an agent? You're not paying for him

You say tomato, a seller's agent says tomahto. I just sold two properties with an agent.I have a good idea of the value of homes in each market. In each case, the selling price they got me for the homes was better than I thought they we'd get, more than double what they earned in commission.

[Sea Ray]

You say tomato, a seller's agent says tomahto. I just sold two properties with an agent.I have a good idea of the value of homes in each market. In each case, the selling price they got me for the homes was better than I thought they we'd get, more than double what they earned in commission.

I agree. I think it's worth it to pay an agent for the very reason you stated.

[vaticanplum]

I'm going to be a voice of dissent on the school district thing. I think a school district should be a consideration in terms of your house, but maybe not the neighborhood you want to live in. If there's an area that really appeals to you and you think is good for your family in other ways, then I don't know that the school district should be the break factor there (provided you're ok with sending your kids there, have charter school options, or can budget for private school). I don't think it makes or breaks the value of the house as patently as some others here have said.

We live in the second-worst school district in the state of Pennsylvania, but the value of houses in our neighborhood has skyrocketed. People are moving to and back to the city in droves and the neighborhood and houses here are very desirable, to the point of bidding wars in some cases. I guess there's a chance that will improve the school district over time, but as of now it seems unlikely. Still, I'm happy to be here. There's an ideological factor here too; I have friends who are appalled that we would consider private school, but to me it's the trade-off for raising kids in a bustling, diverse neighborhood where you can walk places. I think the "buy in a good school district" may be a piece of advice more skewed toward the suburbs. If that's where you want to live, then yes, that should be a big factor. But you can live in a great school district that still may not be the best place for your family.

Lots of good advice here.

[Boston Red]

I think the "buy in a good school district" may be a piece of advice more skewed toward the suburbs.

I think you nailed the thesis of the rest of your post right here, and I agree.

[Redsfaithful]

I'm going to be a voice of dissent on the school district thing. I think a school district should be a consideration in terms of your house, but maybe not the neighborhood you want to live in. If there's an area that really appeals to you and you think is good for your family in other ways, then I don't know that the school district should be the break factor there (provided you're ok with sending your kids there, have charter school options, or can budget for private school). I don't think it makes or breaks the value of the house as patently as some others here have said.

We live in the second-worst school district in the state of Pennsylvania, but the value of houses in our neighborhood has skyrocketed. People are moving to and back to the city in droves and the neighborhood and houses here are very desirable, to the point of bidding wars in some cases. I guess there's a chance that will improve the school district over time, but as of now it seems unlikely. Still, I'm happy to be here. There's an ideological factor here too; I have friends who are appalled that we would consider private school, but to me it's the trade-off for raising kids in a bustling, diverse neighborhood where you can walk places. I think the "buy in a good school district" may be a piece of advice more skewed toward the suburbs. If that's where you want to live, then yes, that should be a big factor. But you can live in a great school district that still may not be the best place for your family.

Lots of good advice here.

This is all true, my advice on that was a very, very defensive position where it's a safeguard for anyone worried about losing principle in a bad recession. I'm also a big believer in streetcar suburbs where you get good schools and walkability both.

[15fan]

Under contract to sell our 5 year old townhouse. (Used longtime friends who we knew for a fact were fantastic realtors.) Townhouse served us well while our kid was in middle and early high school. No time for a yard or maintenance when weekends were at softball tournaments, track/cross country/swim meets, band concerts, etc. Daughter is in private school so we aren't locked into a school district. Now she can drive and she'll be off to college in 18 months, so it's time to rethink and redefine what constitutes "home". Relatively easy to do as neither of us are sentimental about, well, much.

Looking for a house that has good bones in our current part of town so that Mrs. can do what she has always wanted to do - rip out walls, gut kitchen & bathrooms, etc. This is in her professional wheelhouse and I've had some exposure to construction recently through work. Lined up an apartment for 6 months so we have time to find what's right for us and get it renovated before moving in. We'll be sitting on cash and flexibility as all sorts of properties start going on the market in mid to late spring. We'll be nimble in ways that most other people can't.

Let the headaches and fun begin!

[goreds2]

From Bankrate.com:

For today, Friday, March 19, 2021, the benchmark 30-year fixed mortgage rate is 3.320% with an APR of 3.490%. The average 15-year fixed mortgage rate is 2.520% with an APR of 2.780%. The 5/1 adjustable-rate mortgage (ARM) rate is 3.120% with an APR of 3.910%, according to Bankrate’s latest survey of the nation’s largest mortgage lenders.

[JaxRed]

Under contract to sell our 5 year old townhouse. (Used longtime friends who we knew for a fact were fantastic realtors.) Townhouse served us well while our kid was in middle and early high school. No time for a yard or maintenance when weekends were at softball tournaments, track/cross country/swim meets, band concerts, etc. Daughter is in private school so we aren't locked into a school district. Now she can drive and she'll be off to college in 18 months, so it's time to rethink and redefine what constitutes "home". Relatively easy to do as neither of us are sentimental about, well, much.

Looking for a house that has good bones in our current part of town so that Mrs. can do what she has always wanted to do - rip out walls, gut kitchen & bathrooms, etc. This is in her professional wheelhouse and I've had some exposure to construction recently through work. Lined up an apartment for 6 months so we have time to find what's right for us and get it renovated before moving in. We'll be sitting on cash and flexibility as all sorts of properties start going on the market in mid to late spring. We'll be nimble in ways that most other people can't.

Let the headaches and fun begin!

What happened with this? Did Covid stop it?