House Purchase Advice.

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I figured I would post this on here rather than some of the other forums I frequent due to the fact that the average age and experience is probably much higher here.

I am looking to purchase my first home sometime in the next six Months or so and would like to acquire as much knowledge as possible about the subject. I have some basic knowledge of FHA and CFHA financing offers that are out there at the moment.

I am very handy and have never come across a project that I haven't been able to accomplish whether it be carpentry, mechanical, or anything to that matter. I am not afraid to purchase a home that needs a decent amount of renovation or "TLC" although I don't want to get myself into a hell hole.

Pretty much I am looking for some basic pointers and tips to aid me in the home buying process. I will be purchasing this home with my Fiance'. She will be out of nursing school shortly after the intended purchase time frame. According to out finances we should be able to afford a home somewhere around the 140k mark. When figuring our finances I did a comparison of rent vs own on a spreadsheet and pretty much doubled our utility costs of renting.

Unfortunately I am usually the "impulse buy" kind of purchaser and have told myself that it is absolutely necessary to not rush into the process or fall in love with the first home that we look at. I do consider myself a little young at the age of 24 to purchase a home but with the way the market is trending I feel like if I wait I will really regret it. I am generally pretty smart with my money as far as large purchases go.

I have been told by several Realtors that short sales and forclosures are too much of a hassle but the prices are rather tempting. I do realize that I have a pretty tight budget. Living in CT does not help that much either. I just want to be smart with the purchase and not make myself "house poor"

Ideally I would like to purchase a home that I could build a bit of "sweat equity" in. Hence the "fixxer upper"

Once again, any advice would be helpful and appreciated.

Thanks in advance. [grin]
 

George D

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There is a lot to go over, more than I want to type right this minute, but I'll write something up later. I have been writing residential mortgages for 14 years and have written thousands of mortgages.
 

Scrivener

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This is a SUPERB time to be a first-time home buyer. However, you should research where you want to live, based upon commuting time, taxes, schools and licensing policy.

Read the local paper, which should show transactions each week. This will give you an idea of what houses are actually selling for.

Home inspections: Make the sale contingent upon the house passing one.

Don't leap at the first one you see.
 

Chrisg67

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Couple of tips from someone in your same boat. dont obssess over a house that you might not get. the right one will come through when the time is right.

get a reputable home inspector. whatever the cost is that it cost to hire him will be worth its weight on gold if he finds something someone might have overlooked.

short sales and forclosures are a bitch. two friends of mine spent over 6 months trying to close on them, huge PITA.

do all of the major projects you want to do ASAP, because you will soon get lazy and not want to do anything that involves home repair [laugh]


dont let the age thing matter. i bought my house last year at the age of 24, and my fiance was 25. you are better off starting out in a house and maybe money will be tight, but the more you make after you know you can get by with less. and also you are putting money towards something of worth, not throwing money away in rent.

good luck, its a roller coaster of a process but very worth it in the end!
 

gillis51

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If you find a home you like try and do some comps on what has sold nearby in the same price range. Compare sqft, tax basis, location, etc and see how itcompares with what you are looking at. Look up the mortgage and deed at the registry of deeds this will help you get a feel for how deep the seller is and how much wiggle room you may have.

Start low and work up in price. Find the person that needs to sell more than you need to buy. Don't be affraid to low ball offer you will find someone that will bite.

Good luck
 

Rob Boudrie

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Remember, the only power in any negotiation comes from having a sincere ability to say no.

Don't fall too much in love with any particular house until after the deal is done, so you can walk way if there is any problem. In today's environment the seller, not the buyer, is the one who should worry about the deal falling through.

And, as Scriv suggests, buy in a green town if it involves a move to MA. This is probably not an issue in CT unless you are looking for Form 4 signoffs, as CT permits, while theoretically discretionary, are in practice almost shall-issue due to the specifics of the CT law.
 
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I can not stress this enough, do not buy the house, buy the LOCATION!!!!!!

You can waffle on certain things regarding the home but never concede on location. This will probably be the largest purchase/investment a person wil ever make and location is the key. [smile]
 

Bob P

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It's cliche, but location, location, location. Buy the worst house in the best neighborhood you can afford - especially if, as you note, you've no problem with adding sweat equity. Once you do the work on it your neighbor's will love you for making the worst house look better and your return on the investment will be greater then if it were elsewhere.

Can't stress that enough - DO NOT buy the best house in the neighborhood
 

Chrisg67

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I can not stress this enough, do not buy the house, buy the LOCATION!!!!!!

You can waffle on certain things regarding the home but never concede on location. This will probably be the largest purchase/investment a person wil ever make and location is the key. [smile]
+1

anything can be changed, except where you buy it.
 

Yazz

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It's cliche, but location, location, location. Buy the worst house in the best neighborhood you can afford - especially if, as you note, you've no problem with adding sweat equity. Once you do the work on it your neighbor's will love you for making the worst house look better and your return on the investment will be greater then if it were elsewhere.

Can't stress that enough - DO NOT buy the best house in the neighborhood
+1
And make sure you get a house with a dry basement!! Believe me I learned the hard way.
 

Twigg

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If you're single, live beneath your means.

If you're married with a working spouse, buy something you can afford on one income.
 

Shark_Cage

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Get a Real Estate Atty to handle the legal stuff. Don't rely on the banks atty. They don't work for you.

Home inspectors frequently miss stuff. I had one miss a termite infestation and a dangerous electrical problem. Next time I will pay for an hour of my pest company and electrician's time.

Most people look at a house and make all sorts of grand plans. "We'll blow out this wall and dig a pool out back..". Most likely you will only get one or two things done.

When you buy a house you only get the keys. Then the real expenses begin.

Take your time and good luck.
 

Realtor MA

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Get a Real Estate Atty to handle the legal stuff. Don't rely on the banks atty. They don't work for you.

Home inspectors frequently miss stuff. I had one miss a termite infestation and a dangerous electrical problem. Next time I will pay for an hour of my pest company and electrician's time.

Most people look at a house and make all sorts of grand plans. "We'll blow out this wall and dig a pool out back..". Most likely you will only get one or two things done.

When you buy a house you only get the keys. Then the real expenses begin.

Take your time and good luck.
+1 Great points!
 
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Rent. Buying a house is a longterm hedge and I'd guess that New England is the wrong place for a long term hedge. Home ownership is overblown, renters have more job opportunities. There are all sorts of local things that screw you over, for instance if the local school district tanks you may be in a nice neighborhood but you will be stuck sending your kids to a now crap school. At the same time a huge market of parents are now off the potential buyers list for your house. Used to be you had to own property to have autonomy, nowadays you own a house and the town/school district has you by the balls.
Again back to NE, it is full of boomers in big houses that in the next 10-20 years are off to their vacation home, then the assisted living facility, there isn't enough people lined behind them that want to live in NE. The market might go back up but long term the demographics for NE are against long term housing gains. The only advantage to owning is personal mental happiness of being a homeowner and you pay a lot for that.
Rent.
FYI Women have bought into the home ownership thing in a big way- just warning ya.
 

Realtor MA

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Rent. Buying a house is a longterm hedge and I'd guess that New England is the wrong place for a long term hedge. Home ownership is overblown, renters have more job opportunities. There are all sorts of local things that screw you over, for instance if the local school district tanks you may be in a nice neighborhood but you will be stuck sending your kids to a now crap school. At the same time a huge market of parents are now off the potential buyers list for your house. Used to be you had to own property to have autonomy, nowadays you own a house and the town/school district has you by the balls.
Again back to NE, it is full of boomers in big houses that in the next 10-20 years are off to their vacation home, then the assisted living facility, there isn't enough people lined behind them that want to live in NE. The market might go back up but long term the demographics for NE are against long term housing gains. The only advantage to owning is personal mental happiness of being a homeowner and you pay a lot for that.
Rent.
FYI Women have bought into the home ownership thing in a big way- just warning ya.
For some folks renting may be the best choice. But by far the majority of people are better off owning. NE happens to be one of the best places to own a home.
I know a lot of very wealthy people who have made their fortune by owning rental units. Whether you rent or own you are paying for the house!
 

George D

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All very valid points.
I usually spend an hour or so with first time buyers going over things so its a lot to load into one post.
The old standards are true, location location location, hire a good home inspector, don't get emotional, don't overbuy or underbuy.
Figure out what your payment will be and honestly ask yourself if you are ready for it. Don't let a lender tell you what you are pre-approved for, only you know that.
If you pay $800 in rent and the new payment is going to be $1,500, can you put $700 aside right now every month and not miss it?
There is more than just the monthly payment, there are other things that come with a house like the electric bill, heating, maintenance, water, sewer, phone, cable,etc.
You also need to decide how much free time you have to devote to yardwork and maintenance.
 

GaryO

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Consider a 2 family, that way you get help on the mortgage and in the future you can keep it as a rental property and buy up.
 

drumenigma

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My advice is keep crunching numbers. I bought my first house this year and am also young but it was just too good of an opportunity to pass up. Initially a lot of the houses that me and my gf were looking at were going to stretch our finances to the max. Technically we could afford them but there would be little to no money left over each month. We eventually decided on a more modest house that fit in our means. It was in move in condition and only has a few things around it that need to get fixed up. I'd say be careful about being willing to buy a "fixer upper". We saw some god awful houses out there selling for ridiculous amounts of money considering how much work they needed in them to make them livable. Always leave yourself a money cushion and expect the unexpected. I bought my house because it was closer to my work than where I was originally commuting from. Then my work decided to relocate my building over 60 miles away from where it was so my monthly commuting expenses went up. Fortunately we bought the house we did otherwise we'd probably be screwed.
 
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When you are figuring out what monthly payments you can afford, don't forget about taxes. They can, in effect, bump your payment up $200 to $700 a month depending on what and where you buy.
 
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Owning rental units/commercial RE is fine, but your primary residence is not an investment. Primary residence ownership is an expensive 'luxury' and an opportunity limiter. Why do you think NE is a good place to own a home? Business and young folks aren't moving here. Sure the schools are good in some places, some legacy industry, some clusters of really smart people that manage to create wealth despite the NE states standing in the way. The demographics and internal migration speak against buying in NE.

For some folks renting may be the best choice. But by far the majority of people are better off owning. NE happens to be one of the best places to own a home.
I know a lot of very wealthy people who have made their fortune by owning rental units. Whether you rent or own you are paying for the house!
 
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Owning rental units/commercial RE is fine, but your primary residence is not an investment. Primary residence ownership is an expensive 'luxury' and an opportunity limiter. Why do you think NE is a good place to own a home? Business and young folks aren't moving here. Sure the schools are good in some places, some legacy industry, some clusters of really smart people that manage to create wealth despite the NE states standing in the way. The demographics and internal migration speak against buying in NE.
You are putting money into something you own, instead of just losing it outright. If the housing market goes up your house is worth more than you bought it for. Plus you can do some work on a house, make improvements, etc. No one wants to do that on a rented home. I'm looking for a house right now too, and I'll probably be paying LESS per month than I am with all the apartment expenses I have right now.
 

dwarven1

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If you're single, live beneath your means.

If you're married with a working spouse, buy something you can afford on one income.
Yeah... what he said.

I cannot emphasize enough that you should be able to afford the house on ONE salary. My wife and I deliberately did not go for all the money a bank was willing to give us back in '97, but bought a house that was the size we wanted... and it turned out to be a good thing as I got laid off in '02, '05, and this past summer. And we never had any worries as MrsDwarven1's salary + plus savings carried us through till I found a new job.

Don't stretch yourself to the limit - leave a little room in the budget for luxuries (a night out here and there, Christmas presents, new guns...).

Home inspections: Make the sale contingent upon the house passing one.
get a reputable home inspector. whatever the cost is that it cost to hire him will be worth its weight on gold if he finds something someone might have overlooked.
And if your home inspector says he knows the guy who owns the house you're looking at, fire him on the spot and get another one. Don't ask me how I know that. [crying] Let's just say I was an innocent when I bought my first house.

And if the assmuppet says he'll cover things like, say, the cost of exterminating the termites he friggin' MISSED, YOU pick the exterminator. Got burned AGAIN that way - the exterminator that the inspector chose did a half-assed job, putting down less than half the chemicals needed, twice as far apart as they were supposed to be. [angry] Probably because he never paid them the half he was supposed to cover.

When I bought my second house, I used Amerispec Home Inspection, which was recommended to me by my buyer's agent, AND I had a friend (and Lodge Brother) who was a contractor come with me at the same time. No nasty surprises - even after 12 years, either. Amerispec did a great job - exceedingly thorough written report, in a big notebook with coupons for various contractors (none of which I ever used, though), a seasonal inspection checklist and a home repair handbook. They seem to be a chain of independently owned companies - I had Rick Contonio out of the Holden branch. (800-300-5809, if anyone in central MA needs a good inspector). If I was going to buy another house, I'd use him again in a heartbeat.

Oh, yeah... one other thing - you're young, so right NOW is when you should start saving for retirement. And make that part of your budget - even if you need to get a little less house. Personally, I use an Ameriprise consultant, and he's doing an awesome job for us.
 

drumenigma

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I agree with previous posts on the inspector. It'd probably be a good idea to hire one not from the area. I was recommended the one I used by my realtor. He wasn't the most expensive one but he did an excellent job educating me and my girlfriend as he went through the house pointing out a lot of details that we would not have otherwise known.

Also just an FYI the mortgage calculators online are typically very inaccurate. I think it was about 200-300 off typically from what we actually pay per month when we were running some numbers. It doesn't take in to account a lot of the additional costs like taxes, closing costs rolled in, etc....
 

Chrisg67

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dont forget PMI on the FHA, and various other costs that will jack your mortgage up. makes me wish i saved up the cash to put down :-/

also do yourself a favor and DONT add up what you pay at the end of life of the loan, its sickening [laugh]
 

Rob Boudrie

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My wife and I deliberately did not go for all the money a bank was willing to give us back in '97, but bought a house that was the size we wanted...
Being able to send your kid to college without a student loan, and knowing you can pay your mortgage off any time you want provides great peace of mind.
 
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Thank you guys for all the advice. It's really appreciated. It's a really scary though at spending that kind of money lol. So far I think I have had the correct mindset according to what you guys are saying. The biggest motivating factor to me at the moment is safety for my family when I have one someday and PRIVACY. i cant stand my neighbors being able to look over their fence and pretty much be able to grab food off my grill lol. It's that close. :(
 
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dont forget PMI on the FHA, and various other costs that will jack your mortgage up. makes me wish i saved up the cash to put down :-/

also do yourself a favor and DONT add up what you pay at the end of life of the loan, its sickening [laugh]
If you don't have a lot to put down, you can always take out 20% of the home's value as an "improvement loan" and use that as your down payment. It's a higher rate than the primary mortgage, but at least you're paying for SOMETHING rather than PMI where you're paying for insurance against your own demise. [hmmm]
 

PennyPincher

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Location, Location, Location

It's true. The only thing you can change is the house. You can't change the town, neighborhood, street, or location of the lot you buy. You most certainly can't change the neighbors. I made the mistake of buying in a section of town where the lots are small. Even if I wanted to add on I can't because of setbacks (okay, maybe if I get a variance), but I still can't add agreage to my yard. Go for the big lot with the little house.
 
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