Purchasing a Home

[David88vert]

Ya but where at 285 are you? Pleasantdale rd?

Pretty close to Pleasantdale. Just south of there. Plenty of houses cheap here, with easy interstate access.

[David88vert]

Now is a great time to buy. I saved up 45k. spent 38k on a house, and spent 5k on repairs and upgrades.
DONT WORK FOR YOUR MONEY, HAVE YOUR MONEY WORK FOR YOU!!

And that is the smart way.

[Greddypacked]

I wouldn't recommend any home buying at only 26 years of age. Unless you have perfect credit score then $10-$15k will barely get you in even financing range for a home.
Unless you are in a career and not just a job position you could lose tomorrow id continue to save money. Right now is a great time to buy a home if you can get a large loan or just pull $100k out your hat. Unless you are married and starting a family right now then id say maybe look into a condo or larger complex just my opinion.

Listen to this guy.... Your still young so leasing, getting a loft/apartment and still being able to save money for the future, pay bills and what not will be a good goal. Some nice apartments have garages u can get. Now if you know you have good job security and your ambitious enough to pull off getting a house this early go for it, though 10k dollars isnt alot of money while purchasing a house. Now u can look at foreclosure homes and houses banks are trying to get rid of, those houses require cash usually though. I know a house worth about 80k got sold for 42k cash the other day. Now if u have a family and a wife that has a good stable job getting a house seems like a good idea, but if your single supporting yourself I would save more money, rather than making a big move. Goodluck on your decision.

[David88vert]

Listen to this guy.... Your still young so leasing, getting a loft/apartment and still being able to save money for the future, pay bills and what not will be a good goal. Some nice apartments have garages u can get. Now if you know you have good job security and your ambitious enough to pull off getting a house this early go for it, though 10k dollars isnt alot of money while purchasing a house. Now u can look at foreclosure homes and houses banks are trying to get rid of, those houses require cash usually though. I know a house worth about 80k got sold for 42k cash the other day. Now if u have a family and a wife that has a good stable job getting a house seems like a good idea, but if your single supporting yourself I would save more money, rather than making a big move. Goodluck on your decision.

Nice 2 bed/2 bath apartment in Duluth with a 1 car garage is $1200/month. You can rent a house for that. You can BUY a house for that.
You do not have to have all cash for a foreclosure. I'm buying one now, and it was no different to get a loan for it than from a regular house. 5% is good enough to get a loan on most, and 10% will get you a decent loan (20% is much better though).
Now is the time to buy. Keep it at least 2 years, than start evaluation if you will make money selling it.

[nelson9995]

I haven't read this thread but here are my tips. many of you may not know this.

banks sell interest points. I rather much do this than do a down payment. let's say you get approved for a 6%; and let's say that bank sells each point for $3000. That means that with $9000 cash, you can bring your permanent interest rate to 3%.

I would also look for houses under foreclosure (much cheaper)

and....

when making the payments, call the bank and set up to where you make half the payment every 2 weeks. If your mortgage is $800 a month, you would pay $400 every 2 weeks. By doing this, you are killing the interest rate. Interest rate can only be charged once a month so the interest will only be charged on one payment. The other payment, the complete $400 go straight to the capital. My parents do this. The bank doesn't tell anyone because they lose money. The bank told them after setting it up, that he had just cut the 25 years he had left to something alone the lines of 18 or 17 simply because more money is going to the capital versus interest.


YES YES and YES this is all 100% true and verified.

Sorry for any typos. I'm in a hurry

[bu villain]

Buying points is not necessarily a good idea. If you plan on staying in the home for only a few years, a 1% or so interest rate difference is not going to amount to much at all. You may be better off investing that money in other financial vehicles. Like most finanace, you have to figure out what your plans are and then run the numbers to see what makes the most sense.

Also I think you are mistaken about bi-weekly payments. You are implying that they effectively lower your interest rate just for splitting your payment in half. The real savings from bi-weekly payments is because you are effectively making an extra monthly payment every year which goes straight to principle.

Monthly payments: 1 year = 12 months = 12 full-sized payments
Bi Weekly: 1 year = 52 weeks = 26 (half-sized) payments = 13 full-sized payments

So bi-weekly payments are basically the same as monthly payments if you just pay an extra payment toward principle during the year. Run the numbers on an amortization calculator and you can verify it. If the bi-weekly format is easier than making an extra payment during the year, then go for it but the amount you pay in principle and interest would be almost exactly the same.

[nelson9995]

that makes sense. hey I was on the right track. Thanks for clarifying it I was in a hurry.

[EmminoDaGreat]

I bought my house almost 2 years ago now, I pay less on a mortgage than I did renting... I pay more than required to cut down overall price. I only put down 3%, and my intrest rate is 3.5% I believe. 4 year old house, brand new carpet,appliances etc... Foreclosed.

Feel it was a good idea to buy, if I ever get into a jam I could rent it out, or sell it.

[bu villain]

that makes sense. hey I was on the right track. Thanks for clarifying it I was in a hurry.

Yup. Teamwork! Both things are something any first time home buyer should consider.

[blaknoize]

Buying points is not necessarily a good idea. If you plan on staying in the home for only a few years, a 1% or so interest rate difference is not going to amount to much at all. You may be better off investing that money in other financial vehicles. Like most finanace, you have to figure out what your plans are and then run the numbers to see what makes the most sense.

Also I think you are mistaken about bi-weekly payments. You are implying that they effectively lower your interest rate just for splitting your payment in half. The real savings from bi-weekly payments is because you are effectively making an extra monthly payment every year which goes straight to principle.

Monthly payments: 1 year = 12 months = 12 full-sized payments
Bi Weekly: 1 year = 52 weeks = 26 (half-sized) payments = 13 full-sized payments

So bi-weekly payments are basically the same as monthly payments if you just pay an extra payment toward principle during the year. Run the numbers on an amortization calculator and you can verify it. If the bi-weekly format is easier than making an extra payment during the year, then go for it but the amount you pay in principle and interest would be almost exactly the same.

My aunt does this with her mortgage. However, she pays two full payments bi-weekly.

[Greddypacked]

Nice 2 bed/2 bath apartment in Duluth with a 1 car garage is $1200/month. You can rent a house for that. You can BUY a house for that.
You do not have to have all cash for a foreclosure. I'm buying one now, and it was no different to get a loan for it than from a regular house. 5% is good enough to get a loan on most, and 10% will get you a decent loan (20% is much better though).
Now is the time to buy. Keep it at least 2 years, than start evaluation if you will make money selling it.

Not sure if he needs a 2 bedroom, but I know people paying 600$ a month for a 1k sq foot 2 bedroom apartment right near main street woodstock. Nice apartments also. I would rather save more then 10k to purchase a house.

[bu villain]

My aunt does this with her mortgage. However, she pays two full payments bi-weekly.

This actually reminded me. You should always look at 15 year mortgages when buying. Since they have lower interest rates, they aren't that much more monthly than the typical 30 year and if you can't afford a little higher mortgage payment, you should really consider whether your buying too much house.

[blaknoize]

Now is a great time to buy. I saved up 45k. spent 38k on a house, and spent 5k on repairs and upgrades.

its very livable now, all new
lights
fans
paint
front/ rear door

other small stuff.

dont be afraid of a "fixer upper" The job market means there are many people who will do work for cheap "on the side" the hosue i bought had all hte electrical wiring in the attic cut out. (renters mad at owner for evicting, then owner let it forclose) and i was quoted 7k-1ok for rewire, had it done for 450$ with me buying 600$ in materials. Everything else i did myself, with no experience, great learning experience and you feelgreat for sitting down and looking around at everything you have done.

I now have no mortgage, just turned 24, and my gf pays me "rent" which covers most of the utilities. I drive a shitbox, so my bills each month consist of: food, gas, cell, insurance.

currently saving up to buy another property in the same price range to utilize as a rental property within a yar and a half. Easy to save when you have no bills. Ill drive a shitbox and wear old shoes for a few years and at 30 i wont have to work unless i want to. At 30 i plan to be moving into a 200-300k home, and have 2-3 rentals, and other money in mutual funds ect.

DONT WORK FOR YOUR MONEY, HAVE YOUR MONEY WORK FOR YOU!!

the system is designed to keep poor people poor. and making the rich richer with you paying 200,000 for your 100k house (much more with older higher interest loans)

live a littler simpler, and make your mortgage as low as possible, dont worry about paying it off completely because one downfall of me owning outright is that i cant deduct interest on taxes.

I'd like to pursue it that way, if I could find a home in a reasonable area. Around where I work the homes are quite expensive, since this area is filled with educated people and good schools and powerful businesses. However, in pill capital America (Portsmouth, OH) there are plenty of homes in the 38-40k range that are well built. But the area is far away and no work.

[blaknoize]

This actually reminded me. You should always look at 15 year mortgages when buying. Since they have lower interest rates, they aren't that much more monthly than the typical 30 year and if you can't afford a little higher mortgage payment, you should really consider whether your buying too much house.

I heard that the banking world rarely offers such loans. I'd love to have a shorter more expensive loan. Get that over with.

[David88vert]

Almost all lending institutions offer 15 year fixed rate loans. Most prefer that you take those, as their risk is reduced.

[bu villain]

Exactly. The 30 year loan is actually the "unnatural" loan. It only exists due to regulations to make housing more affordable.

[blaknoize]

I like how long it took me to log back in after deleting my message -__-

I suppose I've only thought as those short loans as (wealthy-only). It must just be from where I grew up... stigma's of what you can and cannot do. Thanks guys, I wish I could go the "buy it in full" like Halfwit did, but I may have to take a loan. Kinda wish I was in GA to learn from you all in person, but I'ma rusty northerner haha.

[Halfwit]

I'd like to pursue it that way, if I could find a home in a reasonable area. Around where I work the homes are quite expensive, since this area is filled with educated people and good schools and powerful businesses. However, in pill capital America (Portsmouth, OH) there are plenty of homes in the 38-40k range that are well built. But the area is far away and no work.

dont ike exactly how you stated that. the homes dont make the people, the people make the homes...

"the educated people' live there? I forgot to mention that i have 2 college degrees.

Accounting
Business Management

maybe those "educated" people who live above their means arent exactly as educated as they may seem.

But i understand what your saying, im just an advocate for saving as much as you can, so you arent paying SOO much in interest. id hate to look back after 15 years and add up that i paid 220k for my 120k home that is now worth 100-120k.. what could you do with 100k in15 years? Build a dynasty.

[blaknoize]

dont ike exactly how you stated that. the homes dont make the people, the people make the homes...

"the educated people' live there? I forgot to mention that i have 2 college degrees.

Accounting
Business Management

maybe those "educated" people who live above their means arent exactly as educated as they may seem.

But i understand what your saying, im just an advocate for saving as much as you can, so you arent paying SOO much in interest. id hate to look back after 15 years and add up that i paid 220k for my 120k home that is now worth 100-120k.. what could you do with 100k in15 years? Build a dynasty.

Well I was just literally meaning "educated", nothing at all to do with where you live or your own personal education level. I dont even have a college degree (I have the debt though). But the cost of living in some cities and I'm only assuming in educated cities (like Minneapolis) the rates are higher than necessary because the populas is generally educated. I would love to save that much. A friend of mine saved 14k over 3yrs, but bought a car with it.

[Halfwit]

I was just being an asshole. lol. carry on. Just be savvy with the purchase and payments. and hey, if it doesnt work, im sure you can foreclose and wait 7 years and try again!

[civicturbo10]

Now is def a good time to buy with rates being where they are. If you think your going stay in your home more than the points your buying down then go for it, i say. The money saved pays for itself long term. Also, you don't have to buy down as many points as your budget allows go for a compromise.

Foreclosures are ok if you don't mind getting your hands dirty and can make it livable within a short time.

As far as making your money work for you. Go with what you feel comfortable with. For me, i'd rather work and invest in my 401K( free money), IRA, and brokerage account. Buying a foreclosure to rent is great just be prepared for the initial up front start up costs and mgmt time. Clark Howard did it for years and i think he still has his first rental property from decades ago. He may have sold it by now but i wanna say he still has it.

No matter what path you take cash is king, and let your money work for you. Some friends of mine have about 300k each in retirement savings. One doesn't work and the other two have regular jobs. They live modestly, and by that i mean they don't by "stuff", regular 200k houses with 30 yr mortgages. Drive regular cars and keep them for a long time, I.E. 2003 Honda civic , 1999 BMW 325i. And they look for deals and cost cut when it makes sense.
Sounds like old how old ladies live, but if you can go on multi trips a year and still have 300k and growing with a regular job then financially your doing ok. I actually go to vegas with them plenty of times and we still have our retirement accounts, lol. It's actually better to keep your mortgage and take the extra money each month and invest or whatever. The gains you make is typically higher than paying down the mortgage quicker. Think of a mortgage as cheap money with the way rates are. Plus with a mortgage you typically itemize your deductions, get refunds if you set it up that way, and donations you get around .25 on the dollar.

[blaknoize]

Well I do live well within my means, I consider lots of things risks right now, though the rental property did come up once or twice in the past. I'll start my search next year, for now I'm saving. My apt is $404 a month, I have no commute so no gas is used (I'll be riding my bike most of the time), My car isnt old anymore, so I have a car payment. But my income/expense ratio is low, I believe my expenses are exactly half of my income with no OT. Sooooo... soon that savings acct I have will go a bit crazy with my modest lifestyle.

But thanks guys for all of the pointers and motivation. I just dont want to get into a home when I feel the need to go elsewhere. I like Ohio but New Hampshire is where its at for me.

[civicturbo10]

Rates are super low -

Rate on 30-year mortgage falls to record low