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Okay, question. Me and my girl are buying a house, and we have one we are looking at / inspecting with a friend tomorrow. The market here moves really fast, for example, we saw another one we were interested in pop up yesterday around 4pm, we went and looked at it from the outside when I got off work, and by the time we got a hold of the listing agent today, they already had three cash offers in. Seeing as we are not sitting on a mountain of cash, and even worse, are doing an FHA loan, most sellers aren't even interested. We found one house that we like, it isn't an REO, and the listing agent said she was willing to take FHA, and even better, the house has been sitting for three weeks without any offers. I manage property in the area for a living, so I know full well what the place is worth and all that, but I've never actually *bought* property of my own before. We don't have an agent, is the listing agent going to be that much more motivated to work with us to get it sold if she's getting both commissions? Like I said, I know full well what the place is worth, I'm not gonna lose my shirt. Is there any real reason to have my own agent in this situation? I've kind of been thinking about getting my own agent, as I do have some minor questions, but considering how quickly any worthwhile property for a good price moves, I kind of want to do whatever I can to get a listing agent to work with me and my non-cash offer.
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Jul 23, 2010 05:51
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Congrats, Arkane! I think you're crazy to get an ARM, but I hope it works out for you. Calvran, the listing agent may be happy to get both commissions, but he or she is going to be unhappy with the idea that you'll have no agent to handle all the paperwork. They might assume that they're going to have to walk you through everything a lot, send you things multiple times, and generally be patient with a noob. If you insist on not having an agent, then definitely get a lawyer. But you're not losing any money by getting an agent, and you'll potentially be gaining a lot of help and expertise. Leperflesh fucked around with this message at 07:49 on Jul 23, 2010 |
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Jul 23, 2010 07:47
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We just got a Rate lock on our first home. Doing a FHA loan, rate will be 4.85% 30 year fixed. It's about 2 weeks from the closing date, and this entire story started with a MASSIVE credit cleanup about 3 years ago. As a result our scores aren't that great(good enough for FHA 640-680 range) but our Ratio's are pretty good, and the house will appraise well. I am still a little nervous about it all  Until it clears that closing table I will be biting my nails. The worst thing about our file is old lovely accounts from when we were both single and dumb( all paid off and several deleted). so we may have to write a few letters for that. The best thing is our Ratios. Our front end DTI is about 23% and our back end DTI will be about 31%. The loan officer seems to be ethical but I guess we will see what the underwriter thinks. Farking Bastage fucked around with this message at 17:54 on Jul 23, 2010 |
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Jul 23, 2010 17:51
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Leperflesh posted:I think you're crazy to get an ARM, but I hope it works out for you. This was my initial reaction...probably because of the stigma associated with teaser rates and the financial crisis. I didn't consider it until way late in the process when I started to think how long I was going to live there (5-7 years) and then wondered why I didn't think of this way, way sooner. It breaks down like this ($180k financed). Through the 60th month (when the rate is fixed), with an ARM of 3.5%, I've made $48,480 worth of payments with $18,550 of the principal being paid down. Through the 60th month, with a fixed rate of 4.5%, I've made $54,721 worth of payments with only $16,000 worth of principal being paid down. A disparity of $8792 in favor of the ARM. Assuming the maximum ARM rate hikes of 2% per year for 2 years (so 5.5% then 7.5%)...through 7 years: ARM: $74,616 total payments, $24,100 principal paid Fixed: $76,610 total payments, $23,350 principal paid ARM is still ahead by $2744. In my case, the fixed overtakes the ARM a few months into the 8th year.
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Jul 23, 2010 22:36
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Someone tell me I'm stupid so I can just beat this idea out of my head and move on with my life: Right now I make $47k a year, my fiancée is about to start a year long position with Americorp, and that pays at the poverty line, so I think around $13000. Some friends of ours recently closed on a condo in an amazing building, and I found a unit that I would love for $269,000. I have $16,000 in credit debt, $16,000 in student loan debt, and no savings (well, I might have a few thousand in a mutual fund, I haven't seen it in a few years). I've only had my job for six months, but I know I'll have it for quite a while. My mom has pretty much rock solid credit, and I know I could at least get her to cosign (is that even something I could do with a mortgage?), or possibly help somehow with down payment. Am I basically screwed in this post crash market without a down payment? I'll most likely be getting raises as time goes on, and the fiancée will probably be able to find a position that pays $15,000 - $20,000 after her year long thing goes away. Also, since this is a condo, association fees are $531 for this unit, and that doesn't include electricity, internet, or TV (although does include heat and A/C). Basically, I know this is a bad idea, but I hate my current apartment $750/month (I live with the fiancée right now, btw) and I would love to move into this building. As a compromise, would my odds be any better if I look at units in the $100,000 - $150,000 range? There are a bunch of those, which are smaller, so I'd probably only be able to stay there 5-7 years, whereas the larger unit would most likely be good for 10-infinity years, depending on how many kids we have. Another point in my favor is that I think this unit is way under priced (although I could be wrong, is there an easy way for me to see what other units in that building/area closed for recently?
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Jul 24, 2010 01:49
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I'll try not to be too harsh. Don't buy a loving apartment for $269,000 are you retarded? Where do you live? Find someone who bought one of the $100-150K units who is renting it out and do that. Please tell me that $531 association fee is monthly. That would make your $269,000 apartment run into the mid $2,000's per month in payments. That is more than 50% of your gross income and every banker will giggle when they reject you instantly. And of that $2500 payment only about $375 will be going towards the principal for the first forever years. So much for not throwing your money away on rent! You shouldn't buy anything until that credit card debt is gone, probably the student loans too depending on the interest rate, and you have 20% + closing costs + leftover emergency money. And you still shouldn't buy a $269,000 condo unless that is literally the only type of housing where you live and renting is illegal. There are tangible benefits to owning a single family home I can't think of any reason to own your apartment. Are you on some sort of probation where you aren't allowed to leave your city for the next 20 years? Even if a large condo would be good, what if you get a job offer elsewhere or you decide you don't like the neighbors? If it was underpriced it would be sold already if its been on the market more than a week. Its still not sold because its not underpriced by any meaningful number. You can look on Zillow or Trulia which may have recently sold homes in your building (never looked at condos, but they have them for single family homes at least). Else ask a realtor to check for comps in that building.
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Jul 24, 2010 02:16
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Arzakon posted:I'll try not to be too harsh. The 100-150K units are 1 bedroom, the more expensive one has 2 bedrooms. Also I would buy it because it's where I want to live, not because I think I would save money over renting or because it's not the only thing available. Yes, that association fee is monthly, and yes, my payments would be well over $2000. All reasons that it's a bad idea. And finally, single family homes aren't the be all end of desirable housing.
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Jul 24, 2010 04:07
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FISHMANPET posted:The 100-150K units are 1 bedroom, the more expensive one has 2 bedrooms. Also I would buy it because it's where I want to live, not because I think I would save money over renting or because it's not the only thing available. Yes, that association fee is monthly, and yes, my payments would be well over $2000. All reasons that it's a bad idea. And finally, single family homes aren't the be all end of desirable housing. Well the other thing you may want to consider is resale. You're not going to live there for 30 years, unless you do it to prove the Internet wrong.
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Jul 24, 2010 04:11
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The only plausible financial scenario whereby you could afford to live in the condo complex in question is if you killed off your friends and took over their lives Talented Mr. Ripley style. Barring that, I don't see any realistic way that you could afford that property nor any way that buying that property would make ANY sense. Save up money; I am guessing you plan to start a family? At that point you should be evaluating larger digs...in the meantime build up your credit, savings, and pay off that debt.
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Jul 24, 2010 04:55
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FISHMANPET posted:$47k income, $32k debt, $0 savings I'll keep it short - there's no loving way. Your parents would be stupid to co-sign, too, because they'll end up paying for it. Same applies for a $100k condo actually. Wait until you have the credit cards (at least) paid off and have accumulated a 10-20% down payment.
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Jul 24, 2010 16:39
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To add a real life example. I bought my Co-Op for 268k with 20% down (with help from Mom and Dad). I had to have Dad cosign the loan due to my base salary only being 50k, and the fact that you can't factor in potential renter $ (I have a roommate who pays me). Mortgage for 214k at 5.5% = $1217/mo, + the Co-Op monthly fee of $610 = $1827/month. If you and your wife currently are making about $60k combined then I can safely say that I make as much or more than both of you due to overtime. I would be barely treading water if I was paying for this place solo. Having a roommate ontop of what I make helps make it feasible and gives me an opportunity to save money. You should never get loan approval in the first place, but you should also realize that right now it's not a smart move at all.
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Jul 24, 2010 18:02
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On $60k income, you could afford somewhere around a $200k house if you were stretching it. Once the HOA fee kicks in (holy poo poo, and I thought my $320 / mo was bad) you're going to be house-poor for sure. Then there's your credit cards and student loan debt (I had zero debt when I bought and $75k to throw around). Also, a condo can be far worse than living in an apartment. Apartments can evict people, with condos, you can't kick someone out of a place they own for being a shithead. My condo association couldn't do poo poo about the guy that lived above me that kept his trash outside (attracting ants) and screaming at 2 am for god knows what reasons. And the structure of the place made it such that his portly frame would make the ceiling creak. Also, it turns out I could hear the people above and below me - that's the sort of thing I looked for but couldn't hear because they were never home when I was around. Seriously, gently caress condos, but I can understand why people would feel obligated to buy them. If your area has condos going for $270k for a 2BR/2BA and it's possibly a "good deal" then your median income is likely around $90k / yr. I would recommend not buying anything until your household median income hits that or you can find a place to live in that takes about 35% of your gross income MAX, all fees included. senor punk posted:I had to have Dad cosign the loan due to my base salary only being 50k, and the fact that you can't factor in potential renter $ (I have a roommate who pays me).
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Jul 24, 2010 19:46
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CoOp fees are not the same as HOA fees. My Co-Op fee of $610/mo is considered pretty reasonable by NYC standards (far as I know?). It goes towards the property taxes on the complex, the cost of water/sewage, heat, trash collection, upkeep of the complex and I'm sure some of it goes to the management company that manages the place.
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Jul 24, 2010 20:26
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Arkane posted:It breaks down like this ($180k financed). Yes, I do understand this: a lower interest rate means you pay less in interest (and therefore more principal). Five years at a lower rate plus two years at a higher rate will average out to lower interest than seven years at a moderate rate. The issue with ARMs are these: 1. can you afford the ballooned payments indefinitely. People got in trouble because they assumed they could sell the house before, or quickly after, payments started to go up, and therefore didn't pay attention to and plan for indefinitely paying those higher payments. You need to know exactly how much those payments will be, and if they're higher than you can comfortably pay on what your income will be in 5+ years, then you're potentially screwed. Because 2. Will the house be sellable, at all, in 7 years? You could be underwater. By your own math, you'll have $24k into the principal. If your house depreciates by $24k (plus your down payment) then you are under water and unable to sell, or refinance without coming up with cash to make up the difference. Except that's not taking into account the cost of selling (6% of sale price just in commissions, plus a bunch of other costs). If you find yourself unable to sell at year 7, you'll find that by year 10 you're well below what you would have paid with the fixed rate loan. Of course, this could all be academic. Maybe you're definitely not going to be underwater in 7 years, so if you really can't sell it (you cannot predict what the market conditions will be 7+ years from now) you could at least re-fi (assuming your credit is good, and you can afford the up-front cost of re-fi). Of course the cost of a refi is another sunk cost. So if you're forced to re-fi in 7 years, you might lose most or all of the gain you made from the lower interest for the first 5 years... Basically what I'm getting at is, your ARM is a risk. The reward is that you might save $6k, and be $2.5k ahead on your principal. The risk is that if the market sucks in 5 years, you'll have to shoulder much higher payments, and after something like 9 years or so, you might wind up losing money overall. To me, security and certainty is worth $6 to 8.5k. FISHMANPET posted:Someone tell me I'm stupid so I can just beat this idea out of my head and move on with my life You're stupid. With less than 2 years in your current job, you have 0 income that will be considered for a loan. Your mom will be better off buying the house alone, without your indebted rear end even signing. Condos are depreciating assets. You don't own the actual land, just part of a building. The land is the only part of real estate that isn't destroyed by fire, flood, neglect, termites, or simply the inexorable crush of time. Fees are not fixed. You can't even predict what your monthly housing cost will be next year, much less in 7+ years when you'd actually reach enough principal that you could afford to sell your condo and break even (assuming it does not depreciate at all). The fact you don't even know how much savings you have, coupled with your large debts, is a strong indication that you have not yet learned how to live within your means. A) Don't buy a condo, B) don't buy any real estate at all, and C) if you want to live in a nice apartment, earn more money and go rent a nice apartment. Leperflesh fucked around with this message at 07:01 on Jul 25, 2010 |
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Jul 25, 2010 06:54
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Along the same lines... I thought hard about the 5/5 ARM that Pen Fed is offering right now - only adjusts every 5 years! - but I ended up applying for the plain ol' fixed for a refinance despite the higher rate.
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Jul 25, 2010 06:59
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senor punk posted:CoOp fees are not the same as HOA fees. The point is that HOA / Co-op fees should be every bit as important of a cost as the mortgage itself when buying anything involving shared buildings. HOA and co-op fees are not tax deductible either, so it winds up that you're paying property tax and dues after you own the place no matter what. The worst part of the dues was that my property was empty for 5 months and I still got charged a lot of utilities. If I had an empty house, I'd have just taken it off utilities, period. Can't do that in most apartment buildings it turns out. When a co-op or HOA raises the dues, it negatively impacts the property values in a way because now it costs more to live there per month. So as property values get pushed up by inflation, the HOA has to raise its dues a bit, and so condos should appreciate in value at a far lower pace than SFHs while being subject to even more risks in property value destruction than SFHs. Therefore, I don't think condos should be considered an appreciating "investment" for anyone other than the real estate developers.
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Jul 25, 2010 19:04
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So let's talk about condos vs renting. First off, for my situation, a SFH isn't an option (I just don't want it). When making the rent vs buy comparison, is there anything else I should be taking to account that the rent/buy calc linked in the OP isn't telling me (I found a spot to put in the HOA fee). And owning a condo also eliminates some of the negatives of home buying (exterior maintenance, major repair bills, etc). I've gotten over being an idiot, but this is still something I'll be pursuing in the future, so I'd like to know what you guys think. Also, not for me, but for my mom, I'm assuming most of these concerns go out the window when buying in cash (aka no mortgage).
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Jul 26, 2010 03:24
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You still pay for maintenance and repairs on a condo. You just pay for them via fees, instead of hiring people yourself. Meaning, you pay the average of everyone's maintenance in the development; if your neighbors trash their places, you pay more. The difference is that when you own a SFH, you can do some of the work yourself to save money if you want. Or you can lavish your cash on top-quality work, customizations, upgrades, and so on. Basically condos can make sense for the wealthy. They can afford to take a loss, don't want to waste their time personally hiring contractors or mowing a lawn, and enjoy the amenities. If your mom has the money to buy one outright, it's maybe a good deal for her. A condo can also be the only affordable way to buy property, in an inner-city situation where SFHs just don't exist, or cost half a million dollars or more. If you absolutely must live downtown, and you're ready to buy, a condo can work.
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Jul 26, 2010 05:24
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Leperflesh posted:A condo can also be the only affordable way to buy property, in an inner-city situation where SFHs just don't exist, or cost half a million dollars or more. If you absolutely must live downtown, and you're ready to buy, a condo can work. This is the case right here. I don't want a SFH because they don't exist in the places I want to be living. As for the HOA. That helps take the "shock" out of any major home repairs, as well as (in most cases) providing some useful amenities. The building in particular I was looking at includes a nice fitness center, party rooms, huge rooftop patio with grills, etc. Some of that stuff I'd be paying for myself otherwise. To be honest, I wish there was no mortgage interest tax credit, then none of this would be a problem. Condo prices would be pushed down to a point where they didn't make any sense to build, and all the nice buildings would stop converting from rentals to owner-occupied. I also wish the government would stop subsidizing SFH and suburbanization. But that's really more of a discussion for D&D, so I'll keep it out of here. I'm looking for a place to live that I will love, so I want to be able to do that as cheaply as possible.
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Jul 26, 2010 05:57
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Leperflesh posted:Condos are depreciating assets. You don't own the actual land, just part of a building. The land is the only part of real estate that isn't destroyed by fire, flood, neglect, termites, or simply the inexorable crush of time. http://blog.lucidrealty.com/2010/01/31/chicago-case-shiller-index-for-condominiums-vs-houses/ This is limited to Chicago in the last 15 years though. Condos are actually doing better than SFHes during that time frame.
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Jul 26, 2010 17:19
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gvibes posted:Do you have any evidence to support your assertion that, over time, condos are depreciating assets? I couldn't find much in terms of comparisons, but case-shiller does condo indices too, and condo values seem to track home values pretty well, at least in the one comparision chart I found: Like I said, this can quickly turn into a D&D discussion. Urbanists like myself believe (and this is in some way backed up by trends in housing price decline) that in the long term denser, more walkable properties are going to become more valuable. A SFH in 30 minutes away from the central city surrounded by acres of parking lots is going to have a hard time rebounding. Some of these far flung places can survive if the increase transit to the central city, and emphasize a community design that, if not encouraging walking, at least stops discouraging it. A common phrase I've heard in my metro area is "drive 'til you qualify." That is, start in the center, and go out until home prices are low enough that you can afford it. But that fails to take into account transportation costs. When gas was $1 a gallon, it didn't matter much. When gas is $3 a gallon it starts to matter. When gas is $5 a gallon it really matters. Looking at housing costs in a vacuum is a bad idea, you should be considering housing+transportation, because that gives you the true cost of your living decisions. If I live in the central city, my family only needs one car. That leads to an annual savings of $8000-10000 from numbers I've seen, and that's not pocket change. I can go on and on and on about these kinds of things, but it boils down to this: condo prices in the central city aren't falling as fast as SFH, especially compared to SFHs on the periphary. You can see it in the link gvibes posted. I know it's true in my local market. Were it not for the credit crunch, there would be countless condo buildings going up right now. There is still a demand for these properties, even in this market. There will continue to be demand for these properties.
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Jul 26, 2010 17:52
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The other thing about condos in cities is the gigantic population of about-to-retire folks with money who no longer want the hassle and upkeep of a house and driving everywhere. I'm in the same situation, a condo is absolutely the only way I could buy a place and even then it will be quite a bit more expensive than renting. On the other hand I'm confident that a decent condo in a good location is pretty close to a lock as far as holding its value. qirex fucked around with this message at 18:49 on Jul 26, 2010 |
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Jul 26, 2010 18:46
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FISHMANPET posted:Like I said, this can quickly turn into a D&D discussion. What if you own a Chevrolet Volt? Electric cars can void the gas prices killing suburbs argument. Time is the real deal breaker, and commute time can be very weird when comparing transit vs car, it really depends on individual circumstances and if there is a decent metro system around. sanchez fucked around with this message at 18:57 on Jul 26, 2010 |
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Jul 26, 2010 18:52
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sanchez posted:What if you own a Chevrolet Volt? Electric cars can void the gas prices killing suburbs argument. Time is the real deal breaker, and commute time can be very weird when comparing transit vs car, it really depends on individual circumstances and if there is a decent metro system around. That's true. There's two ways to look at this: high oil prices will cause are cars to be powered differently, or high oil prices will cause us to reevaluate our auto oriented lifestyle. The problem with the first one is that if I live 30 miles away from Downtown and buy a Volt to get to work, so does everybody else. As you've said, there's still the time component. I'm not sure if there's a good, sustainable solution to the traffic problem that doesn't involve more intense concentration of employment in the core. That makes all sorts of stuff like dense central living, peak transit options for the suburbs, and carpooling and such for the exurbs. People are starting to realize that they enjoy an urbanist, walkable lifestyle (which is quite possible in the suburbs, if properly built), and once the economy in general recovers, we're going to see that trend in home prices (by ways of multi unit housing and small SFH in the city becoming more desirable, along with the far fling suburbs and exurbs basically never recovering. We're already seeing this in California, where some of the far off burbs an hour or two away from the big cities are basically being written off as worthless, and residents being encouraged (at least by people here) to just cut your losses and get out.
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Jul 26, 2010 19:22
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FISHMANPET posted:We're already seeing this in California, where some of the far off burbs an hour or two away from the big cities are basically being written off as worthless, and residents being encouraged (at least by people here) to just cut your losses and get out. But my 5 bedroom in Manteca/Palmdale/Tracy! 
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Jul 26, 2010 19:34
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When I refer to a condo as a depreciating asset, I am not talking about its market value, which will go up or down according to many factors including (especially) supply and demand. What I am refering to is the fact that it is a structure, and structures degrade over time due to weathering and use. A house, in that respect, is also a depreciating asset. Of course you can preserve a structure by maintaining it and performing repairs when necessary, but those cost money. So, you can consider that over a given period of time, the amount of money that you have to spend to keep a structure in its original condition, is roughly equivalent to its depreciation. (Not really, because a brand new structure still may be worth more than a used, but like-new structure, but you get the idea.) Property, however - that is, a chunk of land - doesn't fall apart if you don't maintain it. Now, that's actually also not always true - if you buy land in pristine wilderness condition, and then strip mine it, it is obviously massively degraded. If you buy an empty lot in the city and let it fill with garbage and derilict cars, its value might decline somewhat. But for typical real-estate purposes, a lot of a few hundred or a couple thousand square feet is not affected to any appreciable degree by physical depreciation. Its value is entirely dependent on other factors - zoning, quality of the neighborhood, utility availability, and of course supply and demand. I bought a house, but I also have a deed to the land its sitting on. If my house burnt to the ground, I (and my insurance company) would take a big loss on the structure, but I'd still own the lot. In fact short of a meteor strike or something, there's little I can think of that'd totally eliminate the lot. (There's houses on eroding cliff sides and seaside beaches where this isn't the case - I've seen houses in Pacifica where the land has less than 50 years, regardless, and I think the people who bought them are idiots.) If I wanted to (and could afford it), I could tear down my house and build a different one. Obviously I'd have to get planning permission, but it's not impossible. So, a condo's value might well rise over time, because of stable or rising demand in a market with limited ability to expand, exactly like what happens in a prospering city. But, will that structure still be there in 50 years? 80? 100? Do you have a part interest in the land the condo development is sitting on, or is that retained by someone else? If you wanted to, could you tear down your condo and build something else? That's what I mean when I say a condo is a depreciating asset. It's not necessarily a condemnation of the concept. A condo in Manhattan is insanely expensive, but a single-family house in Manhattan is basically nonexistent. If you must live in Manhattan, you can either rent, or buy an apartment or condo.
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Jul 26, 2010 21:41
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That's all fine and good, but most people care about the market value, not some intrinsic value that isn't reflected in the market value.
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Jul 26, 2010 22:13
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Leperflesh posted:When I refer to a condo as a depreciating asset, I am not talking about its market value, which will go up or down according to many factors including (especially) supply and demand. A building can't be torn down until everybody is bought out, so you're not suddenly out your investment when the owners decide to build a space needle or something. It's also not a very useful point to make, because as far as most people are concerned, the house is durable enough for the few years they'll be there. And since nobody here is buying this as an investment, who ares. It's got walls and a roof. If it's buried in the ground or 500 feet in the air doesn't really matter.
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Jul 26, 2010 22:16
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Yeah, I guess it's not really very relevant. There are plenty of other drawbacks to condo ownership that are more tangible, and matter in the short term.
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Jul 26, 2010 22:48
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Okay, does someone here know about the FHA/HUD minimum property guidelines? Me and my girlfriend found a property we want to buy, and it has a number of issues (because the ones without issues sell within hours to people with Scrooge-McDuck like pools of cash, apparently). Fortunately, most of these issues don't really bother us, but I think they will bother the FHA inspector. If anyone can shed light on which ones they will and won't require to be fixed, it might save me some trouble. 1. Two window frames need to be replaced. I plan on getting them replaced anyways, but how much is FHA going to dick me around about replacing them before move-in? 2. Furnace is missing. We use a space heater at home and haven't had working heaters in our last two apartments. I fully believe this habit of ours is what keeps our power bills in the $20 range each month. I couldn't care less if the furnace is there because we won't use it anyways, but will FHA make us pay thousands of dollars to install a furnace we won't ever use? We live in California, by the way, so it never even gets below freezing here anyways. 3. Paint is peeling, and the house is an old Victorian. I think I already know the answer to this, I'm gonna have to shell out for lead based paint abatement, right? 4. Floor on the 1st level is not even, especially in the kitchen. Nothing is structurally wrong, just the house is over 100 years old and has settled. This doesn't bother me, as I doubt it is going anywhere and I can fix it in a few years when I have the money, but is FHA going to make me fix it? 5. Original plumbing and electrical. Seller tells me is is original, but I haven't been in to the basement yet to take a look. This kind of scares me, but as long as everything is working I can replace it as I have time and money. Is FHA going to make me replace it for the hell of it? 6. Missing appliances. I have a truck and access to Craigslist, I can remedy this problem on my own given a day and a hundred bucks. Will FHA let me do that? There are a number of other things, like missing carpet, but I plan on just paying to get that fixed. So, which of these are they going to gently caress me on?
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Jul 27, 2010 03:05
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I did FHA and had extensive conversations with my FHA-experienced realtor and FHA-specialized loan agent. So, although I'm not an FHA expert, we asked about a lot of those things too.calvran posted:1. Two window frames need to be replaced. I plan on getting them replaced anyways, but how much is FHA going to dick me around about replacing them before move-in? Depends. The house has to be secure-able, so if the windows are actually shattered or hanging off the house, you'll have to at least board them up or something. But probably it's fine. quote:2. Furnace is missing. This is probably a problem. FHA wants to be sure the house is in livable condition, and houses in california require some form of heating. (BTW your apartment without heating was also illegal.) Also, plug-in space heaters are much less efficient than a modern furnace, assuming you're heating the whole house; if you really don't mind having most of the rooms at 50 degrees, then I suppose it might save you money, but again I don't think you're going to be able to just get away with no heating installed. Also, I live in California too, and I can't think of anywhere in the state where it doesn't get down to like high-30s at least a few days every winter. I guess maybe San Diego? quote:3. Paint is peeling, and the house is an old Victorian. I think I already know the answer to this, I'm gonna have to shell out for lead based paint abatement, right? My realtor said some inspectors really seem to care about exterior paint, and others don't, so it's hit-or-miss. You definitely won't have to do anything about lead unless you actually know there's lead; and you're under no requirement to test for lead. In fact, many banks will prohibit you from testing for lead as a condition of the sale - the reason being that such a test is immediately part of the public record on the house, which hurts the value a lot, so if you subsequently back out of the purchase the bank would be stuck with a big hit to the value. (This is assuming you're buying a bank-owned house, though. If it's a conventional sale, nevermind - you can demand the owner to do this inspection and they have to do it. But don't do it, because you are virtually guaranteed to find traces of lead.) So while you might have to get some paint, you shouldn't worry about lead. Yet. (Don't let your kids eat the dirt next to the house, though.) quote:4. Floor on the 1st level is not even, especially in the kitchen. Nothing is structurally wrong, just the house is over 100 years old and has settled. This doesn't bother me, as I doubt it is going anywhere and I can fix it in a few years when I have the money, but is FHA going to make me fix it? Foundation work is hideously expensive. Figure $20k+ at a minimum. FHA won't require it unless the structure is actually dangerous, but if I were you I'd have serious second thoughts about buying a house with a settled foundation. Get your inspector to determine whether the settling is recent or old (you can't make that assumption yourself!). quote:5. Original plumbing and electrical. Seller tells me is is original, but I haven't been in to the basement yet to take a look. This kind of scares me, but as long as everything is working I can replace it as I have time and money. Is FHA going to make me replace it for the hell of it? If it's really a Victorian, that'd better not be original wiring (Victorian era is 19th century!). If it is, by now it's a severe fire hazard and you're going to see astronomical insurance rates. FHA will not pass exposed wiring or anything that looks like it is dangerous. Plumbing is much less of an issue. You have to have operating sinks in the kitchen and bathrooms, and the toilets and drains have to work, but they don't have to work well especially. That said, again you are looking at potentially very expensive repairs, tearing open walls and floors to get to ancient rusty crappy piping. quote:6. Missing appliances. I have a truck and access to Craigslist, I can remedy this problem on my own given a day and a hundred bucks. Will FHA let me do that? Yeah you'll have to have a stove of some kind, and I think also a fridge, and a kitchen sink. Any piece of junk you can get your hands on will work. They will let you do that, but you'll have to do it before they sign off. quote:There are a number of other things, like missing carpet, but I plan on just paying to get that fixed. So, which of these are they going to gently caress me on? Your real risk here is that you're going to be spending a bunch of money before you've actually got the house. If something goes wrong during the sale and it falls apart, you'll lose that money. I think the biggest potential issues are the foundation, wiring, and appliances. Appliances will cost you a couple hundred maybe from craigslist; wiring could be from zero to who knows, depending on whether it's considered safe; and the foundation could be nothing or it could be tens of thousands of dollars. Moreover, you and your girlfriend are buying a house that will be extremely expensive to maintain. You will be constantly fixing things, far more than someone who buys a house built in the last 60 years. I think you need to do your research and really make sure you can afford both the money and the stress of this endeavor. You're also going to catch some flack from people for buying a house with a "girlfriend". I don't know how committed a relationship that is - I was with my wife for over 10 years before we got married, and we were committed to each-other after three or four. But the point is, splitting up when you both have your names on the title of a house (and are both fully responsible for the mortgage) is a nightmare. A very, very expensive nightmare, involving lawyers and potential bankruptcy. I urge you to consider a less-ancient house, anyway. Fixer-uppers are not for the inexperienced, and 100-year-old fixer-uppers can potentially eat you alive. Leperflesh fucked around with this message at 08:08 on Jul 27, 2010 |
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Jul 27, 2010 08:00
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FISHMANPET posted:Urbanists like myself believe (and this is in some way backed up by trends in housing price decline) that in the long term denser, more walkable properties are going to become more valuable. A SFH in 30 minutes away from the central city surrounded by acres of parking lots is going to have a hard time rebounding. Some of these far flung places can survive if the increase transit to the central city, and emphasize a community design that, if not encouraging walking, at least stops discouraging it. I'm not saying it's impossible, but the amount of effort to make housing development up and down the stack truly sustainable is probably easier done in less developed areas. Greater population density means each and every change to the landscape has a greater and greater impact. Experiments for housing changes are more economically done outside cities while experiments for social change are likely better done in cities. FISHMANPET posted:I'm not sure if there's a good, sustainable solution to the traffic problem that doesn't involve more intense concentration of employment in the core.
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Jul 27, 2010 08:50
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Leperflesh posted:Lots of stuff Thanks for the reply. I'm aware what a nightmare these places can be, but I like the area it's in and it has a lot of extra rentable space. I don't want a newer house cause they don't tend to have the extra basement space, attic space, and random outbuildings that many victorians (including this one) have. I manage property nearby for a living and we see an opportunity to cashflow and live for free, so, we're not as naive about this at it might seem, I've just never actually bought a house of my own before. Plus, we plan on doing 203k, so any work that is to be done will be done and paid for after we actually own the house. I would never toss money at someone elses house in case the deal fell through. My work throws out old appliances when they upgrade to newer ones, and I see new appliances on CL all the time, so I'm sure I can scare up something. As for the wiring, I worked as an electrician for a while and I know enough to rewire everything except maybe the breaker box to something approximating code. We're aware of the legal quagmire of buying a house together. We've been together for almost three years and plan on getting married after we get on our feet financially (read : buy the house and get the extra rooms all rented out), but we plan on getting a contract written up by a lawyer one of these days when we have time specifying that we each get back what we put into it if things don't work out with us and all of that stuff. Thanks again.
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Jul 27, 2010 22:27
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Maybe you should get on your feet financially before borrowing a massive amount of money to buy a house.
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Jul 27, 2010 23:01
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FISHMANPET posted:So let's talk about condos vs renting. First off, for my situation, a SFH isn't an option (I just don't want it). The biggest problem for me is that my condo's assessments have more than doubled in the 6 years that I've owned. Your best bet is to rent a condo from a private owner - you'll get the amenities that you are looking for without the ever changing HOA fees.
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Jul 28, 2010 06:31
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Is there a current trend of appraisals being rejected lately? The house that we are on the underwriting stage of right now, the appraisal was rejected due to the comps. The place is ~15 miles out of town in a neighborhood of fairly nice houses on 5-7 acres of land. Due to the market, there have been VERY few 2100 SqFt houses on 6 acres that have sold in the last year. Sale price is 225, the appraisal came in at 232,600. 3 of the comps are in the same subdivision and are over the 300k mark one at 400k, a couple more are ~7 miles away in about the same range. Any ideas based on that info on why they would have rejected the appraisal? Note: It's an out of town lender, likely not familiar with the area.
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Jul 29, 2010 15:56
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That happened to one of my friends. He was attempting to refi and got rejected for a lack of similar houses being sold in the past six months. The guy has flawless credit, a stable director-level job that pays well above 100k, and his house is way below what he can afford. You couldn't make a safer bet, but the bank turned him down.
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Jul 29, 2010 16:39
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It's possible to contest an appraisal, but it's a big pain in the rear end and can take many months, with no guarantee of success. It's likely the seller will go with anyone else who can make a cash offer instead. On the other hand if the difference between appraised and offered dollars isn't too huge, you might try to use it to leverage a lower price for yourself. But quote:Sale price is 225, the appraisal came in at 232,600 I don't get it. It appraised for more than the sale price. Why would the lender reject that?
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Jul 29, 2010 17:34
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^^ I don't either. I figure they think the comps are not strong enough of a case. It's weird.
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Jul 29, 2010 17:37
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Yeah it isn't a case of the appraisal being too low, its that they don't believe the appraisal is valid. Did they offer you any sort of option to get a second appraisal? Do you have an option of using another lender?
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Jul 29, 2010 17:53
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