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Kobayashi
Aug 13, 2004

by Nyc_Tattoo

swenblack posted:

Of course we can't predict the future with absolute accuracy. I don't mind opposing views on where the market is headed, but most of the information you're using to support your argument is wrong. The last major social change in regards to home buying was right after WWII, after Congress had passed several measures to encourage home ownership, including implicitly backing mortgages up to 30 years. That, coupled with the post-war economic prosperity accounts for the large jump in home prices in the late 40's and early 50's. It was during that time when all your "modern mortgage ideas" originated, not in the last ten years.

Yeah, and entities like the FHA were created in the wake of the Great Depression.

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Cheesemaster200
Feb 11, 2004

Guard of the Citadel

swenblack posted:

You're also looking at interest rates wrong. Banks are not giving out a discount to get business right now. That would be the credit crisis you've heard so much about. There are a lot of people who would like to get a mortgage either to buy or refinance but aren't able to right now. Can you please cite some sort of source that states that increased home demand leads to higher mortgage rates, because that runs counter to all literature I've seen. Usually home prices follow interest rates (almost like bonds) not vice versa.

The fed currently has the discount rate at .25% right? That is a historical low because they want private (non-government) banks to lend, increasing the amount of credit available to the entire system. This is also because the fed wants to help the housing industry by making low-interest loans available to the general public with the thought that if interest rates are at sub-5%, more people can afford a house (which is correct), and more people will subsequently buy. This works out for the banks as well as the housing market as the banks are originating more loans and making more money, and more houses are being sold.

Now, once the recession "ends" or the housing market gets back to normal operations (housing prices not diving and foreclosures slow), the fed is going to increase that rate again (albeit slowly), driving up interest rates.

You also have to consider that an interest rate is going to be based upon the factor of the fed rate, inflation, risk, and subsequently profit for the banks as this is where they get their money.

Inflation is going to go up heavily after the recession slows down (hell it already is) as the fed as the government has pumped in inordinate amounts of cash into the economy to combat deflationary pressures.

Finally, the amount of profit taken from risk assessment will most likely go up after the banks aren't as hosed up as they are now based entirely on the common principle of "lets not let that happen again". When the banks aren't grubbing for every refi and new mortgage out there, they will (hopefully) be a bit more stringent in their lending practices.

Therefore, the addition of these three factors will see a rather big jump in interest rates once the recession is over. The recession won't be over under house prices stabilize to reasonable levels and people stop going under in droves.

Now the interest rate obviously will be tied to home prices and a lower rate will probably mean lower prices. However, it is just another factor going into a situation that will be extremely different from what we have seen before.
The point, as always, is that the historical data from the last 60 years probably doesn't mean to much.

swenblack
Jan 14, 2004

Cheesemaster200 posted:

Now the interest rate obviously will be tied to home prices and a lower rate will probably mean lower prices. However, it is just another factor going into a situation that will be extremely different from what we have seen before.
The point, as always, is that the historical data from the last 60 years probably doesn't mean to much.
I agree with you on these points regarding interest rates. I just don't think it's wise to throw out the historical data. I think I've laid out my position and given people enough resources to form their own opinions, so I'll shut up now. If anyone wants to continue the debate or wants my opinion on individual markets, feel free to shoot me a PM.

Cheesemaster200
Feb 11, 2004

Guard of the Citadel

swenblack posted:

I agree with you on these points regarding interest rates. I just don't think it's wise to throw out the historical data. I think I've laid out my position and given people enough resources to form their own opinions, so I'll shut up now. If anyone wants to continue the debate or wants my opinion on individual markets, feel free to shoot me a PM.

You are probably right with most of them anyway, and my arguments do have a lot of holes in them. I am just very skeptical of "trends" in financial markets since when people all get on the bandwagon of "hey, it has been doing the same thing for XXX amount of time!" the opposite ends up happening eventually.

mlmp08
Jul 11, 2004

Prepare for my priapic projectile's exalted penetration
Nap Ghost
I'm looking to become a first time home buyer. I'm a married Lieutenant in the Army, and I'm currently deployed. I'm planning on buying a $120-140K home when I get back to the states in late October/Early November in order to take advantage of the tax credit.

Things pushing me toward buying:

1.) I am sick and tired of living in an apartment, and I would just about kill to have a garage. My wife feels the same way. Seriously, my main hobbies aside from being an internet nerd would benefit from a garage, and I want space that is my own. I am willing to pay a premium for this luxury.

2.) I'm not some real estate guru, but I'm stationed at Fort Bliss in El Paso, TX, and it is undergoing a MASSIVE expansion where over the next 3 years our population on base will more than double. I am confident that the home will increase in value, even if modestly, or that it will at least be easier to rent out than it would have been in the past.

3.) I have saved a lot of money while deployed and I ought to be able to save about $12,000 more before I go home in mid-October. That will bring my total saved (minus a few grand for emergencies) to about $25,000 (conservatively).

4.) Guaranteed work. I'd have to rape someone or something to lose my job in the Army, and I am required to work for them for a bit over two more years. I'd like to get out, but who knows at this point.

5.) Renting a home that would meet my desires would cost a couple hundred more per month than the apartment I rent.

Things making me wary of buying:

1.) I only have 26 more mandatory months in the Army, and I'd like to get out if feasible. Let's just say El Paso is not my dream home location.

2.) Even if I stay in the Army, I probably wouldn't be in El Paso for 5 more years straight. It's possible, I guess.

3.) Interest.......... Not because my credit is bad, it's quite good. Just..interest.

Is my desire to own a home clouding better judgment? I keep reading the mantra "if you're not absolutely going to be there for 5 years, don't do it!" but the market I'd be buying in ought to do well, and I'm NOT buying something I cannot afford then hoping it appreciates to bail me out. I am totally open to renting the place out if I move somewhere else of my own accord or the Army moves me. I understand I may not make any profit on renting, but it will offset the cost while I build equity. Or am I a moron?

Any input is appreciated!

FidgetyRat
Feb 1, 2005

Contemplating the suckiness of people since 1982
Personally, it sounds like you aren't in a stable enough situation to warrant a home purchase. The two big things that flagged me in your post were that 1) You don't really even like it down there, and 2) You don't think you have more then 5 years there.

Not sure why you would want to buy something permanent in a place you don't want to live, especially a place where you only for-see yourself for 5 years... sounds like an ideal rent position to me. Lets just say that home prices level off down there for a few years.. Since nobody can predict the housing market down the road, its almost silly to assume "well, there's a boom now so houses should go up quite a bit!!"

Not even assuming the worst, lets say that the market stays stale for those 5 years and your home price stays the same (hell it can even go DOWN).. You just paid 5 years of mostly interest on a house, then may even have a hard time selling for what you bought it for..


I personally would only buy a home if I had intention of spending the rest of my life in that location..

mlmp08
Jul 11, 2004

Prepare for my priapic projectile's exalted penetration
Nap Ghost

FidgetyRat posted:

Personally, it sounds like you aren't in a stable enough situation to warrant a home purchase. The two big things that flagged me in your post were that 1) You don't really even like it down there, and 2) You don't think you have more then 5 years there.

Is it totally stupid for me to rationalize not being there for 5 years based on planning to rent the house out and sell it later?

Having Fort Bliss right there means there will always be transient families moving in and out who will rent. Of course, maybe they have the right idea, and I'm being stupid.

FidgetyRat
Feb 1, 2005

Contemplating the suckiness of people since 1982

mlmp08 posted:

Is it totally stupid for me to rationalize not being there for 5 years based on planning to rent the house out and sell it later?

Having Fort Bliss right there means there will always be transient families moving in and out who will rent. Of course, maybe they have the right idea, and I'm being stupid.

Well no, if you do plan to rent it out and sell it it might not be too bad, at least you have a plan, but keep in mind being a landlord is not as simple as owning a property and saying "ok you can rent". You'll have to keep the place in working order, repair anything that is wrong with it, deal with tenants trashing the place, and all of that is very difficult to do if you live far away from the rental unit. Then, if you buy a house of your own somewhere else, now you have 2 mortgages (one of which relies on tenants which might not ALWAYS be available).

Again, its all my opinion. If you think you want to do it anyway, go for it.. A house is awesome to own, but they are very costly. As long as you can deal with losing alot of money you can walk away 5 years later just fine.

Fraternite
Dec 24, 2001

by Y Kant Ozma Post

FidgetyRat posted:

I personally would only buy a home if I had intention of spending the rest of my life in that location..

Yeah, but most people aren't like this and if they're in a reasonable financial position (as mlmp08 appears to be) there's no reason for them to do this if they want to spend their money on a house.

What I would suggest is doing the math; count the closing costs, property taxes, PMI, interest, etc. -- all the costs associated with home ownership -- and then subtract from them them the amount of equity that would be built in 5 years. While doing this it's important to remember that mortgages are typically front-loaded with interest early in the amortisation period, so if he's typical he'd probably be paying 3:1 interest:equity (that is, only 25% of the payment is going to equity) over the first 5 years of his mortgage

After he does the math, he'll know just how much he's paying for the house as opposed to how much he would pay to rent and he can decide for himself if that's a premium he'd like to pay.

mlmp08
Jul 11, 2004

Prepare for my priapic projectile's exalted penetration
Nap Ghost
Thanks for that tip, Fraternite. I've got some computing to do.

necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll
Nap Ghost
Don't you get some housing expenses paid for in the army? That's how it was for my dad in the US Army. Or is that some sort of enlisted v. officer compensation difference?

There are currently plenty of houses for rent in many areas since so many homeowners are unable to sell their properties to move. You should be able to get a decent deal on a house rental almost anywhere now.

Buying a place and expecting the area to do well is speculation - it may be educated, but it's speculation. A lot of areas looked like they were booming just fine during the boom years, but they were basically fueled by loose lending practices. I expected my area to get a good round of improvements with a new luxury mall and light rail, but due to the recession, all this has been delayed another 2-3 years.

But anyway, I would not recommend anyone that's not a real estate guru to strap themselves into a house and not expect to live there for very long. I've done a lot of homework and despite all my efforts I've honestly been pretty burned (although I took a risk or two I underestimated). If you don't want to deal with the hassles of being a landlord (property managers take a cut, and that still doesn't mean you don't need to pay for repairs), I would recommend you stay out of the real estate market if you intend on renting the place out whatsoever. If you do it right and get lucky, it's basically a steady revenue stream where you have to spend a bunch of cash for repairs every several years.

FidgetyRat posted:

You'll have to keep the place in working order, repair anything that is wrong with it, deal with tenants trashing the place, and all of that is very difficult to do if you live far away from the rental unit.
The risk of all this varies from property to property. I'm about 2500 miles from my property and have a property manager, but the tenants had better records than me and the area is pretty affluent, so the risk of such renters is very low. I plan on spending a good amount of time there anyway, and trips to the property are tax deductible business expenses - this is less relevant at lower tax brackets but get better the higher you get until you're at about $120k / yr AGI.

FidgetyRat
Feb 1, 2005

Contemplating the suckiness of people since 1982

necrobobsledder posted:

The risk of all this varies from property to property. I'm about 2500 miles from my property and have a property manager, but the tenants had better records than me and the area is pretty affluent, so the risk of such renters is very low.

I agree with you, but I imagine the original idea the poster had regarding renting-out the property was seen with rose-colored glasses in a best-case scenario where the renters are perfect, nothing breaks, and he gets near *free* mortgage money..

If looking at the best-case scenario, everyone should also consider the worst case as well.

When it comes to mortgages and homes, its always better to prepare and expect the worst then take a chance and risk financial ruin. I bet everyone in foreclosure now didn't expect the economy to come tumbling down around them.

FidgetyRat fucked around with this message at 17:53 on May 17, 2009

mlmp08
Jul 11, 2004

Prepare for my priapic projectile's exalted penetration
Nap Ghost

necrobobsledder posted:

Don't you get some housing expenses paid for in the army? That's how it was for my dad in the US Army. Or is that some sort of enlisted v. officer compensation difference?

I get $1050/month tax free for housing. That doesn't depend on a rental/mortgage contract, I could live in a van and collect the $1050. I also get about $300/month tax free for food.

Then of course there's my basic pay of $3483/month. Right now I have all sorts of deployment bonuses and whatnot going on in addition to my basic pay.

My current rent is $760 before utilities. More like $900+ with utilities. Renting a house that has what I want (GARAGE, decent room, garage.. garage...) is about $900 before utilities. Buying here costs about as much as renting ASIDE from the obvious and potentially very large costs associated with homes, like repairs and landscaping, and insurance etc.

edit: regarding renting out a property, I dont' expect that the rent will result in a free mortgage payment. I expect to be paying a couple-a few hundred/month toward owning the home instead of several hundred-1,000 per month for owning the home.

mlmp08 fucked around with this message at 18:08 on May 17, 2009

Fraternite
Dec 24, 2001

by Y Kant Ozma Post

FidgetyRat posted:

When it comes to mortgages and homes, its always better to prepare and expect the worst then take a chance and risk financial ruin. I bet everyone in foreclosure now didn't expect the economy to come tumbling down around them.

It's just as ridiculous and unreasonable to expect the worst as it is to expect the best, and doing either will lead you to make bad financial and life choices.

Dik Hz
Feb 22, 2004

Fun with Science

mlmp08 posted:

I get $1050/month tax free for housing. That doesn't depend on a rental/mortgage contract, I could live in a van and collect the $1050. I also get about $300/month tax free for food.

Then of course there's my basic pay of $3483/month. Right now I have all sorts of deployment bonuses and whatnot going on in addition to my basic pay.

My current rent is $760 before utilities. More like $900+ with utilities. Renting a house that has what I want (GARAGE, decent room, garage.. garage...) is about $900 before utilities. Buying here costs about as much as renting ASIDE from the obvious and potentially very large costs associated with homes, like repairs and landscaping, and insurance etc.

edit: regarding renting out a property, I dont' expect that the rent will result in a free mortgage payment. I expect to be paying a couple-a few hundred/month toward owning the home instead of several hundred-1,000 per month for owning the home.

Why not rent a full sized house from one landlords that you planned to emulate? You could probably sign a two-year contract, treat it like your own house, enjoy the use of the yard and garage. And then walk away after two years and enjoy the flexibility of renting. You'll come out way ahead renting, unless housing prices go up significantly. Housing prices might go up, or they might go down. If there's a guaranteed base expansion, it might already be priced into the market.

Then, take the money you will save by renting, plus the money you have saved already, plus the interest it accrues over 2 years, and buy a nicer house someplace you actually want to live and settle down.

Strict 9
Jun 20, 2001

by Y Kant Ozma Post

mlmp08 posted:

I'm looking to become a first time home buyer. I'm a married Lieutenant in the Army, and I'm currently deployed. I'm planning on buying a $120-140K home when I get back to the states in late October/Early November in order to take advantage of the tax credit.

Also, you will have to close before December 1st to qualify for the credit. Unless you have your house pick out and are pre-approved, it's probably going to prove fairly challenging to close before 12/1.

Kruzen
Sep 3, 2003

I need to engage in homicidal behaviour on a massive scale. It can not be corrected but I have no other way to fulfill my needs.

Strict 9 posted:

Also, you will have to close before December 1st to qualify for the credit. Unless you have your house pick out and are pre-approved, it's probably going to prove fairly challenging to close before 12/1.

Why is this? Just curious.


My old roommate decided he didn't want to rent anymore when our lease was up, we went out one weekend, looked at 5 or 6 houses, and decided we liked the first one, bought it, and were moved in 2 weeks later.

swenblack
Jan 14, 2004

Kruzen posted:

Why is this? Just curious.


My old roommate decided he didn't want to rent anymore when our lease was up, we went out one weekend, looked at 5 or 6 houses, and decided we liked the first one, bought it, and were moved in 2 weeks later.
When was this? Stories like this weren't too uncommon even as recently as two years ago.

mlmp08
Jul 11, 2004

Prepare for my priapic projectile's exalted penetration
Nap Ghost

Strict 9 posted:

Also, you will have to close before December 1st to qualify for the credit. Unless you have your house pick out and are pre-approved, it's probably going to prove fairly challenging to close before 12/1.

A coworker of mine who bought a house in the same region I'm looking who makes exactly the same pay, but has a lot more (low interest) debt in the form of his wife's student loans was able to buy a house in just about one month, maybe 6 weeks.

Something I really should have mentioned in my earlier post: I'll probably be using either the VA loan available to active duty military or the Tex Vet loans Texas does which is their version of a VA loan.

Still, I would have to get the ball rolling before I got back to the states, and just do the finishing touches in the states. My wife has a POA until 6 weeks after I get back from deployment, so she should be able to do most everything without me pre-approval wise.

Despite sounding like I'm ignoring everyone and planning to buy a home and say "gently caress it" to renting, I am still very, very undecided.

Using a VA loan, you can put virtually nothing down without getting hosed by PMI and horrible interest rates, plus a ton of builders in our area are paying the closing costs in order to move houses which have decent warranties.

Monthly rent exceeds mortgage+insurance costs on comparable homes.

Cons: landscaping is a horrible task for homeowners in El Paso, because it's a desert. Even homes that come prelandscaped with sprinkler systems in place are a pain in the rear end.

Texas has no income tax, so they make up for it with heavy property tax. Looks like 3-3.1% where I'd be living. Sure, my interest is tax deductible and the tax-free nature of a lot of my Army income means I'm not in a very high tax bracket considering what I actually net anyway. Still, that's a lot of damned property taxes.

I would be taking a gamble. El Paso has remained one of the few large cities to continue to create new jobs during this recession, and Fort Bliss is and will continue to experience a huge expansion as we move a ton of Armor units down here to play in the sand. If I buy the house, I just have to accept that I will need to rent it out for at least a couple years, or else the purchase will not be worth it. There are some excellent property management companies that specialize in working with us military officers who keep buying houses then moving away, but that's still more money I won't be collecting on rent, assuming it stays filled. Which, of course, is an additional gamble.

I will make significant payraises in the next two years of mandatory service to the Army, but if I am tied up in a house and its costs it could make it harder to accept a possible paycut in order to be free of the Army and go back to enjoying civilian life. As awesome as it would be, I can't depend on making comparable or greater pay as a civilian than I will be as a Captain with 3-4 years' service time.

FidgetyRat
Feb 1, 2005

Contemplating the suckiness of people since 1982
I'm at that point in our building schedule when I need to seriously sit down and find homeowners insurance. Any advise on what to look for? I absolutely loathe insurance companies and can get lost in paperwork (that I understand little of) for hours.

What are typical coverages people should get (I'm in NJ, so flood or disaster isn't really necessary)..

Also, every time I want to compare companies, they practically want a full application in order to give a quote.. I've avoided filling any of these out because of fear of dings on credit report before the final closing of my mortgage. Will these rate quotes affect my credit?

Mercury Ballistic
Nov 14, 2005

not gun related
I am in a similar position as the Army guy above. I am a Navy LT, deployed until probably october of this year. Making all the tax free stuff an O3 makes, with a good BAH, totalling about 6300/month take home pay after everything else. After that I go back to my regular job, where I spend most of the year also deployed, but paying tax, where I end up grossing about 100-110K/year. I currently have about 100K saved up for a house, with more in reserve for "oh poo poo" money and some other whatevers that may come up. Cars are paid off, and I have, or at least had excellent credit. No other debt. I "live" in Northern Va, just outside DC and probably want to live there in the future. I am keeping my stuff at my folks house there. I am looking at houses now, up to about 350K, but as I have a non traditional lifestyle I am not sure if I can afford more or less. Here are what has me wondering:
-For about 8 months of the year I am away, outside the country working, where everything except my alcohol and income tax is paid for.
-If I buy a house, I would almost never be there for more than a month at a time, and would need to have someone take care of it. Roommate, friend, ?? Who would/should I trust with this? My brother may be moving to the area, I thought he could be a roommate...
-DC is not a cheap area, and has been a mildly insulated from all the real estate mess of late. High property tax, high cost of living, but I know and like it here.
-I am afraid that buying a house will trap me at my current job, and I will have to work to pay for a house. I am pretty sure I want the freedom of a house, but I like to be able to walk away.
-I would rent, but why waste money on a place I am not there to see or use. I might at least be building equity I guess, except for above.


There is more, but that is the basics. I asked this maybe a year back, thought I would ask again as my situation is slightly changed now. Anyone have any advice on if I should stand by or buy? Oh yeah, FWIW, I am 29 and single.

NJ Deac
Apr 6, 2006

FidgetyRat posted:

I'm at that point in our building schedule when I need to seriously sit down and find homeowners insurance. Any advise on what to look for? I absolutely loathe insurance companies and can get lost in paperwork (that I understand little of) for hours.

What are typical coverages people should get (I'm in NJ, so flood or disaster isn't really necessary)..

Also, every time I want to compare companies, they practically want a full application in order to give a quote.. I've avoided filling any of these out because of fear of dings on credit report before the final closing of my mortgage. Will these rate quotes affect my credit?

The information I have received from the agents while shopping for homeowners insurance is that the credit pull is not a "hard" pull and shouldn't affect my score. Even if it was a hard pull, I assume it would be like applying for a mortgage, where multiple pulls for the same purpose over a reasonable period of time do not have more of an effect on your score than a single inquiry.

With that said, I'm interested in learning a bit more about the HO insurance process too (And am also in NJ), since I'm still in the process of deciding between a few different quotes I've received - leaning towards one that offers more coverage than most of the rest at a substantially cheaper price, but curious if there are any potential pitfalls or catches I should be aware of.

orinth
Apr 15, 2003

NFC WEST IS THE BEST
I bought a house in the beginning of the year, doing a FSBO. I lucked out with the tax credit since, I had assumed that I would have to repay it, but lucked out that I bought my house before the housing bill credit was passed, but still qualified for non repayment.

I had been looking at a few houses and put a few offers on the table with my real estate agent, but nothing was accepted. Granted I did lowball a few. On one, a guy was asking $239k, I offered $215k and he pay my closing costs. Initially, he didn't even counter, but he countered with $239k and he would pay half of my closing costs.

One day, I decided to check out craigslist which I didn't do too often since most everything on there is on the MLS aside from FSBOs. I found a FSBO which looked nice, and we went and looked at it and put an offer on it later that night. I ended up piecing together a sales contract from the internet that was less than 2 pages long. It pretty much just stated that it was for X amount of money, this towards closing costs, this must stay in the house, etc. It also covered me in case I couldn't get financing or the inspection didn't pass.

Overall, I'm happy with the deal I got, although I was leery at first to do a FSBO. I felt bad for doing it outside of my real estate agent, but there really wasn't any point for him being there since I had done all the work on my own. After 2 payments on my mortgage, it has already changed hands. It was initially with a smaller regional bank in the midwest, but has since been sold to Countrywide (now BofA).

Arzakon
Nov 24, 2002

"I hereby retire from Mafia"
Please turbo me if you catch me in a game.
I only contacted Progressive for my homeowners insurance due to the reduced rate because I have my cars there as well but I will say to call their customer service after you get an online quote number. The online quote system is fairly simple, and gave me a quote of $551/yr for high deductibles and the basic coverages and with a phone call they offered me $475/yr, lowered the deductibles, increased my coverage, and added a rider for my wife's wedding rings. After that I gave the person on the phone the number for my mortgage broker and they handled the rest of the information, which I think was my broker giving loan specifics to Progressive and Progressive providing a doc called a DEC page to the broker/bank.

Arzakon
Nov 24, 2002

"I hereby retire from Mafia"
Please turbo me if you catch me in a game.

orinth posted:

One day, I decided to check out craigslist which I didn't do too often since most everything on there is on the MLS aside from FSBOs. I found a FSBO which looked nice, and we went and looked at it and put an offer on it later that night. I ended up piecing together a sales contract from the internet that was less than 2 pages long.

Could you expand on how the rest of this process went? Looking at my sales contract I could easily piece together one of these, but I was worried about anything else that needed to be done after you were under contract. How did you protect yourself to take advantage of doing this yourself (Not having to pay a buyer's realtor 3% commission).

orinth
Apr 15, 2003

NFC WEST IS THE BEST

Arzakon posted:

Could you expand on how the rest of this process went? Looking at my sales contract I could easily piece together one of these, but I was worried about anything else that needed to be done after you were under contract. How did you protect yourself to take advantage of doing this yourself (Not having to pay a buyer's realtor 3% commission).

Neither of us had a realtor so there was no commision that had to be paid. Basically, after we signed the contract, I gave a copy of it to my mortgage broker and gave him the title company's information. We also took the contract down to the title company office with the earnest money check and gave them my mortgage brokers information.

I pretty much just waited for the bank to give the go ahead. I hate the approval with conditions though, the bank at the last minute decided that my final 2008 paystub showing my YTD income was not good enough and they wanted my 2008 1099 (not W2). Neither I had this, nor did my company, as they were waiting for ADP to process it and we had to close the house on 1/31. It came down to the wire, but I was able to get it after sitting around for 2 weeks waiting for it.

anitsirK
May 19, 2005

Why do so many people insist that a (buyer's) realtor is necessary? I'm looking for a lawyer and a home inspector, and several people have said "Ask your realtor" and when I say we're not working with one (other than the seller's realtor), they go into this giant rant.

Wreckus
Dec 15, 2007

From birth, man carries the weight of gravity on his shoulders. He is bolted to earth. But man has only to sink beneath the surface and he is free.

anitsirK posted:

Why do so many people insist that a (buyer's) realtor is necessary? I'm looking for a lawyer and a home inspector, and several people have said "Ask your realtor" and when I say we're not working with one (other than the seller's realtor), they go into this giant rant.

Because a Realtor would know a lawyer, home inspector and WDO inspector. They could also schedule everything for you and handle the paper work. Also, I'm pretty sure they're 'free' in that they split commission with the selling agent... so why wouldn't you have one?

Shaocaholica
Oct 29, 2002

Fig. 5E
So my wife and I found an auction for a new construction condo and we plan on bidding on it.

We already have an agent helping us find a condo but hes really out of the loop on this one and I'm not sure if I should bring him in.

If he gets in on it, he'd get a commission that he could kick back to us but if he doesn't, we'd end up paying the same anyway and the seller would just pocket the commission amount right?

What should we do?

limegrnxj
Apr 24, 2004
We have found a house and are under contract. YAH! The curernt owners would like to rent the home back from us for 30 days after closing. We are ok with this, but want to make sure we don't somehow get screwed. We plan on writing up a rental contract, but has anyone actually done this? Or does anyone have any tips or suggestions?

As far as not using realtors, I both bought and sold a home wihtout one and the process was much smoother that it has been this go round with a realtor. Unless the situation is complex(shortsale, foreclosure) I would not use one personally. We kinda got roped into this one, as she's the bosses wife. We found the house, all she appears to have done is forget to schedule things, delaying a process she is supposed to be helping with.

anitsirK
May 19, 2005

Wreckus posted:

Because a Realtor would know a lawyer, home inspector and WDO inspector. They could also schedule everything for you and handle the paper work. Also, I'm pretty sure they're 'free' in that they split commission with the selling agent... so why wouldn't you have one?

So, you find a realtor (somehow), and put 100% of your trust in them picking out your other real estate professionals. Then you let them act as a middleman between you and your other professionals, calling you to find out suitable times for appointments, instead of you having contact with the other professionals directly. Also, my experience when dealing with a realtor who was (apparently not) trying to sell one property we wanted to view is that a "buyer's agent" will constantly try to push properties on you that are completely the opposite of what you've expressed interest in. And by the way, anything that is part of the price you pay to purchase something isn't free. If the seller's not having to fork out part of the money you give them for one more person's commission, that (should) lower the price they're willing to accept. So, tell me again, why would you have one?

Before you make the argument about them finding houses for you, in my particular situation, there's no reason for that. We're not in a desperate hurry to buy, we tend to like houses that are not what the majority are looking for, and we're willing to wait until the right one comes along. The people who've gone into this big rant about having a buyer's agent all know this.

Wreckus
Dec 15, 2007

From birth, man carries the weight of gravity on his shoulders. He is bolted to earth. But man has only to sink beneath the surface and he is free.

anitsirK posted:

So, you find a realtor (somehow), and put 100% of your trust in them picking out your other real estate professionals. Then you let them act as a middleman between you and your other professionals, calling you to find out suitable times for appointments, instead of you having contact with the other professionals directly. Also, my experience when dealing with a realtor who was (apparently not) trying to sell one property we wanted to view is that a "buyer's agent" will constantly try to push properties on you that are completely the opposite of what you've expressed interest in.

You find a Realtor through friends or sites like Realtor.com, preferably through friends so you can avoid terrible Realtors. Usually you'll get one with a few years of experience, so they have a list of people that do a good job at the various tasks that need to be done (Home Inspection, WDO Inspection, random repairs, etc).

You just said you were asking several people about a lawyer and a home inspector. Why would you put '100% of your trust' in random people that someone who has been dealing with real estate lawyers and home inspectors weekly for years?

If a Realtor is pushing houses on you that you don't want and you can't handle that, just go to another Realtor.

quote:

And by the way, anything that is part of the price you pay to purchase something isn't free. If the seller's not having to fork out part of the money you give them for one more person's commission, that (should) lower the price they're willing to accept.

If a seller is using an agent (and most are) they're already paying commission, which won't change if you have your own agent. The only thing that changes is the agents themselves split the commission. This is likely why the Realtor you mentioned earlier was pushing you to houses that you were not interested in... if they sell you a house that they're also the selling agent then they get to keep both halves of the commission.

Having a buyers agent means that your time commitment to buying a house consists of talking to your agent on the phone/e-mail to let them know when you can be free, going to look at houses, and signing the paperwork. They save you a ton of time, can answer all of questions about every step of the process and will have far more experience choosing the various people/companies that you need to complete the transaction. It makes no sense for a person to try to stumble through the process by themselves if they can have someone available with exponentially more experience for 'free'.

orinth
Apr 15, 2003

NFC WEST IS THE BEST
Yeah I initially wasn't using a realtor since I was using a website that would track everything in the MLS and map it. So I would just watch neighborhoods that I liked. Eventually when it got to the point of going and looking at them, it was way easier to have them. Because then we could just be like "hey we want to look at these 10 houses" and he would schedule everything.

And like Wreckus said, they split the existing commission. Initially, I thought that it wasn't that way, and that was why we didn't have a "buyers agent" at first.

BrokenLinux
Mar 9, 2003
/device/null
So I just got my pre-approval for the usda RD loan of up to 140k. We've narrowed down a bunch of houses and will be closing in the next 2/3 months.

My question is about the 8k new home credit. If my wife doesn't count as a new home buyer (she sold her house 2 years ago prior to our marriage) but I do, can I qualify for the credit?

The loan will be solely in my name if that matters.

edit: poo poo I could've googled this, my bad...for anyone else interested:

What is the definition of a first-time home buyer?
The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.

For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.

BrokenLinux fucked around with this message at 20:18 on May 27, 2009

Tap
Apr 12, 2003

Note to self: Do not shove foreign objects in mouth.
:siren: First time home buyer looking for advice :siren:

I recently got preapproved by two different lenders for 250k, one at 5% (Guaranteed Rural Housing), and one at 5.35% (unrestricted).

About Me:
I'm 26 years old. Software Engineer at a small marketing company. I make 50k a year, have some debt (3 school loans - around 21k left), fully paid off car, motorcycle (paid off) that I'm willing to sell if need be. I have 15k in savings and 23k in 401k.

I'm looking to buy a house in PA, in the suburbs north of Philly. The houses in the areas I'm looking are about average price. I can get an almost new 3br / 2.5ba townhouse for 225k.

There also is the potential to rent out two rooms (I'm looking for a 3br / 2ba home) to the people I currently live with.

My question is: based on this information, would I be ready to purchase a home @ 250k?

Arzakon
Nov 24, 2002

"I hereby retire from Mafia"
Please turbo me if you catch me in a game.

Tap posted:

My question is: based on this information, would I be ready to purchase a home @ 250k?

No way. The payment of just the principal and interest on 250K @ 5.00% will be $1340, plus taxes, insurance, and PMI will be looking to be over 50% of your take home pay. Your 13K is not a significant down payment and money in your 401k shouldn't even be a consideration.

FidgetyRat
Feb 1, 2005

Contemplating the suckiness of people since 1982

Arzakon posted:

No way. The payment of just the principal and interest on 250K @ 5.00% will be $1340, plus taxes, insurance, and PMI will be looking to be over 50% of your take home pay. Your 13K is not a significant down payment and money in your 401k shouldn't even be a consideration.

Agreed.. With those numbers at 5.35% and based on the taxes in my area (rural south NJ) 2.55% and an estimated homeowners insurance policy of 500/y you are looking at close to $2100/m in payments before utilities and extras

Thats a lot to chew for a single person. What about if you lose your job!


And yes, don't even consider tapping that 401(k) for a house.

FidgetyRat fucked around with this message at 18:13 on May 28, 2009

Tap
Apr 12, 2003

Note to self: Do not shove foreign objects in mouth.
Alrighty then, thanks for talking me out of it. I'll continue renting until I can make more money.

Kobayashi
Aug 13, 2004

by Nyc_Tattoo

Tap posted:

Alrighty then, thanks for talking me out of it. I'll continue renting until I can make more money.

Yeah, look at Step 2 from the OP. General rule is you can safely ballpark around 2.5x your annual salary. A $250k mortgage puts you at 5.0x your annual salary. Right now you either need to double your income, or halve the loans you're looking at.

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Tap
Apr 12, 2003

Note to self: Do not shove foreign objects in mouth.

Kobayashi posted:

Yeah, look at Step 2 from the OP. General rule is you can safely ballpark around 2.5x your annual salary. A $250k mortgage puts you at 5.0x your annual salary. Right now you either need to double your income, or halve the loans you're looking at.

Yeah, I figure in 2 years I'll be making close to 80k, and if I continue paying what I'm paying for rent right now, I can easily save 1k a month towards a down payment.

That reminds me, what is the most ideal (or common) place to put money you expect to use for a down payment?

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