buying a house

“I'm starting to look at real estate, what are key compontets to making a profit?

The way I see it, I can either pay my college 10K a year for a small dorm room and dirty showers or buy a 100K house and live great. At the same time I can take the 10k from the first year and the 10k from the second year and now by a decent townhouse in NJ. Hold for years and then refinance and make $$$$$.”

“Tea the Joisey Tycoon by the age of 18! Hey, if you can do it and get the loan, go for it.

I saw these two rich midgets on a infomercial selling a real estate scheem. Too funny AND true.”

“Yeah, I saw that. One of those no money down deals. The funniest part was seeing them driving around in huge SUVs.”

“Tea, buying real estate is the smartest thing you can do, the younger you are the better it is in the long run. However, keep in mind that you'll run into a real hard time getting a loan for that amount at your age, even with a co-signer. BTW, where in Jersey do you live that they're selling houses that cheap?”

“I like buying the house..... but on top of the 10k+++ a year for mortgage payments, you also have major taxes, upkeep & utilities etc. Then you have maintenance like furniture, painting & mowing the #$%^ lawn.”

“Yeah...I was wondering the same thing....

Its a great idea to invest in real estate but where can you find a house in NJ uder 100K?”

“Make money when you refinance? It's still a loan. You only realize a profit when you sell. Your profit is also lessened by real estate commissions, costs of upkeep and maintenance, closing costs on the original loan and refinancing.”

“Tea,
Are you f**kin Nuts?!?!
Do you honestly want the headache, burden, and responsibility of being a home owner? Just get yourself a batchler pad apartment while you young. If your going to be going to College then you will want to have time to study. NOT cutting the yard, fixing this, repairing that.
Get used to living on your own with out the hassle of BUYING something.
When you get older you will have a better idea of what kinda house and WHERE you want it.
What if you Buy a house in one part of the woods but the job you get for your carrear is 2 or 3 hours away?

Keep life simple at a young age.”

“Ditto what Walkindude said. I sat at home this morning waiting for the furnace/AC guy to come for the second time this week, and he didn't come. I lost time at work. I get to lose more tomorrow when he says he'll show up. You don't need that kind of hassle while you're in college. Just enjoy your time as a college student. Its great that you have such high ambitions, but slow down on the house deal, for a couple of years.”

“I think he is talking about more of an investment property that he can live in while he is going to school. Then rent or resell later. Tea you can make money on a refinance but it is not always real money. You make money on a refinance if your house has appreciated in value since you made the original loan. If it has then you might be able to get part of that appreciation in cash when you refinance, and if you are refinancing at a lower rate then your mortgage payment will remain about the same. If the rates are higher are about the same this will not work.
I just refinanced last month at almost a 2 pt savings and my house had appreciated in value about 50% This gave me some extra money that I used to pay off some other debt, and my payments are lower than they were before. If i hadn't needed that money to pay off a higher interest loan then my mortgage payment would have been even lower.
As far as buting a house near your college, good luck finding one for 100k that is not in the hood!”

“How about a condo? I live in a condo, converted from apartments 20+ years ago. The mortgage payment and monthly assessment is still less than rent.

A number of parents of students buy "kiddie condos" low end condo's (like mine) because it's cheaper than living in the dorm and the parents have the benefit of the increased value (usually) when the kid graduates. We've been in this condo for 4 years. Similar unit in the building sold for nearly double what we paid.

The advantage of a condo is that you don't have to be concerned about the lawn, etc. Downside is dealing with the board, especially if they don't plan well. [Special Assessments.]

All, in all, a condo could be a good alternative to a house.”

“Two words: housing bubble.”

“Timing and luck are the key "compontets" to making a profit.

You're going to Ramapo? Is there anything near there that costs so little? I guess if you can find a one-bedroom condo or something it could work out. Perhaps rent out part of a larger unit while you’re in school. Don't count on it appreciating though. Your planning should account for the chance of it depreciating as well. Condo owners took it harder than single family homeowners did in the late 80's. Many people were trapped in a situation where they couldn't resell for anything close to their mortgage amount. I think there is a very real chance that could happen again. On the other hand, if you get lucky, it could be the start of an Ice Tea empire. Being a landlord is more of a headache than many people realize.”

“What Violin and Tilt are saying is right. My first house (a money pit fixer upper) doubled in value the first year I bought it, dropped steadily over the next few years, leveled off and grew in price modestly over the next 8 years. By the time I sold it, I had made no profit when the extensive repairs and remodeling (done mostly with our own labor) were taken into account. This is after 12 years. Then the house I now am in went up 25% the first year and then again double digits over the next five years. So it is quite possible that we are in a housing bubble in NJ again and prices will drop once the economy rolls again enough for interest rates to rise. Houses are much more expensive than renting due to the repairs and maintenance needed, often even on newer homes. So do NOT buy if the possibility of a bubble exists. My personal preference has always been to get a piece of land with my property as opposed to a condo. Land is usually valued higher.”

“Another note for you Tea- If you do a search for cheap houses on the net you're going to find all kinds of stuff about foreclosed homes. Unless you really REALLY know what you're doing, stay away from them- It's enticing 'cos they're so cheap, but there's a lot to look out for. To buy a foreclosed home, you have to pretty much have all the money, which is a lot different from getting a mortgage. Also, in a lot of cases, there are reasons they're so cheap, such as asbestos, radon gas, nuclear cockroaches, yetis, poltergeists- Then there are agencies which offer lists of foreclosed homes and tips on buying, but a lot of these are scams.”

“waste your money on beer and women, look at homes once you graduate. Dorms can also be fun when you first start college.”

“Pimp daddy Tea. Just do like Tom Cruise. Buy the house and turn it into a brothel.”

“I asked my mother how much she has paid in rent over the years. The answer was approximently 120,000. If she had put that money into buying a house, she would have something. But she doesn't since she has given all her money to some one else”

“I post this stuff simply because my mother is a finacial fool, and I don't know too many people that have done what I want to do. So I figure if I ask TT I will get lots of opinions and you will all revile the down side that the books do not.”

“Ice Tea, I can't comment on your mother's financial acumen if I don't know how many years "over the years" amounts to. In my experience, you buy a house, so you put up most of your savings, get a mortgage for the rest of the purchase price, pay the mortgage payment plus home insurance, PMI if you have put only 10% down, property taxes, and money for furnace maintenance, gutter maintenance, septic maintenance or sewage fees, furnace maintenance, air conditioning maintenance, lawn maintenance (even doing it yourself costs for equipment, seeding, etc), and any other repairs as needed like plumbing when a pipe breaks. Driveways need sealing, occasional repaving, roofs need reroofing occasionally, trees fall down, costing to be cut up and taken away if too big to handle yourself. Home ownership has proven to be expensive beyond my wildest imagination. Sometimes it becomes the best investment you ever could make, and sometimes it becomes a financial millstone around your neck. If your mother makes a lot of money the tax deduction of home ownership would probably have made it worthwhile. I hope that you have looked at all the details before concluding that your mother was foolish.”

“Buy the cheapest house in the best neighborhood.”

“Lyndy, if he says his mother was foolish, I'd tend to believe him.”

“All 17 er 18 year olds think there parents are clue less”

“We're going to be joining the homeowner club this summer. I can't wait. Is the process as big of a pain in the ass as i think it is?”

“Depends on how good your credit is. The first time I bought a house I was 22. Had a little difficulty, but not too bad. Biggest pain for me has been the signing.”

“Oh, I forgot the biggest pain. Getting you and your spouse to agree on a place. I only had that problem once, but boy is it a doozy.”

“So far I've been looking for about a month.

-Mortgage: Piece of cake. Not the best credit in the world but good enough I suppose to get approval for way more house then I can afford.
-House shopping: At least where I'm at the market is super tight. The Realtors I've talked too says this is the least ammount of houses they have seen on the market... ever. There are exactly 4 Single family residence between $125-$150k in the area I'm looking at. Actually finding the house is turning out to be a major pain in the rear. Something nice came up on the market yesterday... and it already has an offer on the table. I was meeting with the realtor to make an offer on a house last Friday and someone put a contract on it 4 hours before I was to meet with the Realtor. I hope the housing market is in better shape then the Auburn/Opelika area. Seems that everyone in Montgomery is moving to the area because the local schools are so superior to the big capitol city's schools... and really driving realestate prices up. I hate house shopping.”

“Did Prattville fill up already? Sheesh.”

“Well it's the same in Pratville right now too. But... Auburn's school system is even better then pratville's. There was a new housing subdivision started up and they were initially advertising houses in the $150's. I called about it since they were just starting construction... the realtor tells me they are upping the price to starting at $210k... for the same house... just because they can. At least she was honest.”

“currahee, ask your realtor about HUD homes. Biggest problem is finding one in the area you want to live in.
A friend of mine bought one thru HUD 2 yrs ago. It was a typical 4 bedroom home, 2 car agarage, blah,blah but he got it for next to nothing in a nice subdivison in Old Hickory.

One thing you can do is get preapproved ahead of time so you know what price range you can look at.

I have been thinking about it myself but haven't done anything about it.”

“Sounds like you guys are talking about Bama. I used to live in Enterprise. It sure is a lot cheaper down there then where I live now.

I just started the paperwork to get pre-approved for a mortgage. I'm hoping to get a single family home for under $240,000.... which will be hard to find here in Chicago.”

“Good advise Ewker.
We're looking in the Sylvan Park, Germantown, East Nashville area. We want to buy an older bungalow style home that we can update remodel (nothing too difficult) I've got friends who are painters, carpenters, tile workers, mortgage brokers, etc that I plan on owing big favors.

My primary mission for the next couple of months is to build up more of a down payment, pay off a small credit card, and work towards knocking out the credit card I used to fix my truck and go to Italy last year. Angie has just doubled her bring home pay with this new job, so i think we're going to be able to make some quick progress.
We have great credit, i just want as little debt as possible.
I'm talking to a friend of mine tomorrow to see what we'd be preapproved for now and what we can do to put ourselves in a better position financially.
last edited: 3/02/05 9:36:05 PM”

“good luck with your search”

“Thanks”

“congrats currahee!

The preapproval is a wise move. We didnt look at many houses and paid for it. Dont get me wrong, I love my place but its 50 years old and has needed loads of work. Get a good home inspection, very thorough nad save the paperwork. It helped me to get a roof replacement after a storm. Be picky, once you sign its yours...forever.”

“Good advice from Birch - especially the inspection. Also, try to negotiate a three (or more) year roof certification into the price.”

“If you have a letter of preapproval in hand when you make your offer, you're much better off.

Oh, and if you're self-employed wear protective gear.”

“- sell your house if you have one now and move into a rental or apartment; in this tight market you'll loose every offer war if you have a sell-current-residence clause in your offer and the other guy doesn't; we did this and it paid off big time in the end

- buy all 3 of your credits scores from http://www.myfico.com ; many lenders use the middle score of the 3 (not the average) as your rating; most places give you the best rate if your score is 700+, if you are below that you may want to work on improving it first

- check out current mortgage rates for your city/state at http://www.bankrate.com/brm/rate/brm_mtgsearch.asp

- then get preapproved - the real kind, that requires you to submit proof of income, etc. and gives you a letter of approval in the end, this gives you a leg up when making offers plus you know exactly how much you can afford

- when you find a house you like, get the equivalent of a "credit" report that the insurance industry uses to price homeowner's insurance from http://www.choicetrust.com ; if you or the property you want to buy has too many claims, your rates may be sky-high or you may not be able to get insurance at all (make sure your offers have insurability opt-out clauses), I think you get one report free every year

- my realtor had his own site which was up-to-date, but it left off a lot of the listing info; I found http://www.realtor.com was a good 2nd stop to get all the info on houses we were really interested in (full description, room-by-room info etc)

- our state (MD) has a state-run site where you can type in an address and verify age, lot size, siding and basement type, get a printout of the plot, etc.; it was very useful, see if your state has one like it

- our county has a site where you can type in an address and get the current land tax $ amount, useful when filling out mortgage applications instead of using an estimate

Good luck!”

“Thanks for all of the advise folks. We're very excited about buying a home. We've been married 10 years and have been in apartments the whole time because of the army, or school, or the threat of having to move for a job.”

“Yes, it is an enormous pain in the butt, even if your credit is excellent, as ours is/was. But it'll all work out....”

“hey currahee, how is the search coming. Since your looking what is the interest rate right now.”

“I think 5.7 or 5.8. I'm gonna talk to my money guy and go ahead & get preapproved. He ran some numbers for us and we'll be approved for more house than we really want to buy, so the money end is coming along nicely. We haven't started looking fo a house in earnest yet. Just feeling out neighborhoods.

You'll be at the house warming party, won't you?”

“yeah I will be there as long as it doesn't interfere with a bping trip ;)”

“Who knows, you might be sleeping in the back yard by the time it's over.”

“hehehe, wouldn't be the first time I have done that”

“You'll have company, I'm sure.”

“For mortgage rate shopping: http://www.hsh.com/”

“currahee, there was something I thought 'd add... When we got our approval it was way more then we could ever comfortably afford, we decided that we wanted to be able to cover the payment (tax escrow etc) with 25% or less of our combined take home pay. We then looked at our down payment cash and got a magic number. That number was our absolute TOP amount we would pay. We told the realtor this and made it clear that we would not look at a house 1 penny more. Once you go $1000 over the amount adding additional $1000 is easy. It has paid bigtime for us, with Sass not working anymore our payment is very managable, I cant imagine what its like to have payments like my peers, crazy stuff!”

“Yep, remember the realtor has a financial incentive to get you to buy more house, since their commission is based on the selling price of the house you buy. Our realtor was pretty disgusted that we didn't want a $250,000 house.”

“If the realtor is "disgusted" with the amount your willing to spend, get another realtor.”