House-buying thread - Why is everyone involved in this process so deeply stupid?

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DaveSauce: Feb 15, 2004; Oh, how awkward.

So this kind of turned in to a wall of text, so bear with me here.

My wife and I are considering a house pretty soon here, and we have some questions on a few things before jump in to it seriously.

First, a question on our credit history/ability:

My wife found out that she basically has (had) no credit worthy of borrowing large amounts. She has had a couple credit cards for at least the past 10 years, and she used them occasionally and always paid them off the next month (with maybe a few exceptions, but she always at least made minimum payment). Her credit score is pretty good, but apparently there's no "real history" on her report.

We found this out because about 18 months ago we bought a car. We had tried to get financing through our credit union and they wouldn't give us as much as we asked for because, in their words, she didn't have any credit history showing her ability to pay off large sums over time (i.e. a car or house, things you generally can't pay off all at once). They ended up offering us less than we asked for (because frankly we asked for a couple grand more than we needed, just in case), and it's a moot point anyhow because the dealer had 0.9% financing so we took that instead.

I, on the other hand, have a massive credit history in that respect, but it's basically because I have debt. Student loans mainly, and now the auto loan is on my history. That said, I have exactly $0 in credit card debt. No late payments on anything, though I have carried a balance a handful of times.

So the question is, we're both about to be first-time home buyers, so how is all this going to impact our ability to get a loan? I just refinanced my student loans a few months ago and they told me my FICO score was 805 (Mint's free thingy tells me 758 right now). I think Mint is telling my wife she's at 775 or something, but again the only big ticket thing she has is the auto loan. We both have very good income, but we're mostly concerned about her relative lack of credit history, and the fact that neither of us have ever owned a home.

And then the next question is regarding mortgage terms:

So we're debating between a 15 and 30 year mortgage. The issue is that homes that we're looking at right now are in the range of 225-300k. Based on monthly payments, down payment ability, and what's available in the area, we've targeted 250k as our intended price, with 300k as a max. So with that, after you figure taxes/insurance/etc, the 30-year payment seems very manageable, but the 15-year payment is bordering on uncomfortable (we can absolutely afford it, but we just don't want to).

Our biggest unknown is how long we'll be staying in the area. We have no plans to move, but we're engineers, so that's a distinct possibility. But we can't really plan on that, since we'd never be able to buy a house until we retire if that were the deciding factor. The thing we KNOW is that we intend on having kids in the next year or two. We figure this gives us a solid 5-7 years before we would really want to plant roots and stay put. This works for and against us, really...but mainly it means that we have the potential to up and move in that time frame, so it complicates the decision slightly.

So that said, the main reason we're looking at the 250k range is that we want something that could support a family long-term (3+ bedrooms, 2+ bath, yard, etc.). However, we could also go with a sub-$200k house that's just big enough for the next few years, get a 15-year loan, pump money in to it to build equity, then upgrade to something bigger down the road. But my hesitation there is that rates will likely be higher by then, so while our loan would be smaller we'd be paying higher interest on it. And, if the housing market takes a giant poo poo, we'd be stuck in a cramped house for a while (though we could theoretically rent it out while we buy a bigger house on the cheap, but I don't want to touch that with a 10-foot pole).

There's a lot of possibilities, but I guess that's a separate discussion. Here's what what we've figured on a 15-year mortgage on a 250k house:

Pros:
-Saves us over $90k in interest over the life of the loan, which is an assload of money
-More goes to principal sooner (so if we sell/move before we pay it off, we have more equity built up)

Cons:
-No flexibility on payment (we could overpay a 30-year loan easily, and drop back to minimum if we run in to trouble)
-Lower cashflow, so other savings accounts/investments grow slower
-Only way to lower the monthly payment is to get less house

So with that, I decided to figure out what the lost opportunity cost would be. An easy example is our credit union checking account, which gets a dividend of 2.01% APY each month (as long as we make 30+ transactions each month, which we do easily).

My assumptions are:
-250k house
-50k down payment
-30-year rate = 4.375% (worst rate per CFPB.gov, using above numbers, state is NC and credit score is 740-759)
-15-year rate = 3.750% (worst rate per CFPB.gov, using above numbers, state is NC and credit score is 740-759)

My math gets me a difference in monthly payment of $455.88. If we take that money and dump it in to a 2.01% APY (~1.99 APR) account each month will, over 15 years, turn in to $95,529.27 (compounded monthly). Can someone check my math on that?

Looking at it, the actual difference in interest over the life of a 30 year vs 15 year loan is $97,685.31. So we technically lose $2156.04 over 15 years, assuming savings interest rates don't go up at all (and we don't shuffle that money in to something with a higher yield like a retirement account). And this seems to be worst-case.

Now, if I take the best-case interest rates from CFPB.gov (3.875/3.125 for 30/15 respectively), the difference in monthly payment is smaller, so over 15 years I end up with about $1,000 less accumulated in savings. However, the difference in interest cost is $10k less over the life of the loan (about $87k instead of $97k), so I would actually come out ahead by using the 30-year mortgage (instead of losing $2156.04, I would gain about $6.5k).

So can someone check my logic/math here? Because I think I just talked myself in to a 30 year mortgage, which doesn't seem to make financial sense to me...I must be missing something. Naturally, this ONLY works if we put that extra money each month in to the mortgage or in to savings/investments. It's all out the window if we take that money and spend it on booze (or more realistically, cars we can't afford or a boat or other expensive grown-up toys that we have no interest in).

# ? Aug 6, 2015 15:34

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# ? May 28, 2024 05:20

Catatron Prime: Aug 23, 2010; IT ME; Toilet Rascal

^^ Go talk to your bank and see what they say. Get pre-approved and they'll tell you how much you can afford.

General pre-requisites include 3 established trade lines, and down payment (which can be fudged around if it's conventional versus FHA), two years working your current job/income level.

Because of closing costs, you'll only break even on buying a house vs renting if you plan on staying for at least ~7 years, give or take. If it's your first house, and you don't have any equity built up, you'll probably be taking the 30 year mortgage.

Your best advice is to take the thirty year loan, and then pay another 100-200 extra every month (or more of you can afford it) and pay your loan off early, since all of that will go towards your principle. Life is full of unexpected surprises and expenses, especially if you're going to have kids. You don't want to lose your house because you just can't afford that extra 500$ towards your mortgage that month.

Just for reference, my mortgage was for roughly 100,000 dollars at 3.85% with 20% down. Of my 650$ monthly mortgage payment, only ~150$ actually goes towards my principle. The rest is caught up in insurance, taxes, escrow, interest, etc. However, paying another 100$ on top of that every month, I'll pay my 30 year mortgage down ten years early.

Catatron Prime fucked around with this message at 16:52 on Aug 6, 2015

# ? Aug 6, 2015 16:26

Dwight Eisenhower: Jan 24, 2006; Indeed, I think that people want peace so much that one of these days governments had better get out of the way and let them have it.

DaveSauce posted:

So this kind of turned in to a wall of text, so bear with me here.

My wife and I are considering a house pretty soon here, and we have some questions on a few things before jump in to it seriously.

First, a question on our credit history/ability:

My wife found out that she basically has (had) no credit worthy of borrowing large amounts. She has had a couple credit cards for at least the past 10 years, and she used them occasionally and always paid them off the next month (with maybe a few exceptions, but she always at least made minimum payment). Her credit score is pretty good, but apparently there's no "real history" on her report.

We found this out because about 18 months ago we bought a car. We had tried to get financing through our credit union and they wouldn't give us as much as we asked for because, in their words, she didn't have any credit history showing her ability to pay off large sums over time (i.e. a car or house, things you generally can't pay off all at once). They ended up offering us less than we asked for (because frankly we asked for a couple grand more than we needed, just in case), and it's a moot point anyhow because the dealer had 0.9% financing so we took that instead.

I, on the other hand, have a massive credit history in that respect, but it's basically because I have debt. Student loans mainly, and now the auto loan is on my history. That said, I have exactly $0 in credit card debt. No late payments on anything, though I have carried a balance a handful of times.

So the question is, we're both about to be first-time home buyers, so how is all this going to impact our ability to get a loan? I just refinanced my student loans a few months ago and they told me my FICO score was 805 (Mint's free thingy tells me 758 right now). I think Mint is telling my wife she's at 775 or something, but again the only big ticket thing she has is the auto loan. We both have very good income, but we're mostly concerned about her relative lack of credit history, and the fact that neither of us have ever owned a home.

And then the next question is regarding mortgage terms:

So we're debating between a 15 and 30 year mortgage. The issue is that homes that we're looking at right now are in the range of 225-300k. Based on monthly payments, down payment ability, and what's available in the area, we've targeted 250k as our intended price, with 300k as a max. So with that, after you figure taxes/insurance/etc, the 30-year payment seems very manageable, but the 15-year payment is bordering on uncomfortable (we can absolutely afford it, but we just don't want to).

Our biggest unknown is how long we'll be staying in the area. We have no plans to move, but we're engineers, so that's a distinct possibility. But we can't really plan on that, since we'd never be able to buy a house until we retire if that were the deciding factor. The thing we KNOW is that we intend on having kids in the next year or two. We figure this gives us a solid 5-7 years before we would really want to plant roots and stay put. This works for and against us, really...but mainly it means that we have the potential to up and move in that time frame, so it complicates the decision slightly.

So that said, the main reason we're looking at the 250k range is that we want something that could support a family long-term (3+ bedrooms, 2+ bath, yard, etc.). However, we could also go with a sub-$200k house that's just big enough for the next few years, get a 15-year loan, pump money in to it to build equity, then upgrade to something bigger down the road. But my hesitation there is that rates will likely be higher by then, so while our loan would be smaller we'd be paying higher interest on it. And, if the housing market takes a giant poo poo, we'd be stuck in a cramped house for a while (though we could theoretically rent it out while we buy a bigger house on the cheap, but I don't want to touch that with a 10-foot pole).

There's a lot of possibilities, but I guess that's a separate discussion. Here's what what we've figured on a 15-year mortgage on a 250k house:

Pros:
-Saves us over $90k in interest over the life of the loan, which is an assload of money
-More goes to principal sooner (so if we sell/move before we pay it off, we have more equity built up)

Cons:
-No flexibility on payment (we could overpay a 30-year loan easily, and drop back to minimum if we run in to trouble)
-Lower cashflow, so other savings accounts/investments grow slower
-Only way to lower the monthly payment is to get less house

So with that, I decided to figure out what the lost opportunity cost would be. An easy example is our credit union checking account, which gets a dividend of 2.01% APY each month (as long as we make 30+ transactions each month, which we do easily).

My assumptions are:
-250k house
-50k down payment
-30-year rate = 4.375% (worst rate per CFPB.gov, using above numbers, state is NC and credit score is 740-759)
-15-year rate = 3.750% (worst rate per CFPB.gov, using above numbers, state is NC and credit score is 740-759)

My math gets me a difference in monthly payment of $455.88. If we take that money and dump it in to a 2.01% APY (~1.99 APR) account each month will, over 15 years, turn in to $95,529.27 (compounded monthly). Can someone check my math on that?

Looking at it, the actual difference in interest over the life of a 30 year vs 15 year loan is $97,685.31. So we technically lose $2156.04 over 15 years, assuming savings interest rates don't go up at all (and we don't shuffle that money in to something with a higher yield like a retirement account). And this seems to be worst-case.

Now, if I take the best-case interest rates from CFPB.gov (3.875/3.125 for 30/15 respectively), the difference in monthly payment is smaller, so over 15 years I end up with about $1,000 less accumulated in savings. However, the difference in interest cost is $10k less over the life of the loan (about $87k instead of $97k), so I would actually come out ahead by using the 30-year mortgage (instead of losing $2156.04, I would gain about $6.5k).

So can someone check my logic/math here? Because I think I just talked myself in to a 30 year mortgage, which doesn't seem to make financial sense to me...I must be missing something. Naturally, this ONLY works if we put that extra money each month in to the mortgage or in to savings/investments. It's all out the window if we take that money and spend it on booze (or more realistically, cars we can't afford or a boat or other expensive grown-up toys that we have no interest in).

Do the math, if you take the worst terms you pay 160k in interest over the life of the 30 year loan with $999/month interest/principal payments.
If you take the worst terms you pay ~61k in interest over the life of the 15 year loan with $1454/month interest/principal payments.
If you apply the difference between the two to your 30 year loan at the 4.375% rate, will pay ~78k in interest over 16 years.

So you make one more year of payments and an additional $17k in interest (or, slightly over $1k/year) to have the flexibility to suddenly have another $455 dollars in your monthly budget, if you need it.

Remember that the interest is compounded against your remaining principal, so socking away $455/mo into a 2% APR savings account instead of paying down your 4.375% mortgage is a 2.375% worse rate of return on where you put that money.

If the 15 year payment makes you uncomfortable at all, I'd go for the 30 year, and then apply extra payments to the principal each month. If you're early on in your career, as more income becomes available to you from promotions and raises, you can aggressively pay down your mortgage more. I'm fortunate to be in the position today where I essentially double my mortgage payment most months, with the second half of the payment going entirely toward the principal of the loan.

(for reference, I used http://www.bankrate.com/calculators/mortgages/mortgage-loan-payoff-calculator.aspx to calculate early repayment rates)

# ? Aug 6, 2015 17:12

Leperflesh: May 17, 2007

Rent a home until your first kid is old enough to go to school, and then buy a house in the best school district you can afford and still have a manageable commute to wherever you are working at that point.

Don't buy a house you intend to sell in 5 or less years, you'll get eaten alive by transaction costs.

e. specifically: You have several thousand in closing costs, usually ~6% of sale price in comissions when you sell, plus usually some other selling costs. In addition you're paying interest, property taxes, maintenance, and insurance. These costs are likely to consume whatever you gain in rising value of your home for the first few years. Ask yourself what exactly you're hoping to gain, compared to renting a home.

Leperflesh fucked around with this message at 17:38 on Aug 6, 2015

# ? Aug 6, 2015 17:26

lampey: Mar 27, 2012

DaveSauce posted:

So this kind of turned in to a wall of text, so bear with me here.

My wife and I are considering a house pretty soon here, and we have some questions on a few things before jump in to it seriously.

First, a question on our credit history/ability:

My wife found out that she basically has (had) no credit worthy of borrowing large amounts. She has had a couple credit cards for at least the past 10 years, and she used them occasionally and always paid them off the next month (with maybe a few exceptions, but she always at least made minimum payment). Her credit score is pretty good, but apparently there's no "real history" on her report.

We found this out because about 18 months ago we bought a car. We had tried to get financing through our credit union and they wouldn't give us as much as we asked for because, in their words, she didn't have any credit history showing her ability to pay off large sums over time (i.e. a car or house, things you generally can't pay off all at once). They ended up offering us less than we asked for (because frankly we asked for a couple grand more than we needed, just in case), and it's a moot point anyhow because the dealer had 0.9% financing so we took that instead.

I, on the other hand, have a massive credit history in that respect, but it's basically because I have debt. Student loans mainly, and now the auto loan is on my history. That said, I have exactly $0 in credit card debt. No late payments on anything, though I have carried a balance a handful of times.

So the question is, we're both about to be first-time home buyers, so how is all this going to impact our ability to get a loan? I just refinanced my student loans a few months ago and they told me my FICO score was 805 (Mint's free thingy tells me 758 right now). I think Mint is telling my wife she's at 775 or something, but again the only big ticket thing she has is the auto loan. We both have very good income, but we're mostly concerned about her relative lack of credit history, and the fact that neither of us have ever owned a home.

And then the next question is regarding mortgage terms:

So we're debating between a 15 and 30 year mortgage. The issue is that homes that we're looking at right now are in the range of 225-300k. Based on monthly payments, down payment ability, and what's available in the area, we've targeted 250k as our intended price, with 300k as a max. So with that, after you figure taxes/insurance/etc, the 30-year payment seems very manageable, but the 15-year payment is bordering on uncomfortable (we can absolutely afford it, but we just don't want to).

Our biggest unknown is how long we'll be staying in the area. We have no plans to move, but we're engineers, so that's a distinct possibility. But we can't really plan on that, since we'd never be able to buy a house until we retire if that were the deciding factor. The thing we KNOW is that we intend on having kids in the next year or two. We figure this gives us a solid 5-7 years before we would really want to plant roots and stay put. This works for and against us, really...but mainly it means that we have the potential to up and move in that time frame, so it complicates the decision slightly.

So that said, the main reason we're looking at the 250k range is that we want something that could support a family long-term (3+ bedrooms, 2+ bath, yard, etc.). However, we could also go with a sub-$200k house that's just big enough for the next few years, get a 15-year loan, pump money in to it to build equity, then upgrade to something bigger down the road. But my hesitation there is that rates will likely be higher by then, so while our loan would be smaller we'd be paying higher interest on it. And, if the housing market takes a giant poo poo, we'd be stuck in a cramped house for a while (though we could theoretically rent it out while we buy a bigger house on the cheap, but I don't want to touch that with a 10-foot pole).

There's a lot of possibilities, but I guess that's a separate discussion. Here's what what we've figured on a 15-year mortgage on a 250k house:

Pros:
-Saves us over $90k in interest over the life of the loan, which is an assload of money
-More goes to principal sooner (so if we sell/move before we pay it off, we have more equity built up)

Cons:
-No flexibility on payment (we could overpay a 30-year loan easily, and drop back to minimum if we run in to trouble)
-Lower cashflow, so other savings accounts/investments grow slower
-Only way to lower the monthly payment is to get less house

So with that, I decided to figure out what the lost opportunity cost would be. An easy example is our credit union checking account, which gets a dividend of 2.01% APY each month (as long as we make 30+ transactions each month, which we do easily).

My assumptions are:
-250k house
-50k down payment
-30-year rate = 4.375% (worst rate per CFPB.gov, using above numbers, state is NC and credit score is 740-759)
-15-year rate = 3.750% (worst rate per CFPB.gov, using above numbers, state is NC and credit score is 740-759)

My math gets me a difference in monthly payment of $455.88. If we take that money and dump it in to a 2.01% APY (~1.99 APR) account each month will, over 15 years, turn in to $95,529.27 (compounded monthly). Can someone check my math on that?

Looking at it, the actual difference in interest over the life of a 30 year vs 15 year loan is $97,685.31. So we technically lose $2156.04 over 15 years, assuming savings interest rates don't go up at all (and we don't shuffle that money in to something with a higher yield like a retirement account). And this seems to be worst-case.

Now, if I take the best-case interest rates from CFPB.gov (3.875/3.125 for 30/15 respectively), the difference in monthly payment is smaller, so over 15 years I end up with about $1,000 less accumulated in savings. However, the difference in interest cost is $10k less over the life of the loan (about $87k instead of $97k), so I would actually come out ahead by using the 30-year mortgage (instead of losing $2156.04, I would gain about $6.5k).

So can someone check my logic/math here? Because I think I just talked myself in to a 30 year mortgage, which doesn't seem to make financial sense to me...I must be missing something. Naturally, this ONLY works if we put that extra money each month in to the mortgage or in to savings/investments. It's all out the window if we take that money and spend it on booze (or more realistically, cars we can't afford or a boat or other expensive grown-up toys that we have no interest in).

For the difference between 15 year and 30 it is just in the interest rate and time period so when you are moving is not an issue for this part of the decision. Also if your best alternative to paying down the mortgage is only 2%(- taxes) you would be best off paying the mortgage down at almost any interest rate. Most get a rate of 4%+ over long term with a diversified mutual fund/eft so that could change the results in favor of the 30 year loan.
If you are not living in the same place for long you are paying 4% to buy and 6% to sell. Some of these costs are shared with the other party but ~10% total to buy then sell seems to be the going rate.

# ? Aug 6, 2015 19:05

QuarkJets: Sep 8, 2008

DaveSauce posted:

So this kind of turned in to a wall of text, so bear with me here.

My wife and I are considering a house pretty soon here, and we have some questions on a few things before jump in to it seriously.

First, a question on our credit history/ability:

My wife found out that she basically has (had) no credit worthy of borrowing large amounts. She has had a couple credit cards for at least the past 10 years, and she used them occasionally and always paid them off the next month (with maybe a few exceptions, but she always at least made minimum payment). Her credit score is pretty good, but apparently there's no "real history" on her report.

We found this out because about 18 months ago we bought a car. We had tried to get financing through our credit union and they wouldn't give us as much as we asked for because, in their words, she didn't have any credit history showing her ability to pay off large sums over time (i.e. a car or house, things you generally can't pay off all at once). They ended up offering us less than we asked for (because frankly we asked for a couple grand more than we needed, just in case), and it's a moot point anyhow because the dealer had 0.9% financing so we took that instead.

I basically did exactly what your wife did: a couple of credit cards, never borrowing large amounts, always paying it off the next month. I've never had more debt than like a month of credit card payments. With the exception that I never made a payment smaller than the balance on the card, so your wife technically did more debt-carrying than I did.

My wife and I recently bought a house and had no issue getting financing.

If you get a bank that refuses to finance you because you don't have huge amounts of debt, then try someone else. The banks that we spoke to did not care about that at all. Their primary concern was income and proof of cash reserves for the down payment + closing. They sent a letter to our landlord asking for confirmation of on-time payments, which should be more than enough for anyone concerned about her ability to pay a mortgage.

quote:

I, on the other hand, have a massive credit history in that respect, but it's basically because I have debt. Student loans mainly, and now the auto loan is on my history. That said, I have exactly $0 in credit card debt. No late payments on anything, though I have carried a balance a handful of times.

So the question is, we're both about to be first-time home buyers, so how is all this going to impact our ability to get a loan? I just refinanced my student loans a few months ago and they told me my FICO score was 805 (Mint's free thingy tells me 758 right now). I think Mint is telling my wife she's at 775 or something, but again the only big ticket thing she has is the auto loan. We both have very good income, but we're mostly concerned about her relative lack of credit history, and the fact that neither of us have ever owned a home.

I think that you're probably going to be fine, I can't imagine a bank telling you that this situation is problematic. And I have to assume that the car dealership was trying to scam you out of more money, since that's what car dealerships do.

quote:

And then the next question is regarding mortgage terms:

So we're debating between a 15 and 30 year mortgage. The issue is that homes that we're looking at right now are in the range of 225-300k. Based on monthly payments, down payment ability, and what's available in the area, we've targeted 250k as our intended price, with 300k as a max. So with that, after you figure taxes/insurance/etc, the 30-year payment seems very manageable, but the 15-year payment is bordering on uncomfortable (we can absolutely afford it, but we just don't want to).

Then don't do the 15-year. Even if you could comfortably afford the 15-year, sometimes it's worth doing the 30-year anyway for the comfort of knowing that if poo poo ever hits the fan then you can always scale back to the minimum payment for awhile. Meanwhile, you can still pay off a 30-year mortgage in 15 years, if you want.

quote:

Our biggest unknown is how long we'll be staying in the area. We have no plans to move, but we're engineers, so that's a distinct possibility. But we can't really plan on that, since we'd never be able to buy a house until we retire if that were the deciding factor. The thing we KNOW is that we intend on having kids in the next year or two. We figure this gives us a solid 5-7 years before we would really want to plant roots and stay put. This works for and against us, really...but mainly it means that we have the potential to up and move in that time frame, so it complicates the decision slightly.

Yeah, definitely don't do the 15-year. Get a 30-year conventional

quote:

So that said, the main reason we're looking at the 250k range is that we want something that could support a family long-term (3+ bedrooms, 2+ bath, yard, etc.). However, we could also go with a sub-$200k house that's just big enough for the next few years, get a 15-year loan, pump money in to it to build equity, then upgrade to something bigger down the road. But my hesitation there is that rates will likely be higher by then, so while our loan would be smaller we'd be paying higher interest on it. And, if the housing market takes a giant poo poo, we'd be stuck in a cramped house for a while (though we could theoretically rent it out while we buy a bigger house on the cheap, but I don't want to touch that with a 10-foot pole).

This is an ill-advised plan. Real estate is not a good investment vehicle, especially not on the timescale of 5 years, unless you're buying a serious shitheap and renovating it yourself, which most people should not try to do. Financially, you would be better off buying a house that you like at current interest rates, making minimum monthly payments, and dumping your extra income into a mutual fund (after maxing out 401k and IRA contributions first, of course).

Or if you really just want to build equity for some reason then get a 30-year and pay off extra principle each month. You'll save money in interest in the long-run. I think that a mutual fund is a better investment plan, but some people like the feeling of having a shitload of equity in their house.

quote:

There's a lot of possibilities, but I guess that's a separate discussion. Here's what what we've figured on a 15-year mortgage on a 250k house:

Pros:
-Saves us over $90k in interest over the life of the loan, which is an assload of money
-More goes to principal sooner (so if we sell/move before we pay it off, we have more equity built up)

Cons:
-No flexibility on payment (we could overpay a 30-year loan easily, and drop back to minimum if we run in to trouble)
-Lower cashflow, so other savings accounts/investments grow slower
-Only way to lower the monthly payment is to get less house

So with that, I decided to figure out what the lost opportunity cost would be. An easy example is our credit union checking account, which gets a dividend of 2.01% APY each month (as long as we make 30+ transactions each month, which we do easily).

My assumptions are:
-250k house
-50k down payment
-30-year rate = 4.375% (worst rate per CFPB.gov, using above numbers, state is NC and credit score is 740-759)
-15-year rate = 3.750% (worst rate per CFPB.gov, using above numbers, state is NC and credit score is 740-759)

My math gets me a difference in monthly payment of $455.88. If we take that money and dump it in to a 2.01% APY (~1.99 APR) account each month will, over 15 years, turn in to $95,529.27 (compounded monthly). Can someone check my math on that?

Looking at it, the actual difference in interest over the life of a 30 year vs 15 year loan is $97,685.31. So we technically lose $2156.04 over 15 years, assuming savings interest rates don't go up at all (and we don't shuffle that money in to something with a higher yield like a retirement account). And this seems to be worst-case.

2% is an extremely low rate of return. You should easily be able to get 5% or better with mutual funds in the long term.

Having read your post, it really sounds like you should go with a 30-year after finding a house that you actually like and want to live in. Alternatively, have you considered renting? I think that renting until you find a place that you really like and actually want to buy is your best option. The "throwing away money on rent" thing is total bullshit

# ? Aug 6, 2015 19:35

Dazerbeams: Jul 8, 2009

My agent thinks that the person writing up the settlement statement is inexperienced. She wants to thoroughly review the document once it's finished and before closing.

Can anyone give me an idea of what could be wrong with a settlement statement and how much of an issue this could be? Am I worrying over nothing? I'm closing next Friday.

# ? Aug 6, 2015 20:21

Catatron Prime: Aug 23, 2010; IT ME; Toilet Rascal

^^ Well, you could put a zero in the wrong place and instead of paying 3,000$ towards closing, wind up paying 30,000$?

Never hurts to double check. At least someone is reading the paperwork. When I closed, the seller didn't bother reading the contract and thought they had a month to move out after closing.

Which of course meant that when it came time to close, they hadn't even begun to move. So, not knowing what to do, I caved and gave them a week after closing before I took possession, which really hosed with a lot of stuff I had lined up and meant no final inspection. They of course thanked me by leaving a gigantic loving mess.

# ? Aug 7, 2015 01:37

DaveSauce: Feb 15, 2004; Oh, how awkward.

So I'm trying to figure out where I made a mistake in my assumptions...

So again, we have:

-250k house
-50k down payment
-30-year rate = 4.375%
-15-year rate = 3.750%

This gets the following monthly payments, with total costs:
-30 year: $998.57/mo, at 360 months = $359,485.20
-15 year: $1,454.45/mo, at 180 months = $261,800.00

So the total difference in interest between the two is $97,685.20. The total difference in monthly payment is $455.88. The monthly payment alone nets $82,058.40 over 15 years, so in actuality I'm really only down $15,626.80. And that might be what I'm missing...if I were to put that $455.88 back in to the 30 year mortgage each month, at the end of 15 years I'd still have about $15k owed on the house due to the higher interest rate. And I'm sure it's not exactly that.

Dwight Eisenhower posted:

So you make one more year of payments and an additional $17k in interest (or, slightly over $1k/year) to have the flexibility to suddenly have another $455 dollars in your monthly budget, if you need it.

And there it is. When I first read this I wasn't sure how you came up with it, but now I see what I was doing wrong. I was beginning to think that the $455/mo wasn't real money or something...

Yes, I know I'm over analyzing this. I tend to do that. I guess I'm basically trying to justify a 30 year mortgage financially, because I know a 15 year is a much better deal in the long-run. Fact is, I've pretty much already decided on the 30-year, but I want to make sure I can look at it and know it's not a decision that is costing me nearly $100k. I'm just trying to make sure that this money isn't simply vanishing in to thin air, which it doesn't seem like it is. $17k is still a shitload of money, but it's a hell of a lot less than $100k.

QuarkJets posted:

This is an ill-advised plan. Real estate is not a good investment vehicle, especially not on the timescale of 5 years, unless you're buying a serious shitheap and renovating it yourself, which most people should not try to do. Financially, you would be better off buying a house that you like at current interest rates, making minimum monthly payments, and dumping your extra income into a mutual fund (after maxing out 401k and IRA contributions first, of course).

Yeah, I know it is...I just tossed it out as a possible alternative to what we actually want to do. To be clear, though, when I said "pump money in to it to build equity," I meant the loan, not the house. The idea being that because it's a cheaper house than we can afford, we could throw a lot of money at principal in order to essentially save up for a bigger place. A gamble, obviously, since that assumes we would sell that house for as much or more than what we paid.

quote:

2% is an extremely low rate of return. You should easily be able to get 5% or better with mutual funds in the long term.

Absolutely it is, that's why I used it. I wanted to be as conservative as possible with my calculations. I didn't want to assume a 5%+ rate of return and fool myself in to thinking I was getting a better deal than was realistic. But what we'd most likely do is pump the money in to our retirement accounts (if we didn't put it back in to the mortgage).

So here's another question: We've both been in our jobs for less than 2 years. My wife finished her graduate degree in October of 2013, and started her job here 2 weeks later (her job is why we moved). I left my job and moved down here with her, and worked on contract for 2 months before I started a permanent position down here in December 2013. Aside from that, I've had steady employment in my field since January, 2008 (though technically somewhere in 2010 I was on "contract" for 6 months, but it was a contract-to-hire thing).

Is this going to be an issue? Will lenders fudge that, or are we going to have to wait until December when we've both been in our current jobs for 2+ years?

And also, what's considered a contract? Technically while I was on contract, I was actually working hourly for a contract house...I wasn't self employed, my paychecks had the contract house's name on them. I know through my brother's house buying ordeal that lenders get real uppity about contract workers (unless they can prove that they reliably surf contracts for a living). So would that history be considered a contract, or would they consider it actual employment?

# ? Aug 7, 2015 13:13

Nate405: Oct 21, 2002

DaveSauce posted:

Yes, I know I'm over analyzing this. I tend to do that. I guess I'm basically trying to justify a 30 year mortgage financially, because I know a 15 year is a much better deal in the long-run. Fact is, I've pretty much already decided on the 30-year, but I want to make sure I can look at it and know it's not a decision that is costing me nearly $100k. I'm just trying to make sure that this money isn't simply vanishing in to thin air, which it doesn't seem like it is. $17k is still a shitload of money, but it's a hell of a lot less than $100k.

There's a decent write-up here on 15 vs 30 year mortgages that includes a very detailed calculator at the bottom.

# ? Aug 7, 2015 13:57

WarMECH: Dec 23, 2004

The thing with mortgages is people need to stop looking at them like they will actually pay them off and lose all that money in interest charges. In reality, most people take out 30-year mortgages and sell the house in ~7 years and take out another 30-year mortgage.

The advice I give to some first-time home buyers is to buy a house where the calculated monthly payment on a 15-year mortgage is no more than 30% of their take-home pay. Then go with a 30-year mortgage for the same amount borrowed amount. This way you have the flexibility to make payments at the 15-year rate and pay the loan off in almost half the time, but always able to fall back on the "minimum" payment of the 30-year if you need the cash for other things.

You can always pay more on a 30-year but you can never pay less on a 15-year if you can't afford to make the payment at any time.

Just my two cents.

# ? Aug 7, 2015 15:45

gtkor: Feb 21, 2011

Celador posted:

The thing with mortgages is people need to stop looking at them like they will actually pay them off and lose all that money in interest charges. In reality, most people take out 30-year mortgages and sell the house in ~7 years and take out another 30-year mortgage.

The advice I give to some first-time home buyers is to buy a house where the calculated monthly payment on a 15-year mortgage is no more than 30% of their take-home pay. Then go with a 30-year mortgage for the same amount borrowed amount. This way you have the flexibility to make payments at the 15-year rate and pay the loan off in almost half the time, but always able to fall back on the "minimum" payment of the 30-year if you need the cash for other things.

You can always pay more on a 30-year but you can never pay less on a 15-year if you can't afford to make the payment at any time.

Just my two cents.

This is really pretty sound advice. People don't pay off loans often over the life of the term.

# ? Aug 7, 2015 15:58

silvergoose: Mar 18, 2006; IT IS SAID THE TEARS OF THE BWEENIX CAN HEAL ALL WOUNDS

Yeah I mean, we got a 30 year, planned to pay it off within 15, probably paying it off way sooner. But why risk a payment that's uncomfortable if something happens?

# ? Aug 7, 2015 16:01

Catatron Prime: Aug 23, 2010; IT ME; Toilet Rascal

DaveSauce posted:

Frantic number crunching

Relax, you're going to be hemorrhaging money from HOA fees, property taxes, insurance, closing costs, that unexpected 20k roof repair, that unexpected 30k main line sewer clog repair, etc anyways. No sense stressing over theoretical interest payments. I forget where I heard this, but the average person winds up paying somewhere in the neighborhood of a million dollars in home ownership costs over their lifetime or something like that. Life rarely ever so neatly follows a plan.

Also, you really should be asking your bank these questions.

E: Also, since you asked, a contract is the signed offer you make on the house. When you submit an offer, it's a thick packet full of stipulations, eg we're paying this much, you fix that, you vacate on x date, no guarantee against defects kind of thing you work out with your realtor. If the seller accepts and signs your offer, you're in contract to purchase the home until you close and the money changes hands, and then congrats! The bank (and to a much lesser extent you) are now owners of a new home!

E2: Taking a 30 year mortgage and paying it early like a fifteen is excellent advice and will cost you roughly the same. The sooner you build more equity, the less you pay in interest.

Catatron Prime fucked around with this message at 17:08 on Aug 7, 2015

# ? Aug 7, 2015 16:59

DaveSauce: Feb 15, 2004; Oh, how awkward.

Yeah, we're still doing our background research before we get in too deep. I ran some numbers and my draw dropped when I saw how much the 30-year loan costs over the 15-year loan, which is why I've been trying to figure out if it's REALLY that bad.

We were most likely going to go with the 30-year loan anyhow, I just wanted to make sure I had some sound financial justification for it other than the lower monthly payment.

OSU_Matthew posted:

E: Also, since you asked, a contract is the signed offer you make on the house. When you submit an offer, it's a thick packet full of stipulations, eg we're paying this much, you fix that, you vacate on x date, no guarantee against defects kind of thing you work out with your realtor. If the seller accepts and signs your offer, you're in contract to purchase the home until you close and the money changes hands, and then congrats! The bank (and to a much lesser extent you) are now owners of a new home!

Sorry, I should clarify: I was asking about contract employment, and where lenders/underwriters draw the line between a contract job and a full-time job. I was in a situation where I was a contract employee for a company, except that rather than being a direct contractor I was actually an employee of a contract agency. So my paychecks were from a contract agency, who was getting paid by the people I was actually doing work for.

# ? Aug 7, 2015 18:31

Dwight Eisenhower: Jan 24, 2006; Indeed, I think that people want peace so much that one of these days governments had better get out of the way and let them have it.

DaveSauce posted:

Yeah, we're still doing our background research before we get in too deep. I ran some numbers and my draw dropped when I saw how much the 30-year loan costs over the 15-year loan, which is why I've been trying to figure out if it's REALLY that bad.

We were most likely going to go with the 30-year loan anyhow, I just wanted to make sure I had some sound financial justification for it other than the lower monthly payment.

Sorry, I should clarify: I was asking about contract employment, and where lenders/underwriters draw the line between a contract job and a full-time job. I was in a situation where I was a contract employee for a company, except that rather than being a direct contractor I was actually an employee of a contract agency. So my paychecks were from a contract agency, who was getting paid by the people I was actually doing work for.

It's probably mostly going to be determined by how your income was reported to the IRS. If you got 1099s then the bank will probably have a bug up their rear end. If you got W2s then the bank will happily lump you in with all the other wage slaves.

Also sounds like you're DINK with both decently high incomes, if you're trying to borrow less than 2 years of combined salary and are both W2 employees now I think you'll be fine.

# ? Aug 7, 2015 18:39

Bozart: Oct 28, 2006; Give me the finger.

Keep in mind that home loan interest is tax deductible, which gives you something like a 30% rebate. And student loan interest is not, so you should basically always pay the student loan stuff first and borrow as much as you can on the house to make that happen faster. And your auto loan is almost certainly at a higher rate as well. Go with the thirty year, then throw all of your excess cash at those 2 problems first.

# ? Aug 7, 2015 19:43

QuarkJets: Sep 8, 2008

DaveSauce posted:

So I'm trying to figure out where I made a mistake in my assumptions...

Okay, but you've already confirmed that putting the difference in monthly payment into a 2% interest account each month for 15 years would net you roughly the additional amount that you'd pay in interest over the entire life of the 30-year loan. So even when you assume that your rate of return is unrealistically crummy, you're still breaking even with the 30-year but with the comfort of lower monthly payments.

So what's the confusion here? From the financial benefit angle the 30-year loan is better. From the financial security angle the 30-year loan is better. If home loan interest rates were much higher than typical market returns then a 15-year loan might be advisable, but right now I don't think that there's any real advantage to a 15-year loan unless you're a person who is bad at saving money.

QuarkJets fucked around with this message at 19:59 on Aug 7, 2015

# ? Aug 7, 2015 19:55

Zhentar: Sep 28, 2003; Brilliant Master Genius

DaveSauce posted:

Yeah, we're still doing our background research before we get in too deep. I ran some numbers and my draw dropped when I saw how much the 30-year loan costs over the 15-year loan, which is why I've been trying to figure out if it's REALLY that bad.

The other important factor is the time value of money. $100k extra sounds ridiculous, but you're thinking of $100k 2015 dollars. If you actually do take the full 30 years to pay it off, you'll be paying that extra $100k in 2040-2045 dollars (less 25-30k from tax deductions, as mentioned), which will likely only have half as much purchasing power. So future you is really only paying the equivalent of ~$40k extra, and if future you is reasonably successful, out of a proportionally larger income (particularly if you have invested that extra $500/mo wisely)

# ? Aug 7, 2015 21:13

DaveSauce: Feb 15, 2004; Oh, how awkward.

Dwight Eisenhower posted:

It's probably mostly going to be determined by how your income was reported to the IRS. If you got 1099s then the bank will probably have a bug up their rear end. If you got W2s then the bank will happily lump you in with all the other wage slaves.

Also sounds like you're DINK with both decently high incomes, if you're trying to borrow less than 2 years of combined salary and are both W2 employees now I think you'll be fine.

That's good news. I watched my brother go through this process a few years ago and the bank gave him hell about a few things at the last minute. At the time he was even considering using me as a co-signer because his wife wasn't his wife yet (the wedding was 2-3 months off and I was going to rent from them), so there were some issues there. It all worked out, but it left me a little paranoid.

QuarkJets posted:

Okay, but you've already confirmed that putting the difference in monthly payment into a 2% interest account each month for 15 years would net you roughly the additional amount that you'd pay in interest over the entire life of the 30-year loan. So even when you assume that your rate of return is unrealistically crummy, you're still breaking even with the 30-year but with the comfort of lower monthly payments.

So what's the confusion here? From the financial benefit angle the 30-year loan is better. From the financial security angle the 30-year loan is better. If home loan interest rates were much higher than typical market returns then a 15-year loan might be advisable, but right now I don't think that there's any real advantage to a 15-year loan unless you're a person who is bad at saving money.

Yeah so the confusion is gone. It took me a bit to figure out if my calculations were making sense, because they didn't really at the time. It just didn't make sense to me that I could make money off a loan that had a higher interest for a longer term, but I looked at it from a couple different angles and realized it's real. Mainly, I'm being cautions because it's a shitload of money and I didn't want to make a stupid decision that I was going to be stuck with for a long time.

Bozart posted:

Keep in mind that home loan interest is tax deductible, which gives you something like a 30% rebate. And student loan interest is not, so you should basically always pay the student loan stuff first and borrow as much as you can on the house to make that happen faster. And your auto loan is almost certainly at a higher rate as well. Go with the thirty year, then throw all of your excess cash at those 2 problems first.

The good news is we're getting 0.9% on the auto loan, so that's nearly free money (except for the whole paying interest on a depreciating item...but whatever). My student loan is 5.75% fixed, so that'll probably be the plan of attack.

# ? Aug 7, 2015 23:26

Catatron Prime: Aug 23, 2010; IT ME; Toilet Rascal

DaveSauce posted:

it's a shitload of money and... a stupid decision that I was going to be stuck with for a long time.

Buying_a_House.txt

# ? Aug 8, 2015 01:06

Azrial: Apr 26, 2002; Coach, how did we beat Tennessee this year? The same way Vanderbilt did.

Bozart posted:

And student loan interest is not, so you should basically always pay the student loan stuff first and borrow as much as you can on the house to make that happen faster.

Student loan interest is deductible.

# ? Aug 8, 2015 03:12

Bozart: Oct 28, 2006; Give me the finger.

Azrial posted:

Student loan interest is deductible.

Well, that depends.

# ? Aug 8, 2015 03:46

gvibes: Jan 18, 2010; Leading us to the promised land (i.e., one tournament win in five years)

Azrial posted:

Student loan interest is deductible.

Only for poors.

# ? Aug 8, 2015 04:59

Dik Hz: Feb 22, 2004; Fun with Science

Azrial posted:

Student loan interest is deductible.

It's an adjustment to income, not a deduction.

# ? Aug 8, 2015 13:00

baquerd: Jul 2, 2007; by FactsAreUseless

Dik Hz posted:

It's an adjustment to income, not a deduction.

Adjustment to income is a deduction... Did you mean to say it's not a credit?

# ? Aug 8, 2015 18:26

Dik Hz: Feb 22, 2004; Fun with Science

baquerd posted:

Adjustment to income is a deduction... Did you mean to say it's not a credit?

No. A deduction is on the back-end. An adjustment to income comes off the top. You can take the student interest you pay and reduce your AGI, and still take a standard deduction.

# ? Aug 8, 2015 21:00

BEHOLD: MY CAPE: Jan 11, 2004

baquerd posted:

Adjustment to income is a deduction... Did you mean to say it's not a credit?

No it isn't, they're different things

E:fb

# ? Aug 8, 2015 22:54

baquerd: Jul 2, 2007; by FactsAreUseless

Dik Hz posted:

No. A deduction is on the back-end. An adjustment to income comes off the top. You can take the student interest you pay and reduce your AGI, and still take a standard deduction.

OK, potato/potahto here for like 99% of people. http://www.irs.gov/publications/p970/ch04.html names it as a deduction. It's a deduction that doesn't depend on itemization, but it's still a deduction.

# ? Aug 8, 2015 23:11

Bozart: Oct 28, 2006; Give me the finger.

So my short sale finally went through and now we own a house that smells strongly of cat pee!

The short sale offer was only good for 30 days, and would have expired Aug 10. We closed on Aug 7 (a Friday...) so in reality we had no margin for error. queue dramatic music enter the lending bank!

On Aug 5 they added a new contingency to the loan (specifically, that risers be installed to the septic tank's access hatches). And they said they could not clear the loan without those. They based this on an inspection report they saw in February. Not only was the notice so late as to be extremely difficult to correct in time, but also it is for something that doesn't relate to the operation of the septic system - everything was working fine, but the inspector said that the next time it was serviced, risers would need to be installed to bring it up to current code.

I spend most of the day frantically arranging for installation later in the day along with an invoice to send the bank. The bank calls at 6 pm and says "oh yeah we didn't need that in the end anyway." I'm aging like a wartime president here.

Finally we close everything on Friday, as the occupant is still bringing his stuff out. We told him we would buy some of the things that a short seller is allowed to take (fridge, microwave, washer, dryer, window treatments, chandeliers, extension ladder, ...) and he wants us to cut him a check before he's done moving his poo poo (and before we can check on its condition). In the end we did, and thankfully he did leave the stuff we had bought, and so far it works? I haven't checked all of it yet.

He didn't maintain the property much, if at all, and apparently his 2 cats decided to pee in 2 corners so much that the hardwood is literally scorched due to the resulting ammonia. We'll have to replace those portions; we were already planning on a screen and recoat, this just adds to that cost. The smell is so bad that I'm going around with a bottle of half vinegar half water spraying likely spots so that it will be more bearable while I do other poo poo.

And also, all you nerds suggesting a rekey kit? They don't sell those at home depot or lowes anymore. You'll have to order it online, but if you've just bought a house you don't want to leave it with the old locks while waiting for delivery. One home depot said they did on their website, and dumbass me believed them, drove for 40 minutes to be told that "oh, we don't have that in inventory anymore, maybe that was a display model" and then drive 40 minutes back. I ended up just buying a set of keyed entry doorhandles and replacing the entire assembly. If you also go that route then be sure to take a picture of the shape of the plate on the door, because one of mine turned out to be square, all of the other ones were beveled, so now there is a tiny gap that only I'll ever notice but I'll never stop noticing. At least the handles look nicer.

Oh and some of the lights with dimmers seem to be unwilling to turn off unless you get them just right - maybe they just have the wrong bulbs but the owner did at least some of his own electrical work in a limited area, I'm hoping he didn't do this as well.

DNB my friends

# ? Aug 9, 2015 14:09

minivanmegafun: Jul 27, 2004

As far as the dimmers go, if he put non-compatible fluorescent or LEDs up there they just plain will not behave. Otherwise, the dimmer switch is probably all gunked up with oxidation, removing them from the wall and spraying them down with DeOxit will probably fix them, but if you're getting that far you may as well just replace them.

# ? Aug 9, 2015 16:17

QuarkJets: Sep 8, 2008

Bozart posted:

And also, all you nerds suggesting a rekey kit? They don't sell those at home depot or lowes anymore.

Yes, because it's easy and cheap and gives you just a tiny bit of extra security plus you get to do a cool thing

And the Home Depot and Lowes by me both sell rekey kits for cheap, they were hanging next to the desk where they make key copies. You'll have to figure out what brand of locks you have

# ? Aug 9, 2015 20:20

minivanmegafun: Jul 27, 2004

Hey again house thread!

We're going to go look at houses again, and one of them we're looking at is listed as a multi-famliy two-flat. I looked up the Chicago records, and it's zoned RS-3 Single Family.

That's not necessarily a problem, we have the intention to turn it into a SFH, but I'm curious what possible legal headache we might get in to if there's a tenant mid-lease in one of the units. My guess would be that we'd be forced to kick them out immediately, but I have no idea.

And yes, I'll be sending this same question to my attorney, I'm just curious if anyone's gone down this road before.

# ? Aug 9, 2015 21:35

BEHOLD: MY CAPE: Jan 11, 2004

You'd be forced to honor their existing lease or offer them an enticing amount of cash to end their lease early. You can almost never just close on a property and tell tenants living there to peace out, which is one of the major drawbacks to purchasing any occupied property.

# ? Aug 10, 2015 04:10

minivanmegafun: Jul 27, 2004

Which, I mean, is fine - we can wait them out, but I'm curious what legal trouble I'm possibly in with the city for renting out an illegal two-flat.

# ? Aug 10, 2015 04:15

gtkor: Feb 21, 2011

minivanmegafun posted:

Which, I mean, is fine - we can wait them out, but I'm curious what legal trouble I'm possibly in with the city for renting out an illegal two-flat.

I think RS-3 actually allows 2 units in your case. Honestly if there was likely to be an issue it would pop up on the appraisal (if your appraiser caught it) as a Highest and Best Use issue on page 1 of the report.

You could always check and see if the owners ever got an allowance for it (which they might have done) and if they didn't, see if they will get it done for you before closing if you are concerned.

Chicago is pretty chill about one unit vs two.

# ? Aug 10, 2015 04:51

DrBouvenstein: Feb 28, 2007; I think I'm a doctor, but that doesn't make me a doctor. This fancy avatar does.

I'm at the tail end of the process here. Got our appraisal back and it's almost exactly the purchase price, so we're happy with that.

Managed to get even MORE bank paperwork over to our bank,m because there is no such thing as too much financial information.

Last thing to do is get homeowner's insurance. Any recommendations? I have USAA auto insurance through Costco, so I looked into them but they don't offer homeowner's insurance in my state.

I have quotes from Liberty Mutual (who I have renter's insurance from,) Geico, and Progressive. I tried Farmers and Travelers, and Farmers also does not provide insurance in VT, and Travelers keeps saying they can't get me a quote at this time and I can't be bothered to call.

I also was going to try State Farm, but...well...:

Coneheads? Really?

I know pretty much every insurance ad campaign is dumb, but this seems worse than the others.

DrBouvenstein fucked around with this message at 13:33 on Aug 10, 2015

# ? Aug 10, 2015 13:30

Bozart: Oct 28, 2006; Give me the finger.

Another possibility is Chubb. Their policies are more expensive, but they are typically uncapped, and their unofficial motto is "we pay"

# ? Aug 10, 2015 14:07

Catatron Prime: Aug 23, 2010; IT ME; Toilet Rascal

Apologies if this is the wrong thread for this question, but is there a way to tell what of wood boring insects have taken up residence in my home?

The few I saw were about the size of termites, but they were black and looked like wingless ants. So far, all the tunnels appear be limited to the rotted sill and trim I ripped out, though they might have penetrated down a stud further away in the sill, I can't tell if the damage is rot or insect in there.

Also, does anyone have any advice on how to deal with these buggers? I'm assuming this kind of thing is outside the scope of the home warranty...

# ? Aug 10, 2015 17:03

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# ? May 28, 2024 05:20

No Butt Stuff: Jun 10, 2004

I'd guess carpenter ants.

# ? Aug 10, 2015 17:38

The Something Awful Forums > Discussion > Ask/Tell > Business, Finance, and Careers > House-buying thread - Why is everyone involved in this process so deeply stupid?

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