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

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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Shifty Pony: Dec 28, 2004; Up ta somethin'

I'm considering buying in a year or two, but where't eh best place to squirrel away my money? I have a 95k salary and no debt but I already consider myself a bit of a money hamster at 28 with 25k in savings, 30k in a roth, and 45k in my TSP (govt employee version of a 401k). I have no illusions about coming out ahead of even breaking even on a house, I regard it as a place to live where I can do what I like (run surround sound/networking wires, set up my homebrewing stuff, have a bike work space, have a dog and a garden, etc.)

The options I was considering:

Ally savings account - Already getting 200 per paycheck tossed into it. I could without pain bump that to $800-1000 per pay period (recent promotion + just moved to lower priced rental)

Open a new investment account - I've been considering doing this already. The downside of course is the money will be open for investment losses.

Dump it into the TSP - There are "loan" options from the TSP for new property purchases. The money gets pulled out of investment and charges "interest", however that interest is deposited into the account as the loan is paid back. The TSP has to option of a 4% return government securities fund, which beats the pants off any savings account or money market fund.

Also the calculators are indicating I can afford a $400k property with my goal 50k down payment which seems... oddly high.

# ¿ Jun 16, 2012 16:29

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# ¿ May 2, 2024 09:48

Shifty Pony: Dec 28, 2004; Up ta somethin'

I'd like to know if I'm being realistic in thinking about starting the search for a house next Spring/Summer.

Late 20s, with the following:
Income: $95k
Fico Score: ~770
Cash Savings: $20k
Retirement: $85k
No debt (car paid off, no loans, CC paid in full monthly)

The neighborhood I'm interested in has houses in the range of $230-$280k with ~$4k annual property tax I'm worried that might be a bit much for my income.

Should I wait another year and dump as much cash as possible into savings for a large down payment, or plan on going with a FHA loan? With interest rates as low as they are financing at 3.X-4.X percent looks very attractive. As of now I am comfortably spending $1k on rent and sending $400+ per month into savings (Mint shows $1-3k per month net income, I'm not sure I trust it as it may be including me maxing out my Roth retirement account and sending 8% to my 401k).

# ¿ Nov 11, 2012 05:57

Shifty Pony: Dec 28, 2004; Up ta somethin'

Leperflesh posted:

My main concern would be your age, actually. In addition to analyzing your finances, you need to think carefully about your life plans. Why do you want to buy a house now? Are you married? Do you have kids? Career plans?

You do not want a situation where you buy and then want to move, need more room, or hate your school district 2 or 4 years later. Given the huge transactional costs of buying and (especially) selling, even assuming your property does not lose any value you can wind up losing a lot of money if you have to resell too soon.

I think in this thread we generally advise people not to buy if they're not ready to commit to staying in the home for at least 8 years. That's not a hard rule, but it's enough time to build equity and recover from a near-term but temporary drop in home value.

Not married, no kids, very stable government job that I'm extremely happy with. I have several reasons for wanting to buy vs rent, some silly some practical. Firstly I've moved enough in the last few years to be pretty much wanting to be done with it. The last house I rented had an absolutely awful landlord (who would do things such as send out amendments to the lease via email and think they were binding and was stricter about lawn mowing than any HOA), but I don't care for being in an apartment and want to have a neighborhood again. I would like to get a dog, have a garden, and have space for my beer brewing. I would like to be able to customize my house by installing shelving, painting walls, running networking and surround lines, etc. I've helped (re)build houses and if it doesn't involve roofing, siding, or gas I can generally do it and do it to code although in some cases I recognize when it is better to pay a pro to do it (gently caress ceramic tile, seriously).

The schools in the area I'm looking at are good and the lots are sized to make additions very popular (although the houses in the range I would consider are 2/2 or 2/1.5).

If I could find a landlord like the ones I rented from in DC I'd be much more amenable to renting. However it seems like you can't be that picky around here, with 99% occupancy rates around the city and many "nice" houses being rented as vacation homes. I'd be looking at ~$1350-1500 in rent, before pet fees, with 5-8% annual increases if trends hold for the next few years. I certainly plan to stay in the city I am in now, I really do love this place and that's why I moved back here.

quote:

All that aside, I think you can maybe just afford your payments, but it's tight. You're going to be paying $1500 a month or so for your principal, interest, taxes, and insurance; and add in another hundred or two for mortgage interest if you do not put 20% down. You need to add more to cover maintenance and repairs, and the exact amount depends a lot on the age and condition of the home, plus your region/environment. Depending on where you live and the grade of insulation in your home you may need to factor in a lot for energy bills too.

All told that's significantly above the $1400 a month you're currently accounting for in rent + what you're putting into savings. You ought to have better cash flow if you're really grossing $95k a year. Time to take a close look at your monthly expenses and figure out where all your money is going.

I actually only was counting what I automatically divert to cash savings, most of what I save goes into retirement accounts. My actual savings picture looks like this:
401k - $580 per month
Roth 1 - $580 per month (this is not subject to the normal $5k limit)
Roth 2 - $410 per month (maxed)
Automatic cash savings - $400 per month
Plus transferring on average an additional $600 manually per month to cash savings.

So I hold about a 36% savings rate in spite of some major purchases over the last few months (bike, furniture, computer, trip home to see parents). Perhaps it would be better to seek out the mythical "good landlord" and be a money hamster?

# ¿ Nov 12, 2012 18:19

Shifty Pony: Dec 28, 2004; Up ta somethin'

Great, now I want a house with fuzzy dice and HID headlights.

It is pretty shocking that the "house is an investment!" thing has stuck around even after the real estate implosion of 2007.

# ¿ Nov 12, 2012 20:37

Shifty Pony: Dec 28, 2004; Up ta somethin'

My friends are likely moving in the near future and are would be selling their house. My gf and I really like their house so I've been fiddling around with the "how much house can you afford" calculators but they just seem bonkers to me. Pulling in $107k gross, $60k down, $300 car payment but no other debt, 4.25% rate with 2% property tax and 0.6% year homeowners gets "you can afford" number in the 450-480s. That just seems crazy high and isn't even taking into account her income.

Am I doing something wrong here? That is pretty far out of the 2.5x income range.

# ¿ Jul 5, 2015 04:08

Shifty Pony: Dec 28, 2004; Up ta somethin'

Motronic posted:

It's bike-shedding. https://en.wikipedia.org/wiki/Law_of_triviality

$10k or even $20k is pretty much nothing when you're discussing purchasing a 3/4 million dollar home. If you blow up a deal over that you probably had other reasons you wanted to blow it up. Like the place was overpriced by WAY more than that. Or you're petrified of buying a house or getting it wrong.

All valid emotions - it's a big deal to most people. But understand why you feel like you want to quibble over the $600 water heater that the inspector said is 20 years old and on its last legs as part of your six or seven figure purchase. Because it's not about the water heater. So maybe you should figure out what it IS about and if it's just "I need to get one over so I can say I got a DEAL!" maybe just get over it.

You just know that water heater will choose the absolute worst possible time to die and it will suck MAJOR rear end when it does.

But I agree. We just put in an offer on a house and while we asked for an inspection I put a massive cost to repair exclusion on it. I mostly just want to know what's up so I can prioritize future projects, and have someone crawl around to make sure the house isn't 90% termites with the sewer draining into protected newt habitat or something.

To just whine a bit: This is an earlier offer than we wanted to make. drat inconsiderate sellers deciding to list a house that included everything we wanted including a few "there's no way we'll find that" wishes two months before we wanted. It is just plain rude.

And on what planet is a 2" diameter trunk considered a "mature" fruit tree?

# ¿ Jan 7, 2023 16:23

Shifty Pony: Dec 28, 2004; Up ta somethin'

Motronic posted:

This is what inspections should be for. Damages or defects that cost 5 figures like roofs and foundations, house full or knob and tube with rodent damage, bad septic, bad well, etc.

I almost get why people want to be particular about the small stuff because yeah, it's hard to get parts and its hard to hire competent help.

Also understand that the average home seller either never did any maintenance of any kind and only proactively responded to things that broke or at least has been checked out on any sort of maintenance for several years since they started planning on selling the place.

Really the main thing I'm concerned about on this property is the sewer line. There are enough other projects of sufficient scope which have recently been done to it (where good tradespeople had left their stickers on the installed equipment) to tell me that the gas, hvac, and electrical are at least somewhat modern. There's no way the installations could have passed inspection if they weren't.

The house was originally platted for septic so they switched over at some point, but if they did it shortly after initial construction there's possibly orangeburg pipe under there :stonk:

But who knows, I'm trying to prep myself for getting a "sorry, they took another offer" email tomorrow. I'm hoping the un-updated 1960s spearmint green bathrooms and the kitchen cabinets being a bit scuffed scares off high bidders looking for something more modern/flipped.

# ¿ Jan 8, 2023 04:08

Shifty Pony: Dec 28, 2004; Up ta somethin'

Oh poo poo our offer won.

# ¿ Jan 9, 2023 01:01

Shifty Pony: Dec 28, 2004; Up ta somethin'

Leperflesh posted:

and also "water flows downhill," into your house

That's the one I thought of.

# ¿ Jan 9, 2023 05:14

Shifty Pony: Dec 28, 2004; Up ta somethin'

Dropping a large down payment and going for a 15yr loan is also a valid strategy.

Having no housing payment other than property tax and insurance would be drat sweet.

# ¿ Jan 10, 2023 18:53

Shifty Pony: Dec 28, 2004; Up ta somethin'

My only semi relevant quip is "sometimes money is the cheapest way to pay."

It is very applicable to DIY house repairs.

# ¿ Jan 11, 2023 01:59

Shifty Pony: Dec 28, 2004; Up ta somethin'

Pollyanna posted:

Time is infinitely more valuable than money, especially if you�ve already spent time on getting that money.

That and the fact that you can make a cheap minor repair into a very expensive major repair if you don't know what you are doing and gently caress up.

# ¿ Jan 11, 2023 15:41

Shifty Pony: Dec 28, 2004; Up ta somethin'

Got the inspection report back today and the biggest issue is a bathroom fan exhausting into the attic. Not bad not bad.

# ¿ Jan 11, 2023 21:51

Shifty Pony: Dec 28, 2004; Up ta somethin'

Hadlock posted:

how much do you trust your inspector

He seemed personally offended that he couldn't find more wrong.

# ¿ Jan 12, 2023 01:46

Shifty Pony: Dec 28, 2004; Up ta somethin'

There's also the toddler time dilation effect to consider. One hour passes for the person on the outside while the one watching the kid experiences five.

Also funny that needing a sewer line replacement was mentioned because guess what the sewer scope turned up!

We're still going for it since the run is unusually short (so replacement is fairly cheap and falls solidly within our exclusion) and we can get it done before we move in. Added bonus is then we don't have to loving worry about it for decades. I've been in two houses with poo poo sewer and I'm all about a shiny new run as long as I don't have to use a porta-john for a week while getting it installed.

# ¿ Jan 16, 2023 04:20

Shifty Pony: Dec 28, 2004; Up ta somethin'

Going over the closing process and it is completely mind blowing how "you'll get an estimate but the exact amount will remain a mystery until the morning of closing" is just accepted as the way things are.

# ¿ Jan 21, 2023 18:27

Shifty Pony: Dec 28, 2004; Up ta somethin'

The only person I feel like I've got a good bit of respect for in this whole process has been the escrow attorney we are using. He's one paranoid motherfucker about wire transfer instructions because of all the scammers constantly trying to get the transfers sent to accounts they control, and I appreciate that.

# ¿ Jan 22, 2023 05:43

Shifty Pony: Dec 28, 2004; Up ta somethin'

Pretty much all of those could be given in a table of Closing Dates and corresponding not-to-exceed Estimates though.

Make someone other than the buyer and seller responsible for when the estimate is too low and I'm sure you'd see those estimates get really loving accurate.

# ¿ Jan 22, 2023 14:32

Shifty Pony: Dec 28, 2004; Up ta somethin'

Motronic posted:

It proves to sellers that you at least kinda are vaguely aware that a mortgage is a thing you'll probably need.

Which as we noted in this thread puts you fat above a large number of real estate "professionals".

# ¿ Jan 24, 2023 01:13

Shifty Pony: Dec 28, 2004; Up ta somethin'

I will say that my mortgage broker has been 110% on the ball. We went from pre approval to "all underwriting done, just waiting on the title search" in seven days.

Granted this was with me hounding them for ways to speed it along but still. I think business might be a bit slow right now.

# ¿ Jan 24, 2023 01:39

Shifty Pony: Dec 28, 2004; Up ta somethin'

QuarkJets posted:

I'll tell two anecdotes

My most recent house was sold to an old couple who were unrepresented and had basically just had an attorney look over their offer. It was a cash offer and the highest bid, so I would have picked them anyway, but pocketing that extra 3% was great and obviously would have been a consideration if other offers had been more competitive. The deal closed without a hitch

The house before that was sold to a represented buyer who made an "as is" offer and would later try and argue that "as is" meant that we should pay for their utilities in perpetuity. This wasn't a joke, they were completely serious and tried to "concede" to only asking that we pay 1 year of their utility bills. This was a simple SFH

Don't let an agent convince you that representation is going to ward off a pain in the rear end

The later almost sounds like someone planning to pull a bitcoin mining or grow op scam.

# ¿ Jan 24, 2023 20:06

Shifty Pony: Dec 28, 2004; Up ta somethin'

Popete posted:

It would be nice if their pay wasn't based on the sale price of the home, it's such a bizarre way to get paid in the first place. Like is selling a multi million dollar mansion that much more difficult than a $200k home?

It also incentives the sale at the highest possible price, so the buyers agent probably isn't going to be pushing to get the best value for their client.

Iirc the studies tend to show that agents don't push for high prices but fast easy transactions. A 10% higher sale price boosts their income by 10%, but if it took twice as much effort their hourly income is still down by nearly half.

When they sell their own houses they tend to keep them on the market longer and secure higher sales prices, and I'm sure that they spend more time bargain hunting when they buy.

# ¿ Jan 25, 2023 02:11

Shifty Pony: Dec 28, 2004; Up ta somethin'

Dik Hz posted:

100% agree. Pocket listings are a thing, especially in hot markets.

The general homebuyjng public sucks and as a seller it�s worth a premium to not have to deal with that.

I remember when Redfin first started gaining traction and the National Association of Realtors' legal team was playing whack-a-mole with the various local associations who were encouraging pocket listings or straight up binning Redfin offers as a way to prevent Redfin from ruining their commission structure.

"Stop saying the quiet part out loud morons, you're gonna get us sued!"

# ¿ Jan 26, 2023 21:51

Shifty Pony: Dec 28, 2004; Up ta somethin'

That sounds like a "gently caress you" quote.

# ¿ Feb 1, 2023 03:43

Shifty Pony: Dec 28, 2004; Up ta somethin'

A Proper Uppercut posted:

Curious about something - browsing subreddits like the FirstTimeHomebuyer, people are posting their loan forms with rates of like 5.3-5.5. However every mortgage rate tracker I see says rates are still around 6.5. Why the discrepancy? Are the trackers behind? are redditors full of poo poo?

A lot of the low rates are either special programs (VA, FHA) or large points buydowns (or both).

Pretty much go to Bankrate, put in your area, filter to zero-points, and sort by APR. that will gives you a good idea of about what the rates are doing in your area.

# ¿ Feb 6, 2023 19:16

Shifty Pony: Dec 28, 2004; Up ta somethin'

The math is also complicated by the fact that you are paying for points with today-dollars which are worth more than future-dollars.

# ¿ Feb 7, 2023 17:05

Shifty Pony: Dec 28, 2004; Up ta somethin'

Got the survey back and everything looks kosher

Except the fact that a small section of soon-to-be-my fence is biting off about 8" more than it should be of the neighbor's lot :whitewater:

Whatever that little spot it half buried in a hedge anyway nobody will know but the cardinals.

# ¿ Feb 10, 2023 05:25

Shifty Pony: Dec 28, 2004; Up ta somethin'

Like all financial advice "no, you idiot" comes with a very important disclaimer about how it very much depends on what the rest of your retirement savings looks like now and what your long term goals are.

Remember that contributions are always a penalty free withdrawal, as is an additional $10k of returns for a first house purchase. The biggest drawback of pulling either of those out is the yearly contribution limits prevent you from easily replacing them and you lose out on compounding returns in the meantime, but there is the backdoor conversion to get around that if you make enough money to be able to backfill in the Roth in the next few years.

As a personal example when I first started working I opened a Roth because the plan was 401k plus Roth plus social security, but then I switched over to a public sector job. A pension came into play and my healthcare will carry over into retirement to pay anything Medicare does not. So suddenly I am looking as well over 100% income replacement from pension+TSP and a drastic reduction in potential healthcare costs, making the original Roth superfluous. Additionally I gained access to the TSP which has a Roth option with no income limits and a much larger allowed contribution (~$15k for me) so I could fairly quickly rebuild a replacement Roth account if I wanted to.

Life circumstances changed as well. Met Mrs Pony and had kid. She was forced to move a lot as a kid she very much wanted to not put our did through that which made securing a house where we could stay long term very important. The market we were looking at in was also very competitive (still is) and you really need a sizable down payment to play.

So we made the decision to scrap the Roth account and use the proceeds as part of a down payment. That let us bid on and win a house which checks all our boxes and is not a bullshit "starter home". It gave us a payment which can be comfortably handled on just my salary so Mrs Pony finding a job before the move wasn't a precondition and there will be less stress overall. It gives us a loan which will be paid off at or before retirement making the other income streams go further.

Was it "the right decision"? Perhaps not, but it was our right decision.

# ¿ Feb 10, 2023 16:19

Shifty Pony: Dec 28, 2004; Up ta somethin'

Shifty Pony posted:

Oh poo poo our offer won.

Oh poo poo we own a house

# ¿ Feb 16, 2023 04:25

Shifty Pony: Dec 28, 2004; Up ta somethin'

BonoMan posted:

House next to us went on sale and sold in a day. We definitely didn't see anybody coming and going so I'm guessing somebody bought it to rent out. Yay.

Could also be flippers.

# ¿ Feb 18, 2023 22:16

Shifty Pony: Dec 28, 2004; Up ta somethin'

That sort of finished attic also tends to get very hot and/or cold. The big air gap of a traditional attic acts as insulation.

# ¿ Feb 19, 2023 00:39

Shifty Pony: Dec 28, 2004; Up ta somethin'

Harminoff posted:

Thanks all! Kinda figured but wanted to check.

The other house we looked at today was at the top of our budget but includes an outdoor hottub and 12 foot wide round pool.

I'm in wisconsin though so pool wouldn't get used much, and I'm guessing it would cost 2-3k a year in maintenence/electricity etc? Just nervous on the cost of upkeep on something like that.

Pool will bump you insurance up a decent bit too, especially if you follow recommendations and get higher liability coverage. Pools are considered an "attractive nuisance" where if kids hurt themselves on it you are pretty much automatically at fault even if they trespassed to get to it.

That reminds me I need to price out an umbrella policy...

# ¿ Feb 19, 2023 02:03

Shifty Pony: Dec 28, 2004; Up ta somethin'

QuarkJets posted:

Is this still an issue if your backyard is fully enclosed with a locked gate or do you also need the pool to be fully enclosed with its own locked gate? Or does it simply not matter at all and you're always screwed if teenagers hop over 30 fences to drown in your pool?

I believe that you mostly just need a fence with a locked gate, but some insurance companies might require a separate pool fence to prevent (for example) a guest's kid playing in your backyard from going into the pool. Locking up the ladder for an above ground pool is also common.

I'm not sure though, we excluded all properties with pools from our searches.

# ¿ Feb 19, 2023 03:09

Shifty Pony: Dec 28, 2004; Up ta somethin'

You can also deduct up to $10k of property tax and state income tax. That makes it a bit easier to get over the standard deduction.

# ¿ Feb 22, 2023 18:12

Shifty Pony: Dec 28, 2004; Up ta somethin'

Xyven posted:

My wife has a similar commute, so we're getting twice the value. I'd go nuts with an hour+ commute each day, so not really considering anything more than ~15 minute walk. Just getting a bit of sticker shock!

Has anybody added central AC to a house that previously only had window units? Trying to figure out the cost/difficulty to add AC - with how hot summers have been getting, no AC is a deal-breaker.

The real fun sticker shock comes at school district/area boundaries. Identical houses can literally back up to each other and with a price difference of $100k or more.

# ¿ Mar 2, 2023 03:46

Shifty Pony: Dec 28, 2004; Up ta somethin'

Remember that PMI depends on your credit score. If you have good credit the PMI estimates of online calculators will be wildly off.

# ¿ Mar 2, 2023 18:42

Shifty Pony: Dec 28, 2004; Up ta somethin'

illcendiary posted:

One of the problems with buying in CA (it�s an issue everywhere, but seems supercharged here) is that even if you�re knowingly buying a deathtrap that you know needs work and that you yourself want to live in, you�re inevitably up against 10 people with deeper pockets who magically know a handful of subcontractors who will get the house to a [livable but not great] state for cheaper than you can repair it, and then just rent it out. It sucks

Repairs are a lot cheaper if you don't have to live with the results.

# ¿ Mar 9, 2023 00:06

Shifty Pony: Dec 28, 2004; Up ta somethin'

It is frankly astonishing how many scam letters you get after a home purchase. Goddamn.

# ¿ Mar 10, 2023 14:09

Shifty Pony: Dec 28, 2004; Up ta somethin'

One of the nice things about moving cross-country is blacklisting your old area code to almost completely eliminate robocalls.

# ¿ Mar 13, 2023 23:21

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# ¿ May 2, 2024 09:48

Shifty Pony: Dec 28, 2004; Up ta somethin'

The mortgage broker I used just found out that the sellers that sold her the house she's in now listed a new roof on the listing, gave a copy of an invoice for a full roof replacement, but actually only had a small patch job done.

Just goes to show that anyone can get hosed over I guess.

# ¿ Mar 15, 2023 20:18

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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