Advice on buying a home.

[DallasLinz]

Originally Posted by a1stretch

Hello friends !

i am not a property adviser or consultant but i recently buy a home. before buying a home i asked many consultant and i saw lot's of home, you should also do this & tell him your requirement.

did you buy your home with many limos?

[defcon]

Originally Posted by DallasLinz

I'm not going to read all that, but they should do a study on the health of people who have a mortgage and those who don't. My hypothesis of those who don't is that they have fewer health problems. It is all in the name and it's prefix is "mort."

And by "they" I mean an employer who should hire me as a researcher.

Right now my finances are one of the many things keeping me from sleeping. I have a dead end, part-time job with wage garnishments, I make a little money off the books, and I'm about to get a house transferred into my name gratis thanks to a trust which will be exempt from creditors. If it weren't for the sentimental value of it and the fact that I'm currently living here, I'd put it on the market in a heartbeat.

The more you deal with money, the more problems you see...even if you have plenty of it. Interesting observation with the mort prefix.

[ExistenceNow]

Originally Posted by defcon

Let's take $100,000 as an example.
20% down is $20,000 and 10% down is $10,000

So on your first example, you owe $80,000x.05 (simple interest, not compound...and yes, I am aware that most mortgages are compound)

You want to calculate the interest on $80000 at 5% interest per year after 15 year(s).
The formula we'll use for this is the simple interest formula, or:


Where:

P is the principal amount, $80000.00.
r is the interest rate, 5% per year, or in decimal form, 5/100=0.05.
t is the time involved, 15....year(s) time periods.
So, t is 15....year time periods.
To find the simple interest, we multiply 80000 × 0.05 × 15 to get that:

The interest is: $60000.00

That's 60k you will have paid in interest alone, in addition to the 80k that you already owed, plus the down payment which is not included in the interest calculation, for a total of 160k you will have paid on a $100,000 home when the mortgage is amortized.

Example 2:
You want to calculate the interest on $80000 at 10% interest per year after 15 year(s).
The formula we'll use for this is the simple interest formula, or:


Where:

P is the principal amount, $80000.00.
r is the interest rate, 10% per year, or in decimal form, 10/100=0.1.
t is the time involved, 15....year(s) time periods.
So, t is 15....year time periods.
To find the simple interest, we multiply 80000 × 0.1 × 15 to get that:

The interest is: $120000.00

With interest and principle you will have paid $220,000 on a home.

I know this is confusing, but let's add another factor into the equation: Time, or, better put, inflation. Obviously if you're looking at real dollars, without knowing the rate of inflation, the first example is the most fiscally prudent. If we compare real dollars from 2000 (ten years ago) with real dollars from today, then you would have probably ended up paying more on the second example. It seems like the first example, 5%, would always be the best given the current status quo.

The only scenario that may change that is a depression or some situation where real dollars are significantly devalued. See the note in parenthesis below, and if I'm wrong, feel free to correct me because that is an interesting question.

(I'm sorry, I'm not an economist, but I am 1/8 Jewish, AND I did take macro and micro, albeit from an instructor who spoke Korean most of the time...I ended up learning everything from the book and skipping classes, and I did stay at a Holiday Inn Express last night as well)




First, alot more people than you think. Right now we have people walking away from mortgages who have the ability to pay merely because of what I mentioned before. Second and thirdly, I have a huge mistrust for the banking system right now and even the Fed. I'm sorry, you might think this is bullshit, but my 401K practically disappeared in 4 months. I didn't have much in it, but to watch it shrivel away was ridiculous. I had good investments, Vanguard mutual funds and acted on the advice of Suze Orman, the Goddess of all things financial, and I still got screwed royally.

My only remotely valid argument against your example is that I don't know anything paying 7% right now (CDs, savings, bonds, etc.). Assuming you could find a nice, juicy JG Wentworth style annuity such as from a settlement advance or certain types of trust funds and had all other financial liabilities squared away, having the monthly income pay the mortgage for you would definitely be a good idea. Call me paranoid, but again, I'm a firm believer in the mattress system at this point. My grandfather was moderately wealthy, lived during the Depression, and dealt with cash his entire life. It was only when some slick investment banker talked in into investing 800k into some shitty, SEC prosecuted company called HomeGold Investors that he lost that entire sum.

Clarifying, owning a home free and clear is never a volatile thing. Again, if you have the money, and can afford it (two separate things, but many do not know what the concept of affordable is...hence the current predicament in which we find ourselves) then buying something outright, whether it is a home or a consumer good (personalty) free and clear of any creditors is always a no brainer, a good decision like Samuel Adams beer.

I wish I would have stuck with business administration and finance in college. I couldn't take the material of the computer science/programming courses that my college, a highly ranked program per USN&WR, insisted that I take. My mind just isn't geared that way Otherwise I had a 3.25 in my major without even trying. I guess I should have transfered to a program where such courses would be elective and not required, but that's youthful inexperience for you.

Oh, and in closing, I leave ya'll with the following quote:

"Recent research has shown the empirical evidence for globalization of corporate innovation is very limited. And as a corollary, the market for technologies is shrinking. As a world leader, it is important for America to provide systematic research grants for our scientists. I believe strongly there will always be a need for us to have a well-articulated innovation policy with emphasis on human resource development. Thank You."

*blacks out*

It's there, for sure. My wife works for a financial planning firm and has access to all these wild things. Basically (very basically) what we have is corporate real estate. We put X amount into a 4 year contract which essentially pays parts of mortgages on many corporate buildings which are leased by companies such as Home Depot, Best Buy, Sam's Club, etc...
Over the course of the 4 year contract, we get 7% of our initial investment paid out to us every singe month. (not 7% of the initial investment divided by 48. 7% month 1, 7% month 2... etc..) Then, at the end of the contract, we sell our "shares" of this contract for 25% ($8 per bought, sold at $10) more than we bought them for. So basically, a $200k investment, after 4 years, with us taking out the monthly annuities, would leave us with $240k (which would have been much more if we would have reinvested the monthly annuities, but we didn't, cuz we used those to pay our mortgage).

[defcon]

Originally Posted by ExistenceNow

It's there, for sure. My wife works for a financial planning firm and has access to all these wild things. Basically (very basically) what we have is corporate real estate. We put X amount into a 4 year contract which essentially pays parts of mortgages on many corporate buildings which are leased by companies such as Home Depot, Best Buy, Sam's Club, etc...
Over the course of the 4 year contract, we get 7% of our initial investment paid out to us every singe month. Then, at the end of the contract, we sell our "shares" of this contract for 25% ($8 per bought, sold at $10) more than we bought them for. So basically, a $200k investment, after 4 years, with us taking out the monthly annuities, would leave us with $240k (which would have been much more if we would have reinvested the monthly annuities, but we didn't, cuz we used those to pay our mortgage).

That's not bad. In the words of Peter Griffin, I need a Jew.

[ExistenceNow]

^ The risk is that the corporations go out of business and can't pay their lease... however, it's still real estate. When Circuit City went out of business, Best Buy and other companies bought up their space. When Albertson's went out of business, HEB and other companies bought up their space.

Right now, in this economy, our particular program is holding at a 96% occupancy rate. Texas, Texas!

[DallasLinz]

Originally Posted by ExistenceNow

but we didn't, cuz we used those to pay our mortgage.

this made me giggle a bit. not in a mean way, but i have a terrible sense of humor.
hopefully you understand and don't take offense. further proof i need a job so i don't say strange things on the interwebs at 2am.

[Jan-Willem]

Originally Posted by PilotC150

Don't let the location of your job affect the location of your house. Your job can change at the drop of a hat, but your house is your home. Buy a house where you want to be, don't buy a place because the commute is short.

I guess it's because I'm in The Netherlands, but I would never advice this. Live where your work is the best advice over here....

Over there it might be different though.

On related note: how long does it take people to get from home to work every day?


To the OP: space is important. How does the space feel be in, but also is it comfortable to live in.

[DallasLinz]

Originally Posted by ExistenceNow

^ The risk is that the corporations go out of business and can't pay their lease... however, it's still real estate. When Circuit City went out of business, Best Buy and other companies bought up their space. When Albertson's went out of business, HEB and other companies bought up their space.

Right now, in this economy, our particular program is holding at a 96% occupancy rate. Texas, Texas!

all of the alberson's up here lay empty. those poor folk. we also only have one central market and no HEB. the two could be related. tho, i am very happy about that. i love the prices at HEB, but as a whole I hate them.

p.s. on the home buying note: make sure your grocery is near by! also, make sure it is easy to get in/out of the neighborhood. i.e. not having to cross 6 lanes of traffic to turn left w/o a light.

[ExistenceNow]

Originally Posted by defcon

That's not bad. In the words of Peter Griffin, I need a Jew.

[defcon]

Originally Posted by ExistenceNow

^ The risk is that the corporations go out of business and can't pay their lease... however, it's still real estate. When Circuit City went out of business, Best Buy and other companies bought up their space. When Albertson's went out of business, HEB and other companies bought up their space.

Right now, in this economy, our particular program is holding at a 96% occupancy rate. Texas, Texas!

Yeah, Austin is ridiculous with its economy and a yuppie paradise I hear. SC wants to be like TX but never will be. Entirely too many idiots here and the education system is lacking, etc. If that situation happened, I guess you would be entitled to a fraction of the proceeds from any liquidation/foreclosure/auction or whatever the proper term is. It's definitely a solid investment.

There was a guy here who brought acres upon acres of swamp land here years ago. They said that he was a fool. Now on that land sits the urban sprawl of the area, retail hell or heaven depending on your view of consumerism. He made millions from selling and developing it, and still holds the lease to much of it. It has the namesake of an area town and college with an insane football program and rabid fans.

[ExistenceNow]

Originally Posted by Jan-Willem

I guess it's because I'm in The Netherlands, but I would never advice this. Live where your work is the best advice over here....

Over there it might be different though.

On related note: how long does it take people to get from home to work every day?


To the OP: space is important. How does the space feel be in, but also is it comfortable to live in.

It takes me 11 minutes to get to/from work. The wife's commute is more like 6 minutes.

That's coincidence though. We had these jobs before we bought our house (though our commute wasn't much different at our apartment. We've always been South Austin folk).

[Jan-Willem]

Originally Posted by ExistenceNow

It takes me 11 minutes to get to/from work. The wife's commute is more like 6 minutes.

That's coincidence though. We had these jobs before we bought our house (though our commute wasn't much different at our apartment. We've always been South Austin folk).

I have this rule made up for myself that I don't want to spend more than half an hour travelling to work every day. An hour of travelling every day is my maximum. Otherwise I'm going to move...

It's about 20 minutes now for me.


In the Netherlands there are alot of people stuck in traffic every day because they live in town A and work in town B. 3 hours worth of travelling a day isn't very unusual over here... That's pretty insane because it takes about 4 hours to cross the entire country when there's no traffic at all...

[defcon]

^ I know of people in the Northeast, which has a comprehensive transit system, who commute 3 hours to work, for example, from Upstate NY to NYC, from Central/South Jersey to NYC, etc.

For me, the less of a commute I have, the happier I am. I can't STAND traffic, and to tell you the truth, except for rural driving, I'd rather have a chauffer (however you spell that word).

[Jan-Willem]

^such a waste of time to commute hours a day...

[defcon]

Originally Posted by Jan-Willem

^such a waste of time to commute hours a day...

I agree, but to them, there are significant financial advantages to it. Some make near or above six figure salaries, live in areas with a significantly lower cost of living than the suburbs/exurbs of the cities that they work in, thus justifying the cost of the commute. There's also affinity issues there as well, such as raising a family, schools, the environment, etc.

I once went for a job interview in NYC when I was living Upstate roughly 100 miles from the city, or a two hour drive without traffic. I drove 20 minutes to the nearest train station, spent two hours on the train, and arrived in the city. After walking around Manhattan, the stress of the job interview and testing, and commuting back, I was zapped. I cannot see how people do that day in and day out...actually, most of them had family picking them up or they carpooled to the train or bus station. I got the job offer, but they lowballed me on the salary, so I declined.

Now if we ever get high speed rail comparable to Japan or Europe per our plans, we'll be set. Commutable distances will increase significantly. As of now we only have Acela by Amtrak, which is a laughing stock. Built to travel up to 150 miles per hour, conditions often force layovers, stoppages, and the thing usually only travels at the speed of a normal train (50 to 80 mph).

Bleh.

The fact is that we're a car culture more than perhaps any other nation in the world, and it's going to take a great deal for that to change.

[Jan-Willem]

Originally Posted by defcon

I agree, but to them, there are significant financial advantages to it. Some make near or above six figure salaries, live in areas with a significantly lower cost of living than the suburbs/exurbs of the cities that they work in, thus justifying the cost of the commute. There's also affinity issues there as well, such as raising a family, schools, the environment, etc.

I once went for a job interview in NYC when I was living Upstate roughly 100 miles from the city, or a two hour drive without traffic. I drove 20 minutes to the nearest train station, spent two hours on the train, and arrived in the city. After walking around Manhattan, the stress of the job interview and testing, and commuting back, I was zapped. I cannot see how people do that day in and day out...actually, most of them had family picking them up or they carpooled to the train or bus station. I got the job offer, but they lowballed me on the salary, so I declined.

Now if we ever get high speed rail comparable to Japan or Europe per our plans, we'll be set. Commutable distances will increase significantly. As of now we only have Acela by Amtrak, which is a laughing stock. Built to travel up to 150 miles per hour, conditions often force layovers, stoppages, and the thing usually only travels at the speed of a normal train (50 to 80 mph).

Bleh.

The fact is that we're a car culture more than perhaps any other nation in the world, and it's going to take a great deal for that to change.

This is a problem over here too. Our public transport is great, but alot of people want the freedom of a car aka the "freedom" to use an hour and a half for covering a distance of 15 miles.

[chiznaz]

Austin would be a really fun place to live, but the job market seems limited compared to other major tx cities(unless you you work for govt or the university). I personally wouldn't mind getting out of Houston and goin back to San Antonio (which probably had a worse job market than Austin ) there's nothing like walking outside at 8am in Houston, having your glasses fog up from humidity, and be drenched in sweat in a matter of 2 min. That gets old fast

as for the OP, try to get in on a fixed
mortgage. You'll love youself for doing so in 10 years.

[DallasLinz]

Originally Posted by chiznaz

Austin would be a really fun place to live, but the job market seems limited compared to other major tx cities(unless you you work for govt or the university). I personally wouldn't mind getting out of Houston and goin back to San Antonio (which probably had a worse job market than Austin ) there's nothing like walking outside at 8am in Houston, having your glasses fog up from humidity, and be drenched in sweat in a matter of 2 min. That gets old fast

as for the OP, try to get in on a fixed
mortgage. You'll love youself for doing so in 10 years.

Austin's economy barely flickered during the downturn and there are a ton of jobs. It is also a phenomenal place to live. I would be living in a cute little condo off 183 if it weren't for family in Dallas... and I would probably have a kick ass job at Sweet Leaf Tea.

i concur with the fixed rate. you can always refinance if rates plummet.

[dMATTb]

Advice for the OP:

Work on the following two items, in any order..

1) Find a Real Estate Agent. If you live in an area that you know alot of people, ask your friends/family/co-workers for recommendations. If you can't get any leads there then find a reputable office in the area and search their website for a "contact us" or "message us" form that you can use to contact them. Give them a brief description of your situation (first time homebuyer, price range, ect) and tell them that you would be interested in meeting with an agent. Meet with a couple different agents if you want to get a comparison and go with the one that you feel will help you the best. While you're meeting with these agents for the first time, do not sign anything unless you're 100% sure you want to work with them and I wouldn't suggest giving too much information about yourself right off the bat. Again, it's probably best to use family/friend rec's, but I recently used the latter method and found a wonderful agent. A good agent will make the process 1000x easier, and, best of all, his/her fee's are paid by the seller.

2) Get pre-approved. Talk to a bank about your lending options and what you qualify for, then work on getting pre-approved asap. Just like comparing agents, compare a couple different lenders (remember to take in account their fee's and closing costs). The home I bought had 2 similar offers on it, and the seller chose mine solely because he felt more comfortable with my financing.

As far as finding the right place, it sounds like you're in a similar situation as myself about 4-5 months ago. I would suggest looking at as many houses as you can, even some that you know you're not going to 'love', because you might see something in that house that you DO like that you can keep in mind as you continue to search.

I just bought my first home in april, so i'm fresh off of 'the hunt'. If you have any questions along the way feel free to ask in here, or PM if i dont notice it.

[marco j]

Originally Posted by ExistenceNow

It's there, for sure. My wife works for a financial planning firm and has access to all these wild things. Basically (very basically) what we have is corporate real estate. We put X amount into a 4 year contract which essentially pays parts of mortgages on many corporate buildings which are leased by companies such as Home Depot, Best Buy, Sam's Club, etc...
Over the course of the 4 year contract, we get 7% of our initial investment paid out to us every singe month. (not 7% of the initial investment divided by 48. 7% month 1, 7% month 2... etc..) Then, at the end of the contract, we sell our "shares" of this contract for 25% ($8 per bought, sold at $10) more than we bought them for. So basically, a $200k investment, after 4 years, with us taking out the monthly annuities, would leave us with $240k (which would have been much more if we would have reinvested the monthly annuities, but we didn't, cuz we used those to pay our mortgage).

So basically with this you were getting about $1,166 a month to pay your mortgage right?!

[ExistenceNow]

Originally Posted by marco j

So basically with this you were getting about $1,166 a month to pay your mortgage right?!

$200k was just the number I used as an example, but yea, pretty much.

[marco j]

^What would you suggest be a minimum investment into a venture like you explained?

[rconverse]

Buy low, sell high.

[AJF_41]

Originally Posted by rconverse

Buy low, sell high.

qft.

[hoggdogg]

Buying a house was the most stressful thing ever! They will have to pry me out of my home, because I never plan on doing it again.

[ExistenceNow]

Originally Posted by marco j

So basically with this you were getting about $1,166 a month to pay your mortgage right?!

Oops. Reading back over my post, I mis-spoke. It's 7% a year, not a month. I was a little drunk last night.

You still got to the right number though, so obviously you knew what I meant.

[ExistenceNow]

Originally Posted by marco j

^What would you suggest be a minimum investment into a venture like you explained?

No idea. Numbers is the wife's deal. Though I think I remember her saying that some clients do as little as $5k, but that is really only beneficial if you reinvest the monthly annuities, instead of pulling them out each month.

[Styx Cover Band]

Don't buy a place that is a short sale. I'm trying to buy a condo that is a short sale and it is a pain waiting for the selling bank to approve it. My offer was $1,500 less than the selling price and it's been two months and I'm still waiting for the selling bank to approve it, pain in the ass.

[Mickey Carson]

Originally Posted by SeattlePhil

I know this probably isn't the best place to ask for advice but f it.

I'm looking to buy a home and would like to hear about your experience. What things did you wish you did differently? Did anything come up later that you had no idea about? Anything that could help a first time home buyer would be much appreciated.

I would recommend this book: http://www.amazon.com/Home-Buying-Du...9900150&sr=8-1

Although my wife and I felt we had a pretty good understanding of everything involved in the home buying process, this book has many great tips that we never would have considered.

Not knowing what your salary is, if you're buying in the Seattle city limits...it is likely going to be much more likely that you'll be able to afford a decent condo vs. a decent house. The housing market is so skewed in Seattle. My cousin just bought a house in Seattle on Queen Anne that is very comparable to the house I bought in Spokane, WA. Each of our houses has 5 bedrooms about 3,000 sq. ft. blah blah. However, his house was a disaster from a maintenance standpoint and is a huge fixer-upper. My house cost $238k. His house cost $560k.

[marco j]

Originally Posted by ExistenceNow

No idea. Numbers is the wife's deal. Though I think I remember her saying that some clients do as little as $5k, but that is really only beneficial if you reinvest the monthly annuities, instead of pulling them out each month.

That's pretty much what I figured. Thanks I appreciate the information.