Help me not buy a house
December 16, 2018 10:34 AM Subscribe
Over the past year I paid down significant debt and have more savings than I've ever had in my life. Out of nowhere I have a sudden, irresistible urge to buy a house. There are reasons why this is not a good idea, at least not immediately. Talk me down. First time home buyer horror stories solicited.
tl;dr Last week I made a semi-spurious offer on a house because I am all the way sick of my studio apartment (although I appreciate how cheap it is). The offer was rejected because the seller preferred cash or a conventional loan. The only loan I was pre-approved for was FHA.
That experience has--if anything-- made my House Fever worse, because now I know it's theoretically possible. HOWEVER.
I've been running the numbers ever since, and have come to the conclusion that it would be much better for me financially if I waited. I think I'd like to save up a bit more first. I don't want to go broke buying a house, and have other things I'm considering doing with this money. I might want to go back to school, for instance. (See one of my other AskMes.) I'm also starting a new job right now.
I'm also worried I'm too emotional about this to buy a house right now. I'm 29, and my 20s have been miserable and deprived, and I've been broke and scared more times than I can count. The sudden influx of cash is probably going to my head.
Please scare the shit out of me to motivate me to keep saving up. Tell me of the unexpected costs that popped up, nightmare repairs that an inspection didn't catch.... all the BAD things you experienced buying your first house. Thank you.
tl;dr Last week I made a semi-spurious offer on a house because I am all the way sick of my studio apartment (although I appreciate how cheap it is). The offer was rejected because the seller preferred cash or a conventional loan. The only loan I was pre-approved for was FHA.
That experience has--if anything-- made my House Fever worse, because now I know it's theoretically possible. HOWEVER.
I've been running the numbers ever since, and have come to the conclusion that it would be much better for me financially if I waited. I think I'd like to save up a bit more first. I don't want to go broke buying a house, and have other things I'm considering doing with this money. I might want to go back to school, for instance. (See one of my other AskMes.) I'm also starting a new job right now.
I'm also worried I'm too emotional about this to buy a house right now. I'm 29, and my 20s have been miserable and deprived, and I've been broke and scared more times than I can count. The sudden influx of cash is probably going to my head.
Please scare the shit out of me to motivate me to keep saving up. Tell me of the unexpected costs that popped up, nightmare repairs that an inspection didn't catch.... all the BAD things you experienced buying your first house. Thank you.
My ex bought a house with no insulation in Pittsburgh, PA. The heating bill was over $500 each month to keep the house at 65-68°. Also, the gas company discovered our house had a gas leak. So they turned off our gas until we got it fixed. That was a weekend of non stop digging because gas lines are buried deep and we couldn't afford to have the plumber do the digging and fix the gas line. Also, it didn't have a kitchen (which we knew up front, but didn't think it would take 6-9 months to get one installed) No oven, no sink, no cabinets. We cooked on a hot plate. There was a hole in the wall we needed to get fixed, but had to find someone who dealt with old horse hair plaster because no one else would touch it at all.
Houses aren't going anywhere, you can buy a house once you're more financially stable and have decent savings. I don't want to buy a house after that. I'm fine renting and once I get over that experience, maybe I'll buy a house. Maybe.... and that's only due to having children.
posted by Attackpanda at 10:56 AM on December 16, 2018 [3 favorites]
Houses aren't going anywhere, you can buy a house once you're more financially stable and have decent savings. I don't want to buy a house after that. I'm fine renting and once I get over that experience, maybe I'll buy a house. Maybe.... and that's only due to having children.
posted by Attackpanda at 10:56 AM on December 16, 2018 [3 favorites]
I'm a real estate professional, so I went into the process reasonably savvy. When I bought a house for the first time, I wanted a new construction house, so that we could minimize maintenance work and costs. We bought from a reputable builder who had done work in the neighborhood, and had the house inspected by a reputable inspector.
Months after we moved into our brand-new house, we started having water run down the inside of the windows in continuous streams, every time it rained heavily.
It turns out that that every single side of the house that was exposed to the outside was incorrectly constructed, so that outside water was actually directed into the house. Every house in the (small) development may have the same issues, and a regular home inspection will not catch this. The only way to find it is with a specialist inspection that drills into the home and takes samples.
It's been six years this past September, and we've been locked in ligation with the developer for at least two and a half years. Our homeowner's association has spent into the mid-five digits for litigation expenses, all of which has been divided between the homeowners and paid out of pocket. We have not seen one dime from the developer, and trial is not scheduled until next year.
In the meantime, we have actually had to pay just under $50,000 out of pocket to fix one (1) of the three exposed sides, because homeowner's insurance did not pay that, as they will pay to remediate damage, but will not pay to fix stuff that was incorrectly installed. In fact, at one point, they threatened to cancel our homeowner's insurance, which would have triggered a mortgage default, because the back of our house had been exposed to the elements for two years while the developer fucked around, trying to find the cheapest possible way to fix a very, very expensive problem.
The estimated cost to actually fix all sides of our house? Roughly $150,000.
We like to joke that our house repair bill will cost more than medical bills for having a baby by c-section with a weeklong hospital stay (which is what happened to me) and having aggressive cancer (which is what happened to my partner). Which, incidentally, both happened while we were in the throes of fighting with the developer/litigating the case/paying our mortgage.
posted by joyceanmachine at 11:05 AM on December 16, 2018 [37 favorites]
Months after we moved into our brand-new house, we started having water run down the inside of the windows in continuous streams, every time it rained heavily.
It turns out that that every single side of the house that was exposed to the outside was incorrectly constructed, so that outside water was actually directed into the house. Every house in the (small) development may have the same issues, and a regular home inspection will not catch this. The only way to find it is with a specialist inspection that drills into the home and takes samples.
It's been six years this past September, and we've been locked in ligation with the developer for at least two and a half years. Our homeowner's association has spent into the mid-five digits for litigation expenses, all of which has been divided between the homeowners and paid out of pocket. We have not seen one dime from the developer, and trial is not scheduled until next year.
In the meantime, we have actually had to pay just under $50,000 out of pocket to fix one (1) of the three exposed sides, because homeowner's insurance did not pay that, as they will pay to remediate damage, but will not pay to fix stuff that was incorrectly installed. In fact, at one point, they threatened to cancel our homeowner's insurance, which would have triggered a mortgage default, because the back of our house had been exposed to the elements for two years while the developer fucked around, trying to find the cheapest possible way to fix a very, very expensive problem.
The estimated cost to actually fix all sides of our house? Roughly $150,000.
We like to joke that our house repair bill will cost more than medical bills for having a baby by c-section with a weeklong hospital stay (which is what happened to me) and having aggressive cancer (which is what happened to my partner). Which, incidentally, both happened while we were in the throes of fighting with the developer/litigating the case/paying our mortgage.
posted by joyceanmachine at 11:05 AM on December 16, 2018 [37 favorites]
Before we even had the keys to our first house, someone broke in and stole all the copper pipes. Since we weren't there, someone in the neighborhood smelled a gas leak and realized it was coming from our house and called 911. So we had to replace all the piping in the crawlspace and our front door which had been rammed in by the fire department.
posted by masquesoporfavor at 11:19 AM on December 16, 2018 [6 favorites]
posted by masquesoporfavor at 11:19 AM on December 16, 2018 [6 favorites]
I've been running the numbers ever since
If you've never experienced the joy of homeownership, It's pretty likely you have overlooked some expenses in your calculations. Amortized annual maintenance can easily be thousands of dollars, depending on the condition and size of the house. When I bought my first house, I had the wrong figures for property tax, and it ended up being $5k/year more than I'd planned for. That really hit me in the face.
posted by qxntpqbbbqxl at 11:29 AM on December 16, 2018 [3 favorites]
If you've never experienced the joy of homeownership, It's pretty likely you have overlooked some expenses in your calculations. Amortized annual maintenance can easily be thousands of dollars, depending on the condition and size of the house. When I bought my first house, I had the wrong figures for property tax, and it ended up being $5k/year more than I'd planned for. That really hit me in the face.
posted by qxntpqbbbqxl at 11:29 AM on December 16, 2018 [3 favorites]
We dry-lined the inside walls of our house, repaired a damaged ceiling, and re-wired. All of that we expected and budgeted for. However, all that construction work left the carpets in a terrible state (although they had been covered) and we had to replace several, which we had not counted on.
posted by Grinder at 11:32 AM on December 16, 2018
posted by Grinder at 11:32 AM on December 16, 2018
Buying a house means renting money. How much money can you afford to rent?
posted by clawsoon at 11:39 AM on December 16, 2018 [7 favorites]
posted by clawsoon at 11:39 AM on December 16, 2018 [7 favorites]
Bought a house that was at the top of our budget after being assured by several expensive, well-regarded inspectors and our real estate agent who was a personal friend that the house was move-in ready, mint condition.
Six months later we have spent around $50,000 on repairs including, but not limited to: asbestos removal, asbestos clearance, ceiling resurfacing/"skimming", mold inspection, mold remediation, mold clearance, drywall repair, a major plumbing repair, complete removal and replacement of all flooring, new doors, interior and exterior paint.
Oh! And we've just been told we need to re-do the freshly installed floors because the company installed them wrong! We also need a new roof, furnace, and honestly probably new pipes but lol, we're broke now.
Don't do it. I beg you.
posted by Temeraria at 12:08 PM on December 16, 2018 [12 favorites]
Six months later we have spent around $50,000 on repairs including, but not limited to: asbestos removal, asbestos clearance, ceiling resurfacing/"skimming", mold inspection, mold remediation, mold clearance, drywall repair, a major plumbing repair, complete removal and replacement of all flooring, new doors, interior and exterior paint.
Oh! And we've just been told we need to re-do the freshly installed floors because the company installed them wrong! We also need a new roof, furnace, and honestly probably new pipes but lol, we're broke now.
Don't do it. I beg you.
posted by Temeraria at 12:08 PM on December 16, 2018 [12 favorites]
Even if you have a very skilled home inspector who catches pretty much everything and lays out all the potential issues with the house (which it appears I did when I bought mine) random things still go wrong, and they are moderately to very expensive to fix. Home ownership is like playing a reverse lottery every month, with pretty high odds that you'll "win" an unexpected repair cost. In our first year of home ownership:
1) Parts of our sidewalk were declared out of code by the city, because of a 1/2" separation between sections at some corners of the slabs. Did you know that in many cities the homeowner is responsible for sidewalk repairs? That was $950 to fix. We got this notice two months after moving in.
2) Three months after moving in, our oven stopped working. We tried a repair company, who told us we needed a new logic board ($85 service call). The replacement logic board that we needed is no longer manufactured, so we tried a re-manufacturing service ($150). It failed, so we had to get a whole new oven ($1000). When the oven arrived, it couldn't be installed, because the previous owners had hardwired it instead of installing a plug. So I had to DIY a new wall plug ($30) and then install the oven myself.
3) During our first winter in the house, one of our tree branches fell on the neighbor's garage in an ice storm, which fortunately wasn't damaged but she wanted to get the tree trimmed. We split the cost, and my part was $650. Could have been much worse if the garage had been damaged.
4) The dishwasher stopped washing dishes. Even using youtube to diagnose the issue, and DIYing the fix, I was still out $350 for a new logic board and heating element.
5) An outdoor faucet got stuck and had to be replaced ($300).
In total, we won the first year home owner's lottery to the tune of $3500. If I wasn't comfortable with DIY repair and electrical work, it would have been higher.
And these don't include the issues the inspector identified, which we have since taken care of - replacing dry rot in several places ($900), new roof ($15k), modernizing cable install for high speed internet ($200) - and issues that we still need to address, which we're doing at a rate of one per year as our budget allows - out of code wiring replacement (est: $5k), new gutters (est: $2k).
All of that said, I am still deeply happy living in a house and not an apartment, and owning it so I can do as I please (patio lights! BBQ grill! parties! a dog!), but it just requires an understanding that it's a goddamn money pit even if things go pretty well (especially relative to the previous stories, yikes!) and you've got to budget for that and be comfortable throwing money into that pit.
posted by slagheap at 12:28 PM on December 16, 2018 [10 favorites]
1) Parts of our sidewalk were declared out of code by the city, because of a 1/2" separation between sections at some corners of the slabs. Did you know that in many cities the homeowner is responsible for sidewalk repairs? That was $950 to fix. We got this notice two months after moving in.
2) Three months after moving in, our oven stopped working. We tried a repair company, who told us we needed a new logic board ($85 service call). The replacement logic board that we needed is no longer manufactured, so we tried a re-manufacturing service ($150). It failed, so we had to get a whole new oven ($1000). When the oven arrived, it couldn't be installed, because the previous owners had hardwired it instead of installing a plug. So I had to DIY a new wall plug ($30) and then install the oven myself.
3) During our first winter in the house, one of our tree branches fell on the neighbor's garage in an ice storm, which fortunately wasn't damaged but she wanted to get the tree trimmed. We split the cost, and my part was $650. Could have been much worse if the garage had been damaged.
4) The dishwasher stopped washing dishes. Even using youtube to diagnose the issue, and DIYing the fix, I was still out $350 for a new logic board and heating element.
5) An outdoor faucet got stuck and had to be replaced ($300).
In total, we won the first year home owner's lottery to the tune of $3500. If I wasn't comfortable with DIY repair and electrical work, it would have been higher.
And these don't include the issues the inspector identified, which we have since taken care of - replacing dry rot in several places ($900), new roof ($15k), modernizing cable install for high speed internet ($200) - and issues that we still need to address, which we're doing at a rate of one per year as our budget allows - out of code wiring replacement (est: $5k), new gutters (est: $2k).
All of that said, I am still deeply happy living in a house and not an apartment, and owning it so I can do as I please (patio lights! BBQ grill! parties! a dog!), but it just requires an understanding that it's a goddamn money pit even if things go pretty well (especially relative to the previous stories, yikes!) and you've got to budget for that and be comfortable throwing money into that pit.
posted by slagheap at 12:28 PM on December 16, 2018 [10 favorites]
Here you go. Buyer beware, as they say.
Skip if reptile-phobic.
posted by Armed Only With Hubris at 12:28 PM on December 16, 2018 [3 favorites]
Skip if reptile-phobic.
posted by Armed Only With Hubris at 12:28 PM on December 16, 2018 [3 favorites]
When we bought our first house, we knew it was a fixer-upper. What we didn't know was that the 5-year-old heater was going to break pretty much immediately after closing and that we'd have to baby it along for 2 years before we could afford to replace it (cost about $400 per quarter to replace broken parts, $8k to replace). One day the water heater heating element completely rusted away and we didn't have hot water for 5 days while it was getting replaced - heating elements rust out when the water heater isn't properly maintained, and it's not something that shows up on a home inspection. Inspections won't look behind, say, your bathroom vanity mirror to find out that the light fixture just came out of a hole in the wall with bare wires, and now you have to hire an electrician to install the proper junction box. I'm tempted not to mention the TWO TIMES our under-slab water pipes sprung a leak, because our homeowners insurance did pay for these, but we were still without any water for days during repair/replacement, had to live in a construction zone for weeks while our flooring was replaced, and now pay pretty exorbitant insurance rates.
I loved being a homeowner. In our situation, it made perfect financial sense and even with all the repairs we saved money over renting + investing what we would have spent on repairs. But it was a constant trial, and it is not something I would enter into semi-seriously or without extensive research. If you're sick of apartment living, consider renting a house first, if that's an option in your market.
posted by muddgirl at 12:34 PM on December 16, 2018 [1 favorite]
I loved being a homeowner. In our situation, it made perfect financial sense and even with all the repairs we saved money over renting + investing what we would have spent on repairs. But it was a constant trial, and it is not something I would enter into semi-seriously or without extensive research. If you're sick of apartment living, consider renting a house first, if that's an option in your market.
posted by muddgirl at 12:34 PM on December 16, 2018 [1 favorite]
I’ve owned a number of houses; in fact, I own 3 now (home, rental, and one speculative flip).
If you have kids and want to stay where you are (for schools, friends, and so on), you’re set on your career and do not plan to move for 10 years, consider it. It’s expensive, with unpredictable costly repairs. You might break even in the long run. (I expect a real estate correction in the next 1-2 years. Further, elimination of the mortgage interest deduction was mooted in the last tax overhaul which, I believe, will happen sooner rather than later.)
It’s not a liquid asset at all. Many financial gurus suggest that real estate (home, rental properties, REITs) should be <25% of your overall assets. So, after you have eliminated all debt, topped off your retirement funds, and have the 6 month cushion of liquid assets, and budgeted at least 10% of purchase price per year for repairs and operating costs, consider it.
posted by sudogeek at 12:35 PM on December 16, 2018 [3 favorites]
If you have kids and want to stay where you are (for schools, friends, and so on), you’re set on your career and do not plan to move for 10 years, consider it. It’s expensive, with unpredictable costly repairs. You might break even in the long run. (I expect a real estate correction in the next 1-2 years. Further, elimination of the mortgage interest deduction was mooted in the last tax overhaul which, I believe, will happen sooner rather than later.)
It’s not a liquid asset at all. Many financial gurus suggest that real estate (home, rental properties, REITs) should be <25% of your overall assets. So, after you have eliminated all debt, topped off your retirement funds, and have the 6 month cushion of liquid assets, and budgeted at least 10% of purchase price per year for repairs and operating costs, consider it.
posted by sudogeek at 12:35 PM on December 16, 2018 [3 favorites]
Also, let's imagine that you can buy the perfect house with no unplanned issues and can forecast the cost of repairs and budget for them comfortably (ie, let's take money off the table). Unless you can afford a gardener and handyman, regular home upkeep is going to take up quite a bit of your free time all year round.
posted by muddgirl at 12:39 PM on December 16, 2018 [1 favorite]
posted by muddgirl at 12:39 PM on December 16, 2018 [1 favorite]
We have a house and I regret it. I had infinitely more time in my life as a renter.
posted by aniola at 12:40 PM on December 16, 2018 [5 favorites]
posted by aniola at 12:40 PM on December 16, 2018 [5 favorites]
If you want to know the very most boring way to spend $4000 (doesn’t add to your property value, brings you no joy, you will likely never even lay eyes on it,) I have two words for you: chimney liner.
posted by juliapangolin at 12:43 PM on December 16, 2018 [30 favorites]
posted by juliapangolin at 12:43 PM on December 16, 2018 [30 favorites]
I spent a significant portion of over two years dealing with the financial consequences of mortgage defaults. A lot of them were outright frauds (liar loan-type situations), but a fair number of people who just "bought ambitiously," too. Maybe watch The Big Short?
posted by praemunire at 1:03 PM on December 16, 2018
posted by praemunire at 1:03 PM on December 16, 2018
What juliapangolin said, in spades. There are so many multi-thousand dollar expenses that will suddenly crop up, the repair of which will do nothing but keep your home from falling into ruin.
Are you a person who would like a nice new laptop? Oops! A pipe just burst in your basement and the floor drain is clogged. Where’s that $1k going to go now: laptop or plumbing? A lot of house stuff can come at you out of the blue and require immediate expenditure while returning no pleasure at all (unless you just like hanging out in your basement admiring freshly-brazed pipe). It’s not all remodeled chef’s kitchens, backyard tiny homes and walk-in closet solutions. Indeed, in my 20 years of home ownership, none of it has been.
Too, I don’t know about the market in your area, but where I am things feel pretty bubbly. I wouldn’t be at all surprised to find my house “worth” $100k less in a year’s time. Are you in a seller’s market?
posted by mumkin at 1:09 PM on December 16, 2018 [2 favorites]
Are you a person who would like a nice new laptop? Oops! A pipe just burst in your basement and the floor drain is clogged. Where’s that $1k going to go now: laptop or plumbing? A lot of house stuff can come at you out of the blue and require immediate expenditure while returning no pleasure at all (unless you just like hanging out in your basement admiring freshly-brazed pipe). It’s not all remodeled chef’s kitchens, backyard tiny homes and walk-in closet solutions. Indeed, in my 20 years of home ownership, none of it has been.
Too, I don’t know about the market in your area, but where I am things feel pretty bubbly. I wouldn’t be at all surprised to find my house “worth” $100k less in a year’s time. Are you in a seller’s market?
posted by mumkin at 1:09 PM on December 16, 2018 [2 favorites]
Our house is 20 years old and we have been pretty lucky. It was five years old when we bought it. But now we have a 20 year old house and suddenly everything needs to be replaced. We started with a new roof in 2012 after a hailstorm damaged it. After that we decided to do one or two projects every year. Let's see -
- new sidewalk and landscaping because the old one was just paving stones on grass, $4500
- new garage window because my FIL didn't install it properly before $700
- new dishwasher, $3000 because hubs like top of the line stuff
- new front door, because previous owners painted over it in wrong type of paint, $1200
- new coat of paint on trim, $700
- new coat of paint on trim 11 years later and new wood in places, $1300
- new furnace, water tank and AC - $13,000
In addition we need new lino, new interior paint, new parging and will have to replace all the windows and a new deck. The handyman who repainted our trim will probably replace our deck this year because the railing is falling apart and wasn't built correctly in the first place.
And then we can expect to do this in another 20-25 years :D
posted by Calzephyr at 1:35 PM on December 16, 2018 [2 favorites]
- new sidewalk and landscaping because the old one was just paving stones on grass, $4500
- new garage window because my FIL didn't install it properly before $700
- new dishwasher, $3000 because hubs like top of the line stuff
- new front door, because previous owners painted over it in wrong type of paint, $1200
- new coat of paint on trim, $700
- new coat of paint on trim 11 years later and new wood in places, $1300
- new furnace, water tank and AC - $13,000
In addition we need new lino, new interior paint, new parging and will have to replace all the windows and a new deck. The handyman who repainted our trim will probably replace our deck this year because the railing is falling apart and wasn't built correctly in the first place.
And then we can expect to do this in another 20-25 years :D
posted by Calzephyr at 1:35 PM on December 16, 2018 [2 favorites]
I almost spent my savings on a down payment for a house. Then I was fired and the only place that would hire me for what I was worth was located in another city. So I would have been 100% fucked if I had gone through with it. Now I have no real desire to sink my money into one place.
posted by Young Kullervo at 1:58 PM on December 16, 2018 [1 favorite]
posted by Young Kullervo at 1:58 PM on December 16, 2018 [1 favorite]
There is room between staying in a too-small apartment (studio) and buying a full house. You could rent a larger apartment or condo or townhouse. You could maybe even rent a house. You could consider a smaller purchase like a condo or apartment.
But as noted above - when something breaks you have to pay for it. There’s constant maintenance. It’s expensive and a lot of work.
I get how you’re feeling. I’m disabled and spend about 90% of my time in 900 sq ft. It can get pretty maddening. But at the end of the day we would rather save and stay here, consider other rentals, or possibly buy a condo because otherwise it’s far too much work and expense for us.
posted by Crystalinne at 2:00 PM on December 16, 2018 [3 favorites]
But as noted above - when something breaks you have to pay for it. There’s constant maintenance. It’s expensive and a lot of work.
I get how you’re feeling. I’m disabled and spend about 90% of my time in 900 sq ft. It can get pretty maddening. But at the end of the day we would rather save and stay here, consider other rentals, or possibly buy a condo because otherwise it’s far too much work and expense for us.
posted by Crystalinne at 2:00 PM on December 16, 2018 [3 favorites]
I bought my first house in 2007, feeling that it was the right time - I was in my late 20s, had more than enough saved up for 20% down, and had numerous relatives dropping hints that I should "settle down and stop wasting money on rent".
A year later the recession hit, I was laid off with very little warning, and couldn't find a new job in the area no matter what I tried. What was already a very stressful job hunt was made far worse by being tied down with a mortgage payment. I was eventually able to rent it out so I could move cross-country for a new job, although this was after several very stressful months.
Four years later, the tenant (who had been great) finally moves out. Property manager abruptly refuses to find a new tenant due to some deferred maintenance and various small issues the property manager didn't bother to tell me about earlier. Ends up turning into a massive argument, with legal action eventually being threatened. Did I mention that I was on a long-term international business trip when all this happened, so I was 10 time zones away?
Finally I list the property, having to enlist my dad to help me sell it at a loss. Ultimately I take a hit of nearly $20k, not including several thousand in small repairs needed to get the house sold.
TLDR - houses are money pits, will hold you back if you want/need to move for career reasons, and are not at all guaranteed to appreciate.
posted by photo guy at 2:15 PM on December 16, 2018 [2 favorites]
A year later the recession hit, I was laid off with very little warning, and couldn't find a new job in the area no matter what I tried. What was already a very stressful job hunt was made far worse by being tied down with a mortgage payment. I was eventually able to rent it out so I could move cross-country for a new job, although this was after several very stressful months.
Four years later, the tenant (who had been great) finally moves out. Property manager abruptly refuses to find a new tenant due to some deferred maintenance and various small issues the property manager didn't bother to tell me about earlier. Ends up turning into a massive argument, with legal action eventually being threatened. Did I mention that I was on a long-term international business trip when all this happened, so I was 10 time zones away?
Finally I list the property, having to enlist my dad to help me sell it at a loss. Ultimately I take a hit of nearly $20k, not including several thousand in small repairs needed to get the house sold.
TLDR - houses are money pits, will hold you back if you want/need to move for career reasons, and are not at all guaranteed to appreciate.
posted by photo guy at 2:15 PM on December 16, 2018 [2 favorites]
It's a very common experience: You buy a house, and right away things start failing, or you find out about things that were already faulty. It's often not because the seller was being deceptive; maybe they didn't know about certain things, some things that had been working fine just give out, or they'd learned to live with things that were operating at 50%. It's also typical that buyers try to buy at the top of their means, so as to get the best possible house and location. Also, first-time homeowners don't know a lot about home systems and repairs, and can easily pay too much or get in over their heads in DIY jobs.
Everything costs more that you think it will. I've owned houses for a long time and they STILL cost more than I expect, every time.
On the other hand, a house is a good place to park your money if you're not going to need access to it and you plan to stay there for several years. And in some areas, house prices are steadily increasing, so the longer you wait, the more you'll have to pay.
Find out exactly how property is taxed in your city or county. Get a professional estimate of what insurance will actually cost you. Commit to looking at a lot of houses before you're even ready to buy. Just looking at open houses for a couple of months will help you know your local market. Buying a first house is usually super stressful, so learn as much as you can ahead of time.
And even if you love the nicest house on a street, don't buy it. It's much smarter to buy one that's in the middle or lower and bring it up to par over time.
posted by wryly at 2:27 PM on December 16, 2018 [4 favorites]
Everything costs more that you think it will. I've owned houses for a long time and they STILL cost more than I expect, every time.
On the other hand, a house is a good place to park your money if you're not going to need access to it and you plan to stay there for several years. And in some areas, house prices are steadily increasing, so the longer you wait, the more you'll have to pay.
Find out exactly how property is taxed in your city or county. Get a professional estimate of what insurance will actually cost you. Commit to looking at a lot of houses before you're even ready to buy. Just looking at open houses for a couple of months will help you know your local market. Buying a first house is usually super stressful, so learn as much as you can ahead of time.
And even if you love the nicest house on a street, don't buy it. It's much smarter to buy one that's in the middle or lower and bring it up to par over time.
posted by wryly at 2:27 PM on December 16, 2018 [4 favorites]
When I bought my condo the hot water heater was nice enough to die between making our offer and getting an inspection, so the sellers took off a couple thousand to cover half the cost of a replacement.
So we closed, and we scheduled to paint the place before moving in, but just before the painting I was reading the minutes of the latest HOA meeting and saw a reminder to get the wiring upgrades done. I asked for more information and found that several months before the sale, the HOA had announced that due to insurance requirements, all units needed to have any old wiring removed that year or pay a massive insurance penalty each year. We had seen the old wiring at inspection, consulted an electrician and our home insurance and been told it would be fine for years. So we canceled the painting and scrambled to find a company that could come and rewire half the condo before we unpacked all our boxes, the bare electrical work was about $10k (we were lucky that the bathroom and kitchen had already been done) and then we fixed all the holes left in the walls ourselves (only possible because dad is a house builder who knew what to do with the 1940s lathe plaster).
posted by the agents of KAOS at 3:06 PM on December 16, 2018 [2 favorites]
So we closed, and we scheduled to paint the place before moving in, but just before the painting I was reading the minutes of the latest HOA meeting and saw a reminder to get the wiring upgrades done. I asked for more information and found that several months before the sale, the HOA had announced that due to insurance requirements, all units needed to have any old wiring removed that year or pay a massive insurance penalty each year. We had seen the old wiring at inspection, consulted an electrician and our home insurance and been told it would be fine for years. So we canceled the painting and scrambled to find a company that could come and rewire half the condo before we unpacked all our boxes, the bare electrical work was about $10k (we were lucky that the bathroom and kitchen had already been done) and then we fixed all the holes left in the walls ourselves (only possible because dad is a house builder who knew what to do with the 1940s lathe plaster).
posted by the agents of KAOS at 3:06 PM on December 16, 2018 [2 favorites]
Oh, yea - and I thought we wouldn't need to buy much "stuff" because the two of us were moving in from our existing small places. But among the various things we did still need were curtains for all the windows, and curtain rods, and a shower rod, and a new bed because my box spring didn't fit up the narrow stairs, and a front door mat because I never had one in my apartment.
posted by the agents of KAOS at 3:14 PM on December 16, 2018
posted by the agents of KAOS at 3:14 PM on December 16, 2018
Both times we bought a house, they were not fixer uppers, and they had good reports.
Both times there was about $20,000 in unforeseen expenses in the first few weeks. (Mainly failed heating/cooling/plumbing). It was fine, because we had a cushion. But after that experience, I'd never buy a place if it was a budget stretch.
posted by lollusc at 3:39 PM on December 16, 2018 [7 favorites]
Both times there was about $20,000 in unforeseen expenses in the first few weeks. (Mainly failed heating/cooling/plumbing). It was fine, because we had a cushion. But after that experience, I'd never buy a place if it was a budget stretch.
posted by lollusc at 3:39 PM on December 16, 2018 [7 favorites]
This thread has reminded me to place online orders for a replacement faucet part and two new casement window handles. And I spent the morning lying on my roof in the rain, reconnecting a downspout to the gutter after a wind storm tore it off on Friday. Also installed the replacement handle for the new storm door (the original had a factory defect), so I'm feeling productive. Learning to be handy is actually kind of fun, but it's a big time sink. I think I spend an average of three hours/week repairing little stuff.
posted by qxntpqbbbqxl at 3:58 PM on December 16, 2018
posted by qxntpqbbbqxl at 3:58 PM on December 16, 2018
Response by poster: Thank you MeFi!
A couple snowflakes:
- I've been writing about the real estate industry as part of my job for the last six or seven years. Even though my main job is in a new-to-me industry, I still freelance on the side writing about real estate. So I think I know at least a little bit about home buying that a typical first-time buyer may glass over (I want new or new-ish HVAC! Ditto new-ish roofing!)
- My city is one of the cheapest real estate markets in the country, and dollar per dollar it is much cheaper to buy than rent. Even with property taxes.
- I've been in this city for almost seven years now and have no plans to leave.
However [shudders] god know I can't afford a $20,000 renovation or any of the horror stories in this thread. I think I need to keep saving for a maintenance fund for after I buy a house. I'm not really into top of the line appliances/granite countertops/ etc upgrades, but this thread is making me think I could use an extra ~$8000-10000 on hand just for potential repairs.
Thank you all for sharing with me your very terrifying stories. I have to admit I still want to buy, but I have been inspired to save a LOT more now.
posted by coffeeand at 4:19 PM on December 16, 2018 [3 favorites]
A couple snowflakes:
- I've been writing about the real estate industry as part of my job for the last six or seven years. Even though my main job is in a new-to-me industry, I still freelance on the side writing about real estate. So I think I know at least a little bit about home buying that a typical first-time buyer may glass over (I want new or new-ish HVAC! Ditto new-ish roofing!)
- My city is one of the cheapest real estate markets in the country, and dollar per dollar it is much cheaper to buy than rent. Even with property taxes.
- I've been in this city for almost seven years now and have no plans to leave.
However [shudders] god know I can't afford a $20,000 renovation or any of the horror stories in this thread. I think I need to keep saving for a maintenance fund for after I buy a house. I'm not really into top of the line appliances/granite countertops/ etc upgrades, but this thread is making me think I could use an extra ~$8000-10000 on hand just for potential repairs.
Thank you all for sharing with me your very terrifying stories. I have to admit I still want to buy, but I have been inspired to save a LOT more now.
posted by coffeeand at 4:19 PM on December 16, 2018 [3 favorites]
Why do you only qualify for an FHA loan? I would take this time to work whatever is preventing a conventional loan, whether that's a larger down payment or a bad credit score.
posted by muddgirl at 4:52 PM on December 16, 2018
posted by muddgirl at 4:52 PM on December 16, 2018
Response by poster: What exactly is wrong with a loan type used by 7.95 million people in the country and backed by the government that is geared towards helping first time buyers or lower income folks break into a competitive market?
posted by coffeeand at 5:20 PM on December 16, 2018 [2 favorites]
posted by coffeeand at 5:20 PM on December 16, 2018 [2 favorites]
It will restrict your buying options, as you've already discovered.
posted by the agents of KAOS at 5:25 PM on December 16, 2018 [4 favorites]
posted by the agents of KAOS at 5:25 PM on December 16, 2018 [4 favorites]
Mod note: A few things removed. Asker, it's fine if you're not finding a specific line of advice useful but please go ahead and use the stuff that's useful to you and just bypass the stuff that's not. Getting into a back-and-forth with answerers isn't a good way to go in Ask.
posted by cortex (staff) at 5:40 PM on December 16, 2018 [1 favorite]
posted by cortex (staff) at 5:40 PM on December 16, 2018 [1 favorite]
There's nothing wrong with an FHA loan if it is the only thing you can qualify for, but it is more expensive in the long run than a conventional loan. Spending more money on mortgage insurance means less money in the budget for maintenance and repairs. Since you're planning on waiting for a larger savings cushion anyway, you can take this time to situate your finances for a cheaper loan.
posted by muddgirl at 7:39 PM on December 16, 2018 [2 favorites]
posted by muddgirl at 7:39 PM on December 16, 2018 [2 favorites]
I'm 29, and my 20s have been miserable and deprived, and I've been broke and scared more times than I can count. The sudden influx of cash is probably going to my head.
If your savings allow, and there's a rental market for semi-fancy houses in your city, rent a semi-fancy house for a year. You will get a very keen sense of how much house is too much for your circumstances, how much house (and garden) shit you are willing to put up with, and all without having to own a house and fix that shit. Dismiss the idea that you are burning money or making yourself vulnerable by renting. Think of your House Fever this way: you don't need to buy a house: you need to live in a house.
posted by holgate at 8:08 PM on December 16, 2018 [5 favorites]
If your savings allow, and there's a rental market for semi-fancy houses in your city, rent a semi-fancy house for a year. You will get a very keen sense of how much house is too much for your circumstances, how much house (and garden) shit you are willing to put up with, and all without having to own a house and fix that shit. Dismiss the idea that you are burning money or making yourself vulnerable by renting. Think of your House Fever this way: you don't need to buy a house: you need to live in a house.
posted by holgate at 8:08 PM on December 16, 2018 [5 favorites]
More horror/save up WAY more money than you think you need, like at least 3x the amount stories:
Bought what was supposed to be a well-maintained, good condition house 18 months ago. Like the foolish, foolish first-time homebuyer I was, I immediately blew $5,000 on mostly comestic/luxury upgrades (electrical work, professional painting, new window treatements, etc).
And then everything started breaking. In the first summer alone I was out
-$1000 for random plumbing repairs (turns out the inspection missed two cracked sinks and a wonky faucet)
-$2500 for new gutters
-$2500 for a new water heater
Oh and also I had a massive mouse problem and it's been another $800 on exterminator contracts.
-I bought in the spring so we couldn't tell just how drafty this house is; my winter heating bill is insane (also, I never realized that boiler maintenence contracts are a couple of hundred bucks extra a year). There are good deals on things like insulation, but now I'm trapped because I'm too broke to spend money on energy efficiency upgrades that would save me money down the road.
I've also spent probably $1000 on yardwork/exterior repairs, and untold thousands at Home Depot buying all the things you need for a house and not a studio apartment (lawnmower, rakes, wheelbarrow, hedge trimmer, etc, stuff for DIY projects).
Stuff I'm trying to budget for but it's going laughably slowly:
-new roof within 5 years or so ($10k?)
-either repainting the exterior (guessing $5k) or new siding (guessing $12k). And let's not talk about the basement waterproofing that also needs to be done ($5k if I'm lucky).
So yeah. I love my house but it's an insane moneypit that's given me sleepless MONTHS since purchasing. And neither my laptop nor my car can die on me ever, at this point.
posted by TwoStride at 10:02 PM on December 16, 2018 [1 favorite]
Bought what was supposed to be a well-maintained, good condition house 18 months ago. Like the foolish, foolish first-time homebuyer I was, I immediately blew $5,000 on mostly comestic/luxury upgrades (electrical work, professional painting, new window treatements, etc).
And then everything started breaking. In the first summer alone I was out
-$1000 for random plumbing repairs (turns out the inspection missed two cracked sinks and a wonky faucet)
-$2500 for new gutters
-$2500 for a new water heater
Oh and also I had a massive mouse problem and it's been another $800 on exterminator contracts.
-I bought in the spring so we couldn't tell just how drafty this house is; my winter heating bill is insane (also, I never realized that boiler maintenence contracts are a couple of hundred bucks extra a year). There are good deals on things like insulation, but now I'm trapped because I'm too broke to spend money on energy efficiency upgrades that would save me money down the road.
I've also spent probably $1000 on yardwork/exterior repairs, and untold thousands at Home Depot buying all the things you need for a house and not a studio apartment (lawnmower, rakes, wheelbarrow, hedge trimmer, etc, stuff for DIY projects).
Stuff I'm trying to budget for but it's going laughably slowly:
-new roof within 5 years or so ($10k?)
-either repainting the exterior (guessing $5k) or new siding (guessing $12k). And let's not talk about the basement waterproofing that also needs to be done ($5k if I'm lucky).
So yeah. I love my house but it's an insane moneypit that's given me sleepless MONTHS since purchasing. And neither my laptop nor my car can die on me ever, at this point.
posted by TwoStride at 10:02 PM on December 16, 2018 [1 favorite]
Bought a 2-story seven years ago. Furnace needed a replacement in 2013 (about $4500) and the electrical breaker box had to get swapped in 2017 ($2500). Having $10K in savings devoted to future house problems is the only way I can sleep well at night.
posted by porn in the woods at 6:51 AM on December 17, 2018
posted by porn in the woods at 6:51 AM on December 17, 2018
The week before we closed on our house, a car burst into flames in front of it and melted our siding. We then had weeks of arguing via proxy with insurance - both the car owner and the previous home owner had the cheapest possible plans and were not that interested in fighting for extra money that would not go to them.
We managed to wrap the siding into the new roof project that we knew we needed when we bought the house, although it ended up taking longer to pay off than we anticipated due to said insurance squabbling. The car fire ended up killing the (city) tree by the sidewalk, which meant we had a new issue when it got knocked over in a storm.
Other homeowner hassles: We sprung for a new oil burner (which we knew we needed post inspection). We'd have preferred switching to gas which the gas company told us was impossible due to there being no gas line into the house. Reader, there very clearly is a line coming into our house, but because National Grid could not read a map we ended up with a new oil tank and burner as the oil company was happy to back up National Grid's stupidity and we, as suckers, just followed along. Turns out when they installed the new heating system, they fudged up the zone heating so that in order for the main floor to get heat, the second floor must also want heat, but because of heat rising that is not as often. So that's a new fix that has taken years to diagnose.
posted by robocop is bleeding at 7:12 AM on December 17, 2018
We managed to wrap the siding into the new roof project that we knew we needed when we bought the house, although it ended up taking longer to pay off than we anticipated due to said insurance squabbling. The car fire ended up killing the (city) tree by the sidewalk, which meant we had a new issue when it got knocked over in a storm.
Other homeowner hassles: We sprung for a new oil burner (which we knew we needed post inspection). We'd have preferred switching to gas which the gas company told us was impossible due to there being no gas line into the house. Reader, there very clearly is a line coming into our house, but because National Grid could not read a map we ended up with a new oil tank and burner as the oil company was happy to back up National Grid's stupidity and we, as suckers, just followed along. Turns out when they installed the new heating system, they fudged up the zone heating so that in order for the main floor to get heat, the second floor must also want heat, but because of heat rising that is not as often. So that's a new fix that has taken years to diagnose.
posted by robocop is bleeding at 7:12 AM on December 17, 2018
Oh hey! New first time homeowner here (July), and I was you last year. I don't regret buying the place, but since you want some stories or disincentive...
Partner and I lived in the same apartment complex for 3 years in my hometown. Our friends were nearby, our offices were a reasonable commute and our budget was on the low end for our area. Everyone told us to buy because what we were paying in rent was probably more than a mortgage with fewer benefits. (HA! Fools.)
We got a great realtor, set a reasonable budget, took advantage of government programs. We looked online for two years prior while watching tons of HGTV and salivating over places to live. We looked at dozens of open houses over those two years and another 20 houses with our real estate agent. We dragged a friend with us for a third opinion. We spent about 4 months looking at houses every other weekend. When we found a house we liked, we found the same floorplan in a nearby new development and bought a brand new, beautiful home that was perfect for us in every way. It had a beautiful foyer and 2.5 bathrooms and a great big yard. We got all the nice incentives from the builder. We got a great home inspector. In a textbook way, we did absolutely everything right, right down to taking online courses in home ownership and finance.
But oh, oh how expensive it is. Time, and money. Weekends spent on home projects instead of out with friends. Weekends spent roping friends into projects. Air filters. Moving sprinklers to water a lawn that's way too big. Fixing fences. Putting up decorations. Taking them down. Trying to keep a garage organized. Trying to figure out why that thing won't stop beeping. Money spent on gardeners, money spent on landscaping (WHY DOES THE GRASS KEEP DYING)- money spent on pest control, on home insurance, on home security. Escrow for taxes. Taking time off work to wait for repair people. Flood insurance, because we live in a floodzone.
And neighbors! NEIGHBORS. We live in a great neighborhood and we are all new to it but if someone has their dog off-leash it's not just complaining to a landlord. Yeah, we have an HOA, but that just means more money out the door along with MORE MONEY for landscapers BECAUSE WHY, WHY GRASS, WHY DO YOU KEEP DYING. Plus, if they're miserable or take up too much street parking or have parties that are too loud, there's only so much you can do. You can't just wait out a lease. You're stuck with them. (Reading previous ask mefi threads on neighbor issues is a great way to feel better about your own neighbors, but also- you may want to read those)
It's knowing that every time something breaks, you have two options: Fix it yourself, or spend money to have someone else fix it. And I'm a handy lady, with some very handy friends but like, plumbing is beyond me. And I know that in 10 years we will need to start replacing things like the AC or the fridge or the washer/dryer or the roof or- It's just a matter of time.
So I love our house. I don't regret buying it. But I do wish we'd waited, and maybe had a more reasonable expectation on budget.
posted by Torosaurus at 7:34 AM on December 17, 2018 [3 favorites]
Partner and I lived in the same apartment complex for 3 years in my hometown. Our friends were nearby, our offices were a reasonable commute and our budget was on the low end for our area. Everyone told us to buy because what we were paying in rent was probably more than a mortgage with fewer benefits. (HA! Fools.)
We got a great realtor, set a reasonable budget, took advantage of government programs. We looked online for two years prior while watching tons of HGTV and salivating over places to live. We looked at dozens of open houses over those two years and another 20 houses with our real estate agent. We dragged a friend with us for a third opinion. We spent about 4 months looking at houses every other weekend. When we found a house we liked, we found the same floorplan in a nearby new development and bought a brand new, beautiful home that was perfect for us in every way. It had a beautiful foyer and 2.5 bathrooms and a great big yard. We got all the nice incentives from the builder. We got a great home inspector. In a textbook way, we did absolutely everything right, right down to taking online courses in home ownership and finance.
But oh, oh how expensive it is. Time, and money. Weekends spent on home projects instead of out with friends. Weekends spent roping friends into projects. Air filters. Moving sprinklers to water a lawn that's way too big. Fixing fences. Putting up decorations. Taking them down. Trying to keep a garage organized. Trying to figure out why that thing won't stop beeping. Money spent on gardeners, money spent on landscaping (WHY DOES THE GRASS KEEP DYING)- money spent on pest control, on home insurance, on home security. Escrow for taxes. Taking time off work to wait for repair people. Flood insurance, because we live in a floodzone.
And neighbors! NEIGHBORS. We live in a great neighborhood and we are all new to it but if someone has their dog off-leash it's not just complaining to a landlord. Yeah, we have an HOA, but that just means more money out the door along with MORE MONEY for landscapers BECAUSE WHY, WHY GRASS, WHY DO YOU KEEP DYING. Plus, if they're miserable or take up too much street parking or have parties that are too loud, there's only so much you can do. You can't just wait out a lease. You're stuck with them. (Reading previous ask mefi threads on neighbor issues is a great way to feel better about your own neighbors, but also- you may want to read those)
It's knowing that every time something breaks, you have two options: Fix it yourself, or spend money to have someone else fix it. And I'm a handy lady, with some very handy friends but like, plumbing is beyond me. And I know that in 10 years we will need to start replacing things like the AC or the fridge or the washer/dryer or the roof or- It's just a matter of time.
So I love our house. I don't regret buying it. But I do wish we'd waited, and maybe had a more reasonable expectation on budget.
posted by Torosaurus at 7:34 AM on December 17, 2018 [3 favorites]
We've had three trees die in the past few years thanks to the interaction between drought and the original builders and homeowners overcrowding the yard with unsuitable trees (as per the arborist). We've also had to drop several thousand dollars on a new retaining wall because the original one wasn't high enough (and is also located on our neighbors' side of the property line), so that the soil was eroding from our foundation at an alarming rate. And we just got the estimate from the yard guy to install better drainage because all the topsoil in the back yard has washed into our neighbor's yard. And we just got a $200 water bill that has let us know that we have a break SOMEWHERE in the irrigation system that will have to be found and seen to...
YAY HOME OWNERSHIP!
posted by telophase at 11:14 AM on December 17, 2018
YAY HOME OWNERSHIP!
posted by telophase at 11:14 AM on December 17, 2018
I bought a small, old house in a nice neighborhood, 25 years ago. The lender made us put down extra down payment, because they suspected that we planned to demolish and rebuild. But we did not. Instead, we got the foundation fixed and the roof replaced, and had rotted siding ripped out and fixed.
It has been a lot of work over the last 25 years, mostly because I like to do a lot of work. My projects include bathroom replacement, bathroom remodel, kitchen tiling, guest room tiling, roofing, sewer lines, water lines, siding, windows, electrical, gas, wiring, floors, ceilings, walls, driveway, sidewalk, decking x 3, fences, various projects that involved railroad ties, plus landscaping. This work has given me a lot of exercise, and real sense of accomplishment, and great cost savings. I would only recommend this to someone who is able to see themselves doing this kind of thing. If not for this degree of hands-on, we would have had to sell this house as a tear-down.
But here we are, in a great neighborhood, with good neighbors, good services, and a contented feeling. Our children enjoyed the local schools. We will probably stay until we are too old to fix things anymore.
posted by Midnight Skulker at 2:38 PM on December 17, 2018 [1 favorite]
It has been a lot of work over the last 25 years, mostly because I like to do a lot of work. My projects include bathroom replacement, bathroom remodel, kitchen tiling, guest room tiling, roofing, sewer lines, water lines, siding, windows, electrical, gas, wiring, floors, ceilings, walls, driveway, sidewalk, decking x 3, fences, various projects that involved railroad ties, plus landscaping. This work has given me a lot of exercise, and real sense of accomplishment, and great cost savings. I would only recommend this to someone who is able to see themselves doing this kind of thing. If not for this degree of hands-on, we would have had to sell this house as a tear-down.
But here we are, in a great neighborhood, with good neighbors, good services, and a contented feeling. Our children enjoyed the local schools. We will probably stay until we are too old to fix things anymore.
posted by Midnight Skulker at 2:38 PM on December 17, 2018 [1 favorite]
Knock wood, I have apparently a Disney-quality homeowning experience. I bought a townhome in 2009 when they were offering the $8,000 tax credit for first-time homebuyers. I’m the first owner, the house had a 2-year warranty and therefore when the dishwasher crapped out, I didn’t have to pay for the repair. I’ve replaced the water heater and the kitchen faucet, I’ve had the gas fireplace cleaned. My cats have done some serious clawing damage to a particular area of the carpet.
Apart from that...*knock wood about a thousand times*...it’s been virtually trouble-free. I definitely need to save up a “shit happens” home repair fund, though.
My rules for buying:
1. Had to want to live in the house for at least 10 years, because if the housing crash taught me anything, it’s that just because you want or need to sell doesn’t mean you can
2. Had to afford the mortgage and expenses by myself, without roommates or anyone else contributing
3. Despite #2, house had to be suitable to have a roommate or cohabitor in case it became pertinent
4. HOA had to allow me to rent the house out to tenants if, for some reason, it behooved me to relocate and I didn’t want to sell (which I really don’t, I love the house)
So, there’s something to be said for new construction, but obviously it’s not a foolproof factor, considering the above post whose developer built their house inside out. And my development hasn’t been issue-free, either—they had to litigate due to some foundation/structural issues on some units (luckily, not mine) and they also had to emergency-remodel all the retaining walls, because one was washed out by a torrential rainstorm and threatened the foundation of one unit. My unicorn neighborhood also includes an effective yet beneficial HOA.
Anyway, it doesn’t have to be an either/or situation. You don’t need to buy a house right now, but it doesn’t hurt to save up a good down payment and look for a gem of a place while you’re at it. If you don’t find one, you have extra money. If you do, you’re in a good position to afford it.
I used an FHA loan and it was fine. But then, my circumstances were pretty unique in that the market was in the toilet, and they were dying for credit-worthy first-time buyers. Your PMI doesn’t go away until you’ve paid off what, 20% of your principle (NOT having 20% worth of equity, it has nothing to do with the value of your home). Also, Google tells me that the rules changed in 2013 so that if you have a down payment of less than 10% for an FHA loan, you can’t get rid of PMI unless you refinance to a conventional loan. So that’s an argument for at least waiting until you have a 10% down payment in the bank.
I went back to school 4 years after buying the house, which I absolutely don’t regret. It was really conducive to my studies to have a nice, quiet, comfortable place to do homework and to decompress. Now I’m paying student loans and yeah, money’s a little tight even though I make a good salary. I try to take the long view on everything. The order of my priorities are to pay off the loans first, then my car will probably need to be replaced, then I focus on the house. In the meantime, try to squirrel away extra cash and hope nothing really expensive breaks.
But in the overall scheme of things, everything is a matter of informed risk. You run the risk of being disappointed no matter what you choose. But you can also strive to mitigate as much risk as you reasonably can. Write down your goals, their costs, and how you would pay for each thing, and see where the numbers come up. The next several years are gonna go by no matter what, and if you’ve planned ahead and have a cushion, then do the things you really yearn to do.
posted by Autumnheart at 4:52 PM on December 17, 2018
Apart from that...*knock wood about a thousand times*...it’s been virtually trouble-free. I definitely need to save up a “shit happens” home repair fund, though.
My rules for buying:
1. Had to want to live in the house for at least 10 years, because if the housing crash taught me anything, it’s that just because you want or need to sell doesn’t mean you can
2. Had to afford the mortgage and expenses by myself, without roommates or anyone else contributing
3. Despite #2, house had to be suitable to have a roommate or cohabitor in case it became pertinent
4. HOA had to allow me to rent the house out to tenants if, for some reason, it behooved me to relocate and I didn’t want to sell (which I really don’t, I love the house)
So, there’s something to be said for new construction, but obviously it’s not a foolproof factor, considering the above post whose developer built their house inside out. And my development hasn’t been issue-free, either—they had to litigate due to some foundation/structural issues on some units (luckily, not mine) and they also had to emergency-remodel all the retaining walls, because one was washed out by a torrential rainstorm and threatened the foundation of one unit. My unicorn neighborhood also includes an effective yet beneficial HOA.
Anyway, it doesn’t have to be an either/or situation. You don’t need to buy a house right now, but it doesn’t hurt to save up a good down payment and look for a gem of a place while you’re at it. If you don’t find one, you have extra money. If you do, you’re in a good position to afford it.
I used an FHA loan and it was fine. But then, my circumstances were pretty unique in that the market was in the toilet, and they were dying for credit-worthy first-time buyers. Your PMI doesn’t go away until you’ve paid off what, 20% of your principle (NOT having 20% worth of equity, it has nothing to do with the value of your home). Also, Google tells me that the rules changed in 2013 so that if you have a down payment of less than 10% for an FHA loan, you can’t get rid of PMI unless you refinance to a conventional loan. So that’s an argument for at least waiting until you have a 10% down payment in the bank.
I went back to school 4 years after buying the house, which I absolutely don’t regret. It was really conducive to my studies to have a nice, quiet, comfortable place to do homework and to decompress. Now I’m paying student loans and yeah, money’s a little tight even though I make a good salary. I try to take the long view on everything. The order of my priorities are to pay off the loans first, then my car will probably need to be replaced, then I focus on the house. In the meantime, try to squirrel away extra cash and hope nothing really expensive breaks.
But in the overall scheme of things, everything is a matter of informed risk. You run the risk of being disappointed no matter what you choose. But you can also strive to mitigate as much risk as you reasonably can. Write down your goals, their costs, and how you would pay for each thing, and see where the numbers come up. The next several years are gonna go by no matter what, and if you’ve planned ahead and have a cushion, then do the things you really yearn to do.
posted by Autumnheart at 4:52 PM on December 17, 2018
I should also note that my neighborhood had a ton of newly built townhomes and single family homes, and then was partially destroyed by a tornado the same year. (I had not yet been a resident at that point, but was renting nearby.) Some people had literally been in their homes a matter of months and lost everything.
People have bad luck sometimes. There’s no way to tell if you will or not. All you can do is inform yourself and then act.
posted by Autumnheart at 4:57 PM on December 17, 2018
People have bad luck sometimes. There’s no way to tell if you will or not. All you can do is inform yourself and then act.
posted by Autumnheart at 4:57 PM on December 17, 2018
Yeah, houses are total money pits. I bought one at 22 when I was starting grad school. Termites, HVAC failures, a water line break under the slab, leaking gutters, a collapsing retaining wall, rotting siding. Thousands and thousands of dollars. It was very stressful and expensive just to fix the stuff that immediately affected habitability, and there was no money to fix the non-emergency stuff, much less upgrade anything. We spent $8k just to fix it up enough to sell, on top of what we had already done to live there ourselves.
I wouldn’t buy again until I had a 20% down payment plus another 20% in savings as cushion against all the repair bills. (And I mean free and clear in savings that won’t be needed for anything else — i.e. in addition to retirement savings and “one year’s regular living expenses in case I lose my job” savings.)
Renting for sure has its own downsides. But I do not miss the gut-churning stress of having huge repair bills hanging over my head.
posted by snowmentality at 5:20 AM on December 19, 2018
I wouldn’t buy again until I had a 20% down payment plus another 20% in savings as cushion against all the repair bills. (And I mean free and clear in savings that won’t be needed for anything else — i.e. in addition to retirement savings and “one year’s regular living expenses in case I lose my job” savings.)
Renting for sure has its own downsides. But I do not miss the gut-churning stress of having huge repair bills hanging over my head.
posted by snowmentality at 5:20 AM on December 19, 2018
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We love this house and it is, technically, within our budget, but if we hadn't had that initial chunk of cash we'd have been in rough shape, and as it is it's gonna be years before we can just get it to a condition in which we don't have to apologize for things to guests. (It rains popcorn sometimes!)
This isn't actually my first place - I bought a cheapass condo in my 20s with zero down, back when banks were willing to do that with clowns like me. Three-quarters of my team got laid off the week after I closed. I was lucky as shit I wasn't in that group, but it still chills my blood. The only reason that didn't end up being a disaster is that I had some savings to tide me over the several periods of unemployment, and that my expenses were very little more than my rent would be anywhere else. (And I was eminently employable with a fairly rare and desirable specialty.) The roof needed to be replaced the year I moved in. Major foundation repairs had to happen the year after. All this I had to help pay for.
Owning your own place is nice, but it means you are on the hook for a whole lot of stuff, and it ties you down. I'd be thinking very hard about how long you want to live and can get a job in the location you are in right now. And think about how many months you can pay mortgage if you're unemployed.
posted by restless_nomad at 10:53 AM on December 16, 2018 [6 favorites]