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Best subreddit for home buying?
Main Post:
I'm just going to open houses right now before I get serious about buying. I'm looking at one today that really fits my budget but before I involve agents and inspectors I want to know if there's a rudimentary list of things I should look for.
Top Comment: I don't know of a subreddit or good website, so I'll give you all my advice here: Looking at houses If you spend the weekends looking at and comparing houses, you will find ~1 can't miss deal about every 6 months. There are things that matter to value, and there are many things that have nothing to do with valuation that matter to you. Things like whether it's in the right school district, proximity to airports, proximity to the beach, proximity to freeways, commute distance, whether it's in an HOA, etc. You learn those things over time as you evaluate homes. Start looking now. Don't waste an agents time because it will be a painful relationship. Find an agent that will be completely hands off and email you listings, or just use Zillow/RedFin/etc. to shop with. MLS doesn't have everything. Zillow doesn't have everything. Don't get into your final stretch until you actually know what you are looking for. That's where an agent earns their money - by finding the place that you can't find on your own. Pay attention to how long homes stay on the market. Pay attention to the kinds of buyers they go to. Pay attention to comps. Learn about home inspections. Learn how to notice things like bad insulation around AC units, degraded carpets, roof problems, and aged water heaters. Learn how to evaluate without getting sold by the kitchen or getting un-sold by the kitchen. Pay attention to landscaping and look for landscaping problems. Pay attention to bathrooms. Look and look and look until you are completely flustered. Then look more. Figure out what you can afford It's not as easy as a pre-approval. It's not as easy as 1/3 of your income. You get a tax deduction by paying a mortgage. Figure out what that is and factor that in. You have to factor in home repairs, maybe PMI, and earthquake/fire/flood insurance. Come up with your own number and stick as closely to that as you can. You will be tempted to spend more. Hold out for the deal you are looking for. Learn how to negotiate You don't walk in the door saying how much you love the place. You don't say "I can fix that, no problem" when you notice the garbage disposal doesn't work. Read books on negotiation. The time and effort will yield value ten-fold. Learn who gets paid and for what Your first home buying experience is terrible. Every time you turn around someone is shoving another dick in your face while someone else is emptying your wallet. Your mortgage broker is getting paid. Your realtor is getting paid. Their realtor is getting paid. Your bank is getting paid. The title company is getting paid. The home inspector is getting paid. They are all getting paid a lot of money and if you aren't careful they are getting paid out of your loan that you are paying interest on for 30 years. You can end up paying thousands of dollars for worthless and terrible service. Learn who gets paid, whether it's necessary, why they are getting paid, and hold them to the fire to make sure they do their job. Negotiate every single one of their payments. Choose your own vendors. Get the seller to pay for some of it. Get the bank to reduce their fees. Get the realtors to reduce their fees. Be a pain in the ass. You will never work with those people again. Learn what is easy to fix and what is hard It's really best if you have a buddy who is in construction or carpentry. There are things that are great cost reducers, that are also easy and cheap to fix that many people are just afraid of doing or are too lazy to do. When you can spot those things they are opportunities. Be prepared to walk away The most powerful negotiation tool you have is walking away. Walk away from at least one deal to see how people react. Don't walk until they've offered you the best deal ever. Just walk. See how far it goes. You might piss off your agent. You might lose your agent. You might lose a few grand if you put in a deposit knowing that you were going down this road. But the knowledge that you gained will be absolutely worth it. Once you have done it once, you will have that tool in your pocket. You have it when the bank won't reduce it's fees. You have it when the selling realtor demands you use his title company. You have it when the notary demands that you go to their office and spend all day instead of them coming to you at your convenience. Learn what will matter down the road See a great house at a great price and you don't know why? Check the school ratings. You might not have kids, but homes in better school districts sell faster and are better values. It doesn't matter what you hear, low rated schools do not turn around with ANY sort of expediency. How long will you stay? What does it matter? There are tax ramifications associated with timelines. How many renters are in the neighborhood? How many foreign investors? Do people park on their lawns? Do the cars in the area look washed? How do all these things compare to other nearby neighborhoods? You don't want the best house in the neighborhood. You want a good house for the neighborhood. Or the ability to turn the worst house into a decent one. These are just some examples. Think long and hard about what matters to you now and talk to people in different generations to see what matters to them. Think about crime rates, local politics, city expansions, the economy.
What advice would you give to first-time home buyers?
Main Post:
My SO and I are just beginning the home buy I process. He won't be on the loan due to low credit score. We dont have a down payment saved but could probably save one pretty quickly.
I was just looking for some advice and things you wouldn't know about until you went through it. What did you learn during the process? What would you have done differently?
Thanks in advance for your replys :)
Edit: WOW! And I mean WOW! Thank you everyone for their responses I will read through everyone's! I'll try to comment to most, and I really hope this will help others in a similar situation!
Top Comment:
I bought my house a couple years ago and I am engineer who works in construction so this might be a little long winded. I gutted my house and did a complete renovation so I have messed with a lot of things. These things are in no particular order, just things I have gleaned over the years. Also, I live in Florida, so some of this advice may be region specific.
- When you put the contract on the house, make sure you put the offer is contingent on an inspection. Hire your own independent, home inspector and if there is something you are really uneasy about (needs new roof, bad plumbing, crappy insulation, etc.) either negotiate the price down to offset the cost of the repair, require the seller to fix the issues before the sale or walk away from the deal.
- Depending on your area, search for any permits pulled on the house for construction. This is all public record. Look for sinkhole repairs, new roofs, or any other construction related permits. These help you know if there has been significant repair work done to the house. If they have pulled a permit for anything sinkhole related (grouting or pilings) walk away from the house and find another one. Sinkhole prone houses are to be avoided at all cost.
- Try and find out the utility costs for the home before hand. I live in Florida so my electric fluctuates like crazy because of the summer heat. I'm talking a $100 swing at least between december and july. Also, when I bought my house, they had an average water bill of $400 a month because they had a massive leak they didn't know about that destroyed the kitchen. I used that to drive the price down. Knowing the average utility cost can help you decide if your budget can handle the house.
- If you are doing repairs/renovations, get at least 3 estimates. Be wary of a bid that is way below the others. Contractors who under bid tend to do a few things a) crappy sub-standard work b) try and find ways to increase your cost through additional services that "they find along the way".
- Odds are your loan will be sold to a different bank at some point. It's no big deal because the terms of your loan will remain constant. I never made a payment to my original lender before my mortgage was sold to wells fargo.
- No adjustable rate mortgages. Ever. Only get a fixed rate mortgage. There are enough horror stories on the internet about this one. Also, I got an FHA loan with my house, but they since changed the rules and now with an FHA the PMI never comes off instead of when you have paid 20% of the principle. Check with your mortgage broker about things like that. I pay about $120 a month in PMI. Would suck for that to never come off.
- Set aside a decent amount of money for unforeseen repairs in the first few months. Busted water heater, squirrels in the attic, leaking roof whatever. You're on the hook now for all repairs. It sucks.
- Look at the condition of the air conditioners. Replacement units can get expensive depending on what kind of system you have and what kind of climate you are in. If they are really old, you could be replacing them soon.
- Take a good hard look at your budget and I mean everything. Food costs, utilities, etc. and figure out of you can actually afford the house. Homes come with a lot of hidden costs.
Awesome you have a pool, you now have to buy chemicals or hire a pool service.
Sweet I have a yard. Now I need to buy a lawn mower, weed eater, etc and buy the gas, etc. to run as well as spend the time keeping it nice. HOAs can get really pissy really fast.
Your house is now 3 times farther from your job so now you gas bill tripled.
Lots of hidden costs that you won't know about before you buy the house. Make sure there is some wiggle room in your budget. If not, you're sunk.
Oh and just because you got approved for whatever amount doesn't mean you have to spend it. I was approved for over $200k and I spent $120k on my house. Do what's best for your financial situation.
10) Sometimes the best deal you can make on a house is to walk away. Never be afraid to kill the deal if something isn't to your liking and there isn't a work around that satisfies you. It's your money, time, and energy on the line. Don't get talked into a fixer upper if you don't want to deal with that or an overpriced brand new home if it's beyond your budget.
11) Be careful with the brand new homes. You would not believe the cost cutting measures some of the builders take. Research the builder if you go that route and make sure they are reputable. Maybe discuss a warranty on certain aspects of the home.
12) Look up any fees associated with your neighborhood. HOAs, etc. If you go condo/townhouse route, be really careful with the HOA fees. My HOA is $125 a year for my house, while my buddy has a $400 a month HOA for his 2 bedroom condo his wife owned before they got married. Those can be budget killers.
13) All repairs will cost more than you think. Tack on 30% to any estimate as a contingency if you can.
Update: thought of other stuff and I am out of work for the day.
14) Home owner's insurance is a pain. Make sure you shop around. I have an insurance agent who shops for em and he is great. 2 months after I bought my house, my original insurance company decided they didn't like my roof so they canceled my policy (they get twitchy about that especially here in Florida). I had to go shopping for new insurance, but no one would give me a policy until I put a new roof on. $8300 later, I had a new policy with a better company. So it worked out, sorta.
15) No idea what area your in, but check FEMA to see if you're in a flood zone. If you are in a flood zone, you are required to have flood insurance. If you are not technically in flood zone, you may want to look into flood insurance anyway. I am not in one, but my area floods from time to time because people jacked up their yards and the drainage went to crap. I pay $300 a year for a good flood policy just in case I get water intrusion from this. Most home owner's policies do not cover flooding related damage so you would be on the hook for those repairs (think new carpet, cabinets, etc.) if you don't have a flood policy.
16) If you are looking at a 2-story home, remember that things like bursts pipes and other leaks filter down. So a burst shower pipe on the second floor usually translates into ceiling damage and potentially mold on the first floor. Just something to keep in mind. Oh also, 2 story homes cost more to A/C especially if you only have 1 unit. Most homes in Florida will have independent upstairs and downstairs units because it is cheaper this way.
17) If you do no other repairs to your home, fix the soffit vents to the attic spaces or whatever opening here are. Critters in the attic can destroy everything including wiring, lights, A/C systems and whatever else you got up there.
18) Ask your mortgage broker if you can have your home owner insurance and property taxes put into escrow and paid through your mortgage payment. Makes it so you only make 1 payment (to your mortgage company) every month. They will withhold the monthly amount for your insurance and taxes and pay them for you when they are required. A couple less things you need to actively worry about each month.
Side note about property taxes if you do it this way. Property taxes are estimated each year and that is what determines how much you would pay each month. Sometimes the mortgage company can't do math and you get screwed. For instance, last year, they estimated my property taxes were going to be lower, so they reduced my payment by $100 for the year. Well come February, they informed me they screwed up and there was a shortage in my escrow account for the property taxes. So my payment not only reverted back to its original amount, but also increased an extra $110 to make up for the escrow shortage. Pain the butt.
Why do people buy things on those home shopping network channels? What demographic is it?
Main Post: Why do people buy things on those home shopping network channels? What demographic is it?
Top Comment:
Old.
Tips from a first time home owner 1 year in
Main Post:
It seems there's a post about home ownership at least once a week. I thought I'd share my learnings one year after buying my first home.
- Be clear about why you're buying a home. Every large decision you have to make about home ownership should somewhat tie in to this. I can't stress this enough. Make sure the reason makes sense to you after you and your SO (if applicable) sleep over it a few times. Don't get in to home ownership because your friends or colleagues are telling you how much they love owning their home. It might not be the same for you. Again, be clear. I'd say literally write it down.
- If you're buying a home together with your SO (I'd imagine most might), sit separately with different pieces of paper and write down what each of you wants in your home. Be realistic. Indicate what you're ok with compromising on and what is absolutely a must have (or must not have). Don't talk to each other while doing this. Once you're satisfied with the list, tally what you have and combine what you want, don't want, what's a must have and what you can compromise on. Be realistic.
- Use one of the online tools to calculate "how much house can I afford". Don't spend more than 30-40% of your annual income on home ownership - this includes your mortgage, insurance, property tax etc. I'd say stick to 30% or less. Edit: 30% of take home pay is what my max was. I ended up buying lower than that. Your scenario may be different. The COL in your area will probably affect this number.
- Look at houses based on the life style you have not the life style you aspire to have. For example we looked at houses with smaller yards or yards without large lawns. Reason: Our lifestyle and gardening aren't compatible. We'd have loved a large green lawn but realistically we'd never maintain it and probably wouldn't spend on a gardener. That's just one example. Don't dream of building a home theater in the basement if you're the outgoing type.
- "Buy the biggest house you can afford" is horrible horrible advice. This was given to me by most people around me. It sounded bad then and after a year in, it sounds just horrible. Buy the house that you need today with some consideration for tomorrow's needs. Tomorrow's needs is something along the lines of growing family NOT anticipating profits from business or promotions. The advice given on this sub holds true here too - buy below your means.
- Avoid borrowing money from friends or family in order to afford a bigger home. This is kind of an off shoot of the point above. Both points will just lead to additional stress that you don't need. This is true even if they're willingly offering you money without you asking.
- REALLY look in to total cost of home ownership. If you're looking in to a fixer upper things can get very tricky. I'd recommend not going for a fixer upper for a first time home owner. I bought a relatively new home but the cost of minor fixes baffled me. I'm very very happy to not have bought a home that needed repairs. I'd have underestimated the cost even if someone would have given me quotes for the repairs. Things like regulations change. A minor change might end up with large expenses to keep up with code. I learned this the hard way when I wanted to get an additional power outlet. :\
- Drive around the neighborhoods that you're interested in. Get a feel of the place. Chat with people who're out for walks or something and see what they think. This might lead to interesting results. When I did this, people thought I was selling something so their immediate reaction to my "Hi" was "I'm good. thanks.". :|
- A home purchase is often a process of elimination. Start with all homes that match your criteria. Filter based on cost, then filter based on neighborhood, then filter based on square footage, school districts etc. Keep going until you're left with a few homes that you'll go look at.
- Your agent facilitates the transaction. If you don't know what you want and haven't communicated with them very clearly, they may influence your decision. If you feel your agent is pressing you into making decisions - RUN. Better than having buyers remorse after having gotten in large debt.
- Feel free to use your agent to do the ground work. I gave my agent a list of questions to go figure out for the houses/neighborhood/HOAs etc that I was interested in. You're paying your agent a good sum of money. Get your money's worth. Don't shy away from asking questions. (Your agent might tell you that you won't pay him. That's partly true. You won't pay them directly - the seller usually accounts for this and prices the home accordingly. So in a way, you are paying him.)
- It's in your best interest to not have the same agent as the seller.
- Don't skimp out on the essentials - for example home inspection. It may be expensive to do but it's better than being stuck with a flawed house. Edit: u/SureWtever: consider getting a radon inspection (Quick google tells me there are DIY kits that are available).
- Protect your investment - get good insurance. Make sure you're aware of what's covered and what's not. Change the locks before you move in. Change the lock on the mailbox. Invest in a home security system if your neighborhood warrants it. Consider cameras at the very least.
- Find out how the HOA is if it exists. I've heard horror stories from colleagues. A couple of them have sold their condos because of the stress it caused them.
- Consider your mortgage options. Depending on how long you plan to live in your home, ARM might be a good option.
- After you buy your home, don't feel compelled to set it up immediately. That means it's ok to use the current furniture you have. It's ok to not have a proper bed. (We're still using a box + mattress combo - no frame or headboard). It's ok if one or more of your rooms look spartan for a year or two.
That's all I can think of now. I'll add more if I think of something. Good luck!
Edit: Thanks for the gold.
Some thoughts on comments:
Take 'home advice' (including mine) as just that - advice. Surely give it thought, but you know your scenario better than anyone else does. Some of the above points might not fit your needs. IMHO, it's better to be aware of a line of thought and reject it than to be ignorant of it and end up in a stressful situation.
"Look at houses based on the life style you have not the life style you aspire to have" Someone used an example of aspiring to have a garage to work on cars. The way I look at that is that working on cars is already your thing. You're not kidding yourself in to doing something you've never done before or are not currently passionate about. A person like me buying a large garage because "I'd like to get in to working on cars" when I currently don't know anything about the trade would be a terrible mistake.
"Buy the house that you need today with some consideration for tomorrow's needs" This should speak for itself. The suggestion is to consider tomorrow's needs but don't get carried away. You're not going to NEED a 4 car garage because you might make more money and might buy 4 cars.
RE: These points are conservative. Yes, they are. Purchasing for a lot of people is often emotional. Starting conservative for a first time home owner is not a bad idea. "You don't know what you don't know.". Next time around at least you'll know what you don't know and can plan somewhat better.
Top Comment:
Also from a first time homeowner two months in, these are perfect.
I'd like to add, do NOT blow every penny of your savings on the down payment. The washer we took with us shit itself one week in and needed to be replaced. There's a special tool for EVERYTHING you want to do that costs 50$. Painting is not the cheap renovation it used to be if you're doing it right. The "unexpected" purchases add up quick.
Give yourself a good buffer to work with so you're not struggling to deal with the surprises of homeownership.
Is there a "beginner" guide to purchasing a house
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24 yr/o making 40k a year here. Currently living in an apartment but I really want purchase a house in within the next few years. But honestly I have no idea even where I would start. There seems like so many terms and complexities to it that I don't understand at the moment. Where do I even start if I'm beginning to think about purchasing a house in the near future?
Edit: thank you for all the information guys! I'm going to sit down this weekend and go through it all
Top Comment: I felt the same way as you not too long ago. Here's what I did to get myself educated and comfortable with the process. Find an independent mortgage broker. Scheduled 30 minutes with them to talk about what the process is like, how to determine affordability, and what documents I would need when I decided to move forward. You should feel comfortable avoiding discussing current income, desired price, etc, and phrase the conversation around the broader concepts. A good broker will have a low-pressure conversation with you in the hopes that you'll come to them first when it's time to secure a loan. Find a reputable real estate agent. For me, I got this referral through family, and I would avoid finding one through a site like Zillow or Redfin as those agents are typically buying leads and are more hungry for a short-term deal. Ask them a lot of the similar questions - keep it high level like "what should I look for?", "what is the market like around here?", and "what should I have done already when I'm ready to look for the right house?". See if you can get a quick chat with a local home inspector. When you're ready to buy, it will be a good thing to have your own inspector to bring to the table anyways, so find someone to give you 15 minutes of their time and ask them what common issues they see, what you should care a lot about, what issues are insignificant, etc. If the convo goes well and they seem trustworthy, they're a great use of the $300-500 it takes to have them look at a property before you make an offer. Bonus points: talk to a friend or family friend and ask them about anything they wish they would have done differently. Unless they're a professional, take it with a grain of salt. However, intel about pitfalls and mistakes is a magnitude more valuable than recommendations and success stories. Pay attention to any times that you get different info from different sources. Everyone's representing their own interests alongside yours, so be aware that realtors and brokers often have a vested interest in getting you to spend more money. That being said, their insight is still valuable and you can easily revise numbers downward to keep them in your comfort zone. If you feel strange asking for all this help, don't. Regardless of home prices in your area, you represent a prospective big-ticket customer. Your realtor stands to make 3% of any purchase. Even if home prices in your area are $100k, that's still $3,000 in commissions and buyers agents don't, frankly, do that much work (opinion). The mortgage broker will make money if you use them, setting up your initial loan and then selling it to a servicer. The inspector gets a nice couple hundred bucks for 1-2 hours of work. You see where I'm going with this. Anyways, good luck!
Buying a House Is for Suckers
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Should you own a home? Unless you have 20 million bucks in the bank, in cash, you have no business buying a house.
People think the only way to save money is to buy a house. Suzy Orman thinks you have no way to earn any real money for yourself, so she advises you to buy a house as the only way to get your money. You will get your home paid off when you are old. Who wants to wait until they are old to have money?
A home is not an investment because it doesn’t pay you every month. In fact, you have to pay it every month. That’s why a house is not an asset, it’s a liability. Nothing is a good deal if you have to feed it constantly.
People ask, “Why would you pay rent when you could buy?” Because you can’t leave. Who wants to go to jail for 30 years? You can be mobile and nimble if you rent. Mobility is a great thing in today’s world. Why settle down? Invest the money in yourself or your business. Your money needs to be free!
I have been investing in multi-family real estate for over 25 years. If you want a great opportunity to create income for yourself, realize that America is becoming a nation of renters. How many reasons do you need to buy multi-family real estate? Apartments offer high cash yield, build equity, give tax advantages and let you use leverage. A $400K purchase can be bought with 25 percent of the price allowing you to leverage $100K to control 4X the value in physical property. Stocks or gold can’t touch that!
The house, much like a college education, has been fed to you as the American dream. Really, it’s a middle class myth perpetuated by outdated thinking, politicians and mass media. Buying a house may have worked for previous generations but old ways of doing things aren’t viable in 2016. We are not in the 1950’s, things have changed and people refuse to adjust.
A house is not an investment.
I want to give you three tips to making true investments.
- Invest In yourself. When I was 25 I made a $3,000 investment to buy a sales program for the purpose of becoming better at my job. Becoming a better you will never fail you.
- Focus on Income. Whether you have a house or not is irrelevant to how well you are or, will be, financially. So many people are concentrated on savings but their real problem is they just don’t make enough money. I encourage millennials to spend their energy on this one thing -- getting their incomes up high enough where they can actually make a real investment.
- Invest in something that pays you. Only after you have enough income can you start to think about investing. As I mentioned earlier, buying a home to live in is not going to pay you. Whether it be multi-family real estate or something else, a true investment will not cost you money. There are so many real estate agents out there giving false information. A home needs to be fed, it won’t feed you.
If you start investing in yourself, focus on growing your income. Put that growing income into an investment that will pay you, then you will be living like the rich do, not like the middle class.
Most Americans have been made to believe the myth that getting rich is almost impossible or not important. If you look at the world you will see that the only group of people that are safe are the rich. The rich didn’t get rich “buying a house”.
Blame them, hate them, resent them, but they are safe and everyone else is at risk. They will be able to survive inflation, housing busts, tight credit, high unemployment rates and whatever else is thrown at them. They have investments that pay them.
The middle class idea of just “being comfortable” is a risky venture in 2016. If your hope is in a house, you will be disappointed. I’m all for education, but how many people have gone to college and into massive debt and found themselves unemployed? How many of them are paying that debt back for 10, 20 and 30 years?
Don’t get caught in the idea that a house is your ticket to wealth. A house, along with a college education, has been fed to this country as the way to financial prosperity. It may have been true in the past, but today it’s all a myth.
Top Comment:
Interesting point of view but I don't necessarily agree with much of it. The average person is much more likely to end up with a nest egg by buying a house and paying it off, as opposed to buying investment property.
Investing in income properties is a JOB. If someone wants a job like that, and is willing to work at it, then more power to them. I've seen hundreds of operating income statements on income properties and from what I've seen, most people are not really cash-flowing all that well. They are hoping for long-term appreciation. A few people do pretty well but I'd estimate they are the top 10-15% of landlords. But I suppose any industry is like that - some people really do well. I've never seen an OIS that made me want to invest in real estate, in fact, it's just the opposite.
I do post here frequently that renting is not a bad idea for many people, and that the "throwing money away on rent" mentality is bullshit. I totally agree that renting is buying your freedom. However, I'm at a place in my life where I don't want freedom, I want security and boring ole reliability. I don't want to have to move because the landlord says I have to. I want to be able to put holes in the wall if I want. I want a nice house with nice finishes and I want to pick what I want. To rent a house as nice as the one I live in would cost me twice as much every month as my mortgage. To suggest that a house is a bad investment is just silly.
ELI5: How do channels like the Home Shopping Network and QVC still exist when Amazon and such exists?
Main Post: ELI5: How do channels like the Home Shopping Network and QVC still exist when Amazon and such exists?
Top Comment:
For the most part, the elderly, the main demographic that HSN/QVC is aimed at are still not accustomed to the technology needed for Amazon, et al to exist.
Best online house-hunting resources?
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I'm currently in an apartment and thinking of becoming a first time home owner. While I pursue pre-approval, I want to look at possible houses in my area. I've been using Zillow, but I've heard their info isn't always accurate or up to date. Is there a better tool or website? A combination? Should I just meet with a realtor instead?
If this has been answered before, please feel free to point me to existing resources. This is my first time in this sub.
Top Comment: www.realtor.com